Turkish wealth fund akin to development bank: S&P

Country does not fit category of conventional wealth fund nation

Turkey’s new sovereign wealth fund is more akin to a national development bank, with its design suggesting an effort to create a funding vehicle by leveraging assets, S&P analyst Frank Gill said yesterday.

Turkey has transferred government stakes worth billions of dollars in Turkish Airlines, major banks and fixedline operator Turk Telekom to the fund set up last year to help finance big-ticket infrastructure projects.

“In this way we regard it as a quasi-fiscal instrument, almost akin to a national development bank, that can be used to finance public spending outside of the central government perimeter,” Gill, Senior Director Sovereigns and International Public Finance EMEA, said in an email.

Sovereign wealth funds are generally used by commodity-exporting countries to enable them to save a portion of their large external surpluses to hedge against commodity price falls. “Turkey doesn’t fit into this category,” Gill said.

“So the design of Turkey’s sovereign wealth fund suggests an effort to create a funding vehicle by leveraging up public/ private assets,” he said.