Turkey repays $5bn Saudi deposit to cut liabilities

Reuters

Turkey’s central bank has repaid a $5 billion deposit by Saudi Arabia as part of its plan to lower external liabilities.

The amount was returned to the Saudi Fund for Development, received in 2023, the central bank said in a statement.

“Our external liabilities have recently improved by $7 billion through the reduction of deposit balances,” the statement said.

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In a post on social messaging platform X, treasury and finance minister Mehmet Simsek said that Turkey’s reserves have strengthened due to the increased influx of foreign resources, dollarisation reverse and reduced external financing needs resulting from its medium-term economic programme.

“Therefore, we are reducing external liabilities,” he said, adding that the country will continue economic and financial cooperation with Saudi Arabia.

In February, the Saudi fund granted a $55 million loan to Ankara to support schools in earthquake-devasted regions.

Turkey has cut its current account gap by more than 80 percent in a year, with improved trade data and strong portfolio inflows. 

The current account deficit for May was $1.2 billion, a report issued by the central bank on July 12 showed, the lowest monthly level since October.

However, an area of concern is likely to be the continued poor performance of foreign direct investments, with inflows in May of $361 million, down 58 percent from April’s figure of $859 million.

Between January and May, Ankara attracted $1.5 billion in FDI, well short of the $2.1 billion in the first five months of 2023.