Brad Setser@Brad_Setser
Nov 25, 2022
13 tweets
The ability of Turkey's President Recep Tayyip Erdoğan to get financing from “friendly countries” is really quite impressive -- even countries that themselves aren't exactly friends have lent large sums to the CBRT ...
1/
Today's news is that the Qataris may augment their existing $15 billion in support (via a swap line) with an additional $8-10 billion (including the purchase of a Turkish eurobond, which would deliver USD not just QAR)
2/
reuters.com/world/middle-e
The Qataris are more than keeping pace with the Saudis, who are in talks for only $5 billion (structured as a deposit at the CBRT)
ft.com/content/ae8531
The Saudis joined the Russians, who had to take a more convoluted path to get money to Turkey -- Gazprombank lent $7b to Rosatom, which transferred the funds to its Turkish JV (they then were placed in Turkish deposits/ dollar bonds)
middleeasteye.net/news/russia-tu
The Russians joined the Emiratis, who have a $5 billion swap with the CBRT
bloomberg.com/news/articles/
And the Emirati swap (from early 2022) kept pace with China, which augmented its swap to $6 billion in the summer of 2021 ...
reuters.com/article/turkey
Korea hasn't wanted to lose out commercially to China -- in October, the CBRT drew $780 million (around TL 14.5 billion) from its $2b swap line with Korea ...
7/
dailysabah.com/business/finan
Even the Azeris (no friends of Russia) have provided $1 billion through their state oil company.
And I am still trying to figure out the additional $2 billion deposit from a country to be named later ...
(in the July BoP I think, so it is real)
8/
External fx liabilities (including $23-24b per Reuters from the drawn swap lines) are now equal to about half of Turkey's reported liquid fx reserves (I am leaving the gold out)
9/
And the CBRT has another $50b or so in swaps with the domestic banks (off balance sheet FX liabilities) and over $80b in on balance sheet liabilities to the domestic banks (dollar deposits as part of the banks reserve requirement, etc). The CBRT's fx liabilities are massive
10/
Unsurprisingly, the CBRT now actually wants "real" fx (dollars and euros) from deposits, not swaps that inflate stated reserves with difficult to use currencies (Qatari riyal, UAE dirham)
11/
reuters.com/world/middle-e
Erdogan has lined up a substantial amount of new funding it seems, even relative to Turkey's $40 billion current account deficit.
Combine the new deposits with soft capital controls, and Turkey doesn't yet look to be close to running of fx
12/
mei.edu/publications/l
But sorting out all the geopolitical chits isn't going to be easy ...
(and at some point Turkey presumably will exhaust the financial patience of its new non-market creditors)
end/
Brad Setser
@Brad_Setser
CFR senior fellow. Views are my own. Retweets are not endorsements. Writes on sovereign debt and capital flows.
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