How Sincere Is Qatar's Pledge to Support Turkey's Deteriorating Economy?

Published June 12th, 2019 - 10:23 GMT
Analysts predicted that even if the Qatari pledge was real, the 15 billion it promised will not be enough to resolve the ailing economy.
Analysts predicted that even if the Qatari pledge was real, the 15 billion it promised will not be enough to resolve the ailing economy. (Shutterstock)
Highlights
As the lira continues to crumble, analysts have even started to question the usefulness of the Qatari pledge, if it exists
Turkish analysts have started to question Qatar’s alleged support to their country’s economy as it continues to plummet and as the lira continues to weaken against the dollar.

Doha announced in August 2018 that it would be backing Ankara with 15 billion dollars, but the pledge has yet to see fruition, raising questions about Qatar’s sincerity.

The Takvim newspaper, which is close to President Recep Tayyip Erdogan, openly accused Qatar of carrying out a “maneuver”, doubting that it was ever sincere in supporting Ankara.

It warned that political statements of support from Doha could be a “maneuvers that are not followed up by real measures to prop up the Turkish economy,” labeling the 15-billion dollar pledge as “fake.”

As the lira continues to crumble, analysts have even started to question the usefulness of the Qatari pledge, if it exists. They highlighted the negative predictions surrounding the economy, stemming from Erdogan’s ongoing attempt to balance relations between Washington and Moscow. They also pointed to his internal crises, most notably his municipal elections loss in Istanbul, as well as the mounting foreign debt.

The electoral loss compounded the economic crisis, with the lira losing 2 percent of its value. As it stands, the dollar is trading at 5.80 Turkish liras.

Analysts predicted that even if the Qatari pledge was real, the 15 billion it promised will not be enough to resolve the ailing economy.

In an attempt to prop up the economy, the Treasury borrowed some 7.4 billion Turkish liras ($1.3 billion) from domestic markets, according to an official statement on June 10.

The Treasury and Finance Ministry said the first auction was held for 12-month zero coupon bonds (new issuance) totaling 5.25 billion liras ($910 million).

The total tender for the bonds was 6.86 billion liras ($1.2 billion) with a 76.5% accepted/tendered rate.

The government bonds will be settled on June 12 and mature on June 10, 2020, while the interest rate of the 364-day bonds was accepted at a 24.45% term rate.


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