Jin Liqun, president of Beijing-based Asian Infrastructure Investment Bank (AIIB), and Turkey’s finance minister Mehmet Simsek signed a memorandum of understanding (MoU) on the sidelines of the Conference for Emerging Market Economies held in Al-Ula city of Saudi Arabia, the AIIB said on February 17.

The MoU outlines an investment programme that guides AIIB sovereign-backed loans that will be provided to Turkey from 2025 to 2027. They are expected to total around $5bn. The investments are to focus on climate resilience, water management, sustainable transport, earthquake preparedness and healthcare.

The three-year programme will be reviewed semi-annually.

In its press release on the arrangement, Turkey’s finance ministry added that an additional $5bn of loans was envisaged for private sector projects in the coming period.

The AIIB, launched in 2016, currently has 109 member countries. It operates with a paid-in capital of $100bn.

Turkey is the 10th largest shareholder in the AIIB. It holds a 2.6% stake in the bank’s capital.

Since 2018, the AIIB has extended a total of $5.5bn in loans to Turkey for projects across energy, transport, urban resilience and disaster response.

Turkey is the AIIB’s second largest market after India.

By 2023, the AIIB’s total investments in Turkey amounted to $4bn across 19 infrastructure projects, mostly in the energy and transport sectors.

In 2023, the investment bank extended $690mn in loans to Turkey via a total of five green infrastructure projects.

Charm offensive

When he was appointed in June 2023, Simsek launched a charm offensive to attract funds from development banks.

In its press release on the AIIB MoU, the finance ministry also noted that Turkey’s combined outstanding development bank loans volume reached $35bn at end-2024.

According to the latest data release, the figure stood at $34bn at end-September.

Table: Turkey’s gross external debt stock by lender.

Table: Outstanding long-term loans received from abroad by Turkey’s private sector.

Between 2024 and 2026, the World Bank Group plans to extend a total of $18bn in financing to Turkey.

Turkey has been the top investment destination of the European Bank for Reconstruction and Development (EBRD) for the past five years.

For the period between 2024 and 2026, Saudi Arabia-based Islamic Development Bank (IsDB) is planning to extend a total of $6.3bn in financing to Turkey.

Since the February 2023 earthquakes that devastated parts of southern Turkey, development banks have signed more than $5bn in loan agreements with Turkish borrowers for recovery efforts.

In January, Simsek announced that the Asian Development Bank (ADB) would commence operations in Turkey.

(See the list of major external loans obtained by Turkish borrowers here.)