September 8, 2017 / 10:35 AM / 10 months ago

Erdogan says Turkish wealth fund to be reorganised after head dismissed

ANKARA (Reuters) - President Tayyip Erdogan said on Friday Turkey would reorganise its $40 billion sovereign wealth fund after dismissing the organisation’s chairman over its failure to meet targets since it was founded a year ago,

Turkish President Tayyip Erdogan addresses his ruling AK Party (AKP) members during a meeting at his party headquarters in Ankara, Turkey, September 6, 2017. REUTERS/Umit Bektas

Mehmet Bostan was removed as chairman of the fund as of Thursday and the head of the Borsa Istanbul stock exchange, Himmet Karadag, was named as acting chairman, a senior official earlier told Reuters.

“The desired goals and progress were not achieved in the wealth fund,” Erdogan told reporters ahead of a foreign trip. “We need to reorganise the wealth fund and we will take that step after the Kazakhstan visit.”

The president said he discussed the issue with Prime Minister Binali Yildirim, who is responsible for the fund, and they “decided it could not go on this way”.

Reuters was not immediately able to reach Bostan or Karadag for comment.

The fund was set up last year by the government to develop and increase the value of Turkey’s strategic assets and provide resources for investment. Historically, sovereign wealth funds have been set up with oil producers such as Norway or Gulf states, using money from energy exports for investment.

But Turkey imports almost all of its energy and some economists have said the government could better spend money paying down a national debt that runs at roughly 30 percent of economic output.

The government has transferred stakes worth billions of dollars of state assets, including stakes in flag carrier Turkish Airlines, major banks and fixed-line operator Turk Telekom.


The government has said it wanted the fund to manage $200 billion in assets as soon as possible. One senior official told Reuters this year that the fund could be used to secure financing for major infrastructure projects.

Ratings agency Standard & Poor’s has said the fund was more akin to a national development bank, with its design suggesting an effort to create a funding vehicle by leveraging up assets.

Under Erdogan, who supports using large-scale projects to bolster the construction industry and domestic demand, Turkey has built high-speed railways, suspension bridges and undersea tunnels.

Other planned mega-projects include one of the world’s biggest airports in Istanbul and a huge canal that would render a large chunk of the city an island.

Some analysts and opposition politicians have expressed concern that the fund would lead to greater political control over state assets and a decrease in outside oversight.

Additional reporting by Daren Butler, Ezgi Erkoyun and Tuvan Gumrukcu; Writing by David Dolan; Editing by Ralph Boulton

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