A new regulation is in the works to help build-operate-transfer (BOT) projects manage the difficulties they face in their finances. The goal of the regulation is to overcome the hesitations of foreign creditors due to the COVID-19.
The regulation was included in a new legislative proposal consisting of 12 items submitted by the AK Party. The Ministry of Transport and Infrastructure will provide collateral security for BOT projects whose finances come from abroad and the Treasury is expected to undertake the finance deficit of Turkish State (TCDD).
According to the new regulation, the Ministry of Transport and Infrastructure can also be a party to agreements taking on the debts of public enterprises affiliated to the Ministry within the scope of BOT projects whose tenders were made after March 15, 2020 but whose agreements haven’t been signed yet. In this way, the Ministry will be able to provide collateral security for the financing to be provided by foreign creditors.
The security to be provided by the Ministry will not be subject to the limitations included in the law on Regulating Public Finance and Debt Management. Article 5 of the law limits the net debt utilization with the difference between initial budget allocation and estimated revenue.
The validity period of the regulation on undertaking of TCDD’s finance deficit by the Treasury has been extended to the end of 2023. The President has been authorized to extend this period for another 10 years. Moreover, the TCDD’s public service obligation period has also been extended to the end of 2023 by virtue of the fact that private railway operators did not show interest in taking not on passenger transportation. The President has also been also authorized to extend this period for another 10 years.
Extending mobile phone network coverage and internet service infrastructure are also included in the proposal. The relevant amounts in the Ministry of Transport and Infrastructure’s budget will able be transferred to the Information and Communication Technologies Authority’s budget this year in order to make universal service payments.
ECONOMIC REFORM PACKAGE TO BE ANNOUNCED ON MARCH 9
Following the Human Rights Action Plan announced last week, economic reforms forming the second basis of the reform package will be announced by President Erdogan on March 9. The economic reform package is expected to include two titles, macroeconomic stability reforms and structural reforms. Public finance, fight against inflation, finance sector and fight against current account deficit will create actions within the scope of macroeconomic stability while investments, incentives and competition policies are expected to form the structural policies.