Saudi Arabia committed to deposit $5 billion into Turkiye’s central bank through the Saudi Fund for Development, according to a statement issued by the fund on Monday.
The move is “a sign of the Kingdom of Saudi Arabia’s commitment to helping Turkiye’s economic initiatives,” according to the statement.
The development comes as Turkiye battles to recover from years of high inflation and a recent series of devastating earthquakes that killed over 46,000 people and displaced millions.
After several years of policy involvement by Turkish President Recep Tayyip Erdogan, who delayed hiking interest rates despite growing inflation, Turkiye’s inflation remains above 55%, and its currency is hanging at record lows versus the dollar.
Rising global oil prices, the Covid-19 outbreak, and Turkiye’s expanding current account and trade deficit have all combined to put the Turkish economy in jeopardy, and many of the country’s 85 million residents can now hardly afford basic necessities.
Significantly, Saudi Arabia’s action suggests an improvement in ties between the two nations, both of which are major powers in the Muslim world. According to the Saudi Fund for Development, the agreement “not only demonstrates the two nations’ strong collaboration and historical links, but also the Kingdom of Saudi Arabia’s determination to help Turkiye’s efforts to build its economy.”
Saudi Arabia has also offered financial assistance to other struggling economies in the region, but has lately turned down requests from Pakistan and Egypt, demanding that they first implement specific changes. This appears not to be the situation with Turkiye.