Finance Minister: Turkey better off with debt guarantee

Photo: Finance Minister: Turkey better off with debt guarantee / Turkey

Turkey's Finance Minister Mehmet Simsek said Tuesday that the new regulation that offers debt guarantee for large-scale projects outweighs the risks Anadolu Agency reported.

The treasury announced Saturday that it will guarantee projects costing more than TL 1 billion (US$470 million), including the building of a third airport in Istanbul and a third bridge over the Bosphorus straits.

The treasury will ensure 85 percent of the contractors' debt if the projects are called off because of a financial or logistical problem. However, under other circumstances the treasury will take on the entire debt in a bid to ease the financing of large-scale projects.

"Not building a third airport in Istanbul would cause a serious harm to public," said Simsek. "But we cannot forecast whether the move which eases constructing the third airport will place any burden".

Turkey restricted treasury guarantees 12 years ago after a fiscal crisis in 2001 burdened the Turkish economy.

The government had planned to assume at most US$3 billion for public-works project debts for 2014. Turkey's public debt stock to GDP fell to 36% in 2013 from 74% in 2002.

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