Earthquake-resistant housing schemes in Istanbul and Eskisehir are being held up by the refusal of Turkey's treasury to provide a guarantee for a long-term Japanese loan, according to the Turkish Mass Housing Administration (TOKI) .
"The loan costs the Treasury zero, and there is no default risk," says Kamil Ugurlu, president of the public TOKI, which has been waiting for Treasury approval for about nine months. Without it, the loan would cost more.
The Treasury is reluctant to provide guarantees for public sector borrowing, which it fears might disrupt the ongoing anti-inflationary program. Moreover, its stand-by deal with the International Monetary Fund (IMF)
limits its ability to provide financing guarantees. Earlier this year a debate heated up between the Treasury and the Energy Ministry over a $5 billion nuclear power plant project that was canceled because the
Treasury deprived Turkish utility Electrical Generation and Transmission Corporation (TEAS) of its financing guarantee.
Nevertheless, Ugurlu noted, "We are not like some municipalities, universities or public institutions that default on Treasury-guaranteed loans." TOKI seeks to finance its quake-resistant housing projects with a $135 million Japanese loan at Libor (London Interbank Offering Rate) plus 2.2 percent, for a term of 10 years including a two-year grace period. "These houses will be sold by the time the term expires, and the
state will not subsidize them," Ugurlu said.
"TOKI is merely brokering the loan. Private companies will build the houses and we will sell them. So there are no complications about repaying the loan."
The projects comprise 500,000 houses in the Halkali district of Istanbul, which was destroyed by last year's killer earthquake, and another 500,000 in Eskisehir. The buildings are designed on the American model with gardens and only a few stories.
Not only would the loan increase the quake-resistant housing supply, Ugurlu said, but it would revive the construction and housing market. "We insist that the Treasury guarantee this loan." — (Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)
