Saudi Arabia deposits $5bn in Turkey's central bank

Funds will help bolster the country's economy and reflect the kingdom's support for the Turkish people

Ahmed Al-Khateeb, Saudi Arabia's Minister of Tourism and SFD chairman, with the Central Bank of Turkey Governor Sahap Kavcıoglu. Photo: Saudi Fund for Development

Saudi Arabia has deposited $5 billion at the Central Bank of Turkey through the Saudi Fund for Development.

Ahmed Al-Khateeb, the kingdom's Minister of Tourism and chairman of the Saudi Fund for Development, signed an agreement with the governor of the Central Bank of Turkey, Sahap Kavcioglu, the fund said on Monday.

The deposit was made on instructions of King Salman and Crown Prince Mohammed bin Salman.

The move is "a testament to the close co-operation and historical ties" between the two countries and of Saudi Arabia's "commitment to supporting Turkey's efforts to strengthen its economy and to promote social growth and sustainable development", the fund said.

The funds will help bolster the Turkish economy and reflect Saudi Arabia's "strong support for the Turkish people and its confidence in the future of the Turkish economy".

Turkey's central bank's gross reserve assets fell 2.6 per cent to $125.3 billion in January 2023 from the previous month, according to the regulator's website.

The central bank's foreign currency reserves decreased by 10.9 per cent to $67.2 billion in January 2023 and gold reserves increased 10.3 per cent to $50.6 billion.

Saudi Arabia's deposit comes after 7.8-magnitude earthquake on February 6, followed by more than 7,500 aftershocks and two additional quakes, inflicting the largest disaster on the country in more than 80 years.

About 50,000 people were killed and more than 105,000 buildings damaged.

Turkey's reconstruction and recovery costs may exceed $68 billion as a result of the disaster, the World Bank estimates.

The country sustained an estimated $34.2 billion in direct physical damage from the February 6 disaster, equivalent to about 4 per cent of its 2021 gross domestic product, the Washington-based lender said in its 50-page rapid damage assessment report last month.

The estimate does not represent the approximate cost of indirect or secondary effects on Turkey’s economy and is not an estimate of the impact on the growth of its economy, it said.

GDP losses associated with economic disruption will also add to the cost and further aftershocks are expected to increase the cost of damage over time, the bank said.

Economic damages are estimated in excess of $20 billion by Verisk while JP Morgan put the cost at about $25 billion and Karen Clark and Company's estimate is about $20 billion.

Moody’s RMS, a catastrophe risk modelling and solutions company, estimates economic losses will exceed $25 billion, with the road to recovery expected to take several years.

The Turkish Enterprise and Business Confederation has published an estimate of $84 billion, based on a comparison with the country's 1999 earthquake in Izmit.

In 2021, the UAE formed a $10 billion fund to support investments in Turkey following talks between President Sheikh Mohamed and Turkish President Recep Tayyip Erdogan.

That fund is focused on increasing support for the Turkish economy and will focus on sectors such as energy, health and food.

Last week, the UAE and Turkey signed a comprehensive economic partnership agreement (CEPA), to boost trade between the two nations.

The agreement, which is expected to come into effect from the middle of this year, will create 25,000 highly skilled jobs in the UAE and 100,000 jobs in the Turkish market in the next 10 years, Dr Thani Al Zeyoudi, Minister of State for Foreign Trade, told The National.

As part of Operation Gallant Knight 2, the UAE's humanitarian mission to help the quake-hit countries, it sent 194 relief flights and delivered 5,514 tonnes of aid.

An army of volunteers in the UAE have also lent a vital hand to the continuing relief effort.