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Turkey in final stage of talks for up to $10bn funding from Qatar: Sources

Qatar has strong ties with Turkey, which supported Doha when it was blockaded by several Arab countries
Turkish President Recep Tayyip Erdogan (centre) is welcomed by Emir of Qatar Tamim bin Hamad Al Thani (right) in Doha on 24 July 2017 (Reuters)

Turkey and Qatar are in the final stages of talks for Doha to provide up to $10bn in funding for Ankara, including up to $3bn by the end of this year, according to two senior Turkish officials.

One of the officials told Reuters the total funding could take the form of a swap, eurobond or other method, and that the Turkish and Qatari leaders had discussed the issue.

Turkey is also in the final stage of talks with Saudi Arabia over Riyadh placing a $5bn deposit at the Turkish Central Bank, a Saudi finance ministry spokesman said on Tuesday.

The foreign funding could help shore up foreign exchange reserves to backstop Turkish President Recep Tayyip Erdogan's unorthodox policy of pursuing interest rate cuts and other stimulus measures despite soaring inflation and a slumping currency.

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Turkey's treasury and officials in Qatar were not immediately available for comment.

With western countries balking at investments in Turkey, Ankara has turned to "friendly" countries for foreign resources to backstop its policy of supporting the lira by balancing the economy's supply and demand for foreign exchange.

Turkey's central bank already had in place a swap deal with Qatar's central bank, which was originally worth $5bn but was tripled in 2020 to $15bn.

The sources spoke to Reuters under condition of anonymity because they were not authorised to discuss the funding.

"Talks for Qatar to provide new resources to Turkey have reached the final stage," the first official said.

"A minimum amount of $8bn is foreseen" but it could total "as much as $10bn", of which $2bn-$3bn is to be obtained this year and the rest next year, the source added. 

"This could be a swap or eurobond, but they are discussing several methods. There is a mutual agreement."

The second Turkish official said the talks for $2bn-$3bn funding for this year were focused on the eurobond.

Multiple swap deals

Qatar has strong ties with Turkey, which supported Doha when Saudi Arabia, the United Arab Emirates (UAE), Bahrain and Egypt imposed an embargo on Qatar in 2017, in a row that was resolved early last year.

Erdogan was in Qatar for the opening game of the football World Cup on Sunday, while Turkish finance minister Nureddin Nebati met his Qatari counterpart Ali bin Ahmed Al Kuwari last month.

Turkey's finance ministry has so far borrowed $9bn in 2022, of the $11bn foreign borrowing foreseen for the year.

The ministry foresees $10bn foreign borrowing for 2023, but it can bring forward its debt issuances when needed for earlier financing.

Ankara already has a total of $28bn in currency swap deals with the UAE, China, Qatar and South Korea and bankers calculate around $23bn-$24bn are already in the Turkish central bank's reserves.

Instead of swap deals, Turkey's central bank has recently preferred depo accounts, which involves dollars or euros entering the system instead of local currencies.

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