Turkish President Recep Tayyip Erdogan is seeking closer financial ties with Russia as he tries to stabilize the troubled economy ahead of next year’s elections, Bloomberg reported Friday, citing Turkish officials.
Turkish officials, speaking on condition of anonymity because confidential information was discussed, said one of Erdogan’s goals was to lower prices and pay for energy imports in lira. Turkey’s natural gas bills are set to top $50 billion this year, and Russia is its biggest energy supplier.
Senior Turkish officials familiar with the matter noted that during a meeting with Russian President Vladimir Putin in Uzbekistan on Friday, Erdogan sought a 25 percent discount on natural gas prices and agreements that Turkey could pay part of its bill in lira. .
People familiar with Moscow’s position did not confirm talks about lowering gas prices for Turkey.
On Friday, Putin said a previous agreement with Ankara to pay for a quarter of its imported gas in rubles would come into effect soon, and Putin made no mention of receiving payments in lira or offering a discount.
Turkey is expected to run a $47 billion deficit later this year, the lira’s weak performance is making debt coverage more expensive, and rising global energy prices have added an additional burden, according to Bloomberg.
Any help to prop up the economy could give a significant boost to Erdogan, whose opinion poll ratings are hovering at historic lows and inflation accelerating above 80% less than a year before elections are scheduled for next June.
On the other hand, Turkish bank shares posted their biggest drop in three days and the gains they have made in recent months have dwindled, Bloomberg reported on Friday.
The agency said the Istanbul Stock Exchange Banking Index, after rising 150% in about two months, has fallen 24% since Monday’s close, resulting in a 94 billion lira ($5.1 billion) loss in market value.
The agency indicated that the decline was due to US inflation data.
Turkish bank shares have risen this year, thanks in part to strong earnings forecasts. Politicians lowered interest rates, which led banks to increase their investment in government bonds, despite inflation at 80%.
