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Turkey’s wealth fund is less about wealth and more about debt

Turkey’s newly established sovereign wealth fund is expected to throw life preservers to companies involved in the government’s “mega-projects” and primarily owned by AKP cronies.
Turkey's Finance Minister Naci Agbal speaks during an interview with Reuters in Ankara, Turkey, September 27, 2016. Picture taken September 27, 2016. REUTERS/Umit Bektas - RTSPSH5

In a stunning move Feb. 6, the Turkish government transferred public assets worth billions of Turkish liras to a sovereign wealth fund that it hastily created last year. Structured through legislative decrees under the state of emergency declared after the coup attempt in July, the Turkey Wealth Fund (TVF) appears destined to continue to stir controversy.

The ruling Justice and Development Party (AKP) says the TVF is similar to sovereign wealth funds operated by oil-rich Gulf states, Norway and other countries with current account and budget surpluses. In reality, the only similarity is the name. Turkey, a country with a chronic current account deficit, has no budget surplus, but rather a budget deficit, which happens to be on the rise. Why Ankara sought such a fund is becoming clearer as it gradually takes shape.

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