Turkish Treasury defends protection of mega projects

Turkish Treasury defends protection of mega projects

Turkish Treasury defends protection of mega projects

Treasury says only foreign-funded projects are guarded by the Treasury.

Turkey’s Treasury has denied reports that a new bylaw to encourage large-scale public works projects will threaten the country’s current account deficit and give unfair advantages to particular companies.

The Treasury said in a statement yesterday that the regulations introduced little new, and stressed that the guarantee to protect contractors’ debt was limited to externally financed projects.

According to a new arrangement announced last week, the Turkish state will reimburse 85 percent of loans to companies involved in project tenders if the deal is canceled due to company-related faults. The Treasury will reimburse the total amount of loans if the tender is annulled for any other cause.

Critics of the new regulations have pointed to abused Treasury guarantees for projects prior to 2001 and warned of the negative effects on budget and fiscal discipline that could be created by the failure of projects protected by a guarantee.

The Treasury emphasized that state-owned enterprises and local administrations would not be accepted on the program and the guarantee would be limited to $3 billion annually.

It also said no companies would unfairly benefit because all companies bidding for project tenders would be aware of whether government guarantees would be provided.