The European Bank for Reconstruction and Development (EBRD) shared on Tuesday details of its investment strategy for Türkiye covering the period of the next five years, until the end of 2029.
The bank has defined four key areas of investment priorities in the country: intensifying green transition, boosting the development of human capital, increasing Türkiye’s global competitiveness and strengthening the country’s infrastructure and regional integration.
In the last five years, the bank has delivered nearly 10 billion euros ($10.6 billion) for its investment goals under the previous country strategy, helping to drive significant progress in Türkiye’s private sector with regard to green investments, digital transformation and inclusive policies, it said.
In 2023 alone, the EBRD invested a record 2.5 billion euros in the country, boosted by the bank’s 1.5 billion euro support package for the earthquake-affected region.
Building on a strong track record, the EBRD will channel investments and policy dialogue within the strategic framework, with a strong emphasis on green transition and climate resilience, the bank said.
Priority areas
The key area of investment for the EBRD remains the green transition and climate mitigation, with the bank committed to providing support for increased renewable energy integration, resource efficiency, decarbonization, the sustainability of municipal services, and boosting climate resilience.
The second EBRD priority is defined as Türkiye’s human capital development, with investments seeking to foster greater gender equality and economic and regional inclusion.
The third investment priority is set as boosting Türkiye’s competitiveness through investments that will lead to increased productivity, innovation and stronger governance, according to the bank.
Lastly, EBRD projects will work toward strengthening Türkiye’s infrastructure and regional integration by investing in greater connectivity between transport networks and trade infrastructure, enhancing the quality of digital infrastructure and services, and increasing resilience to natural disasters.
EBRD noted it would work with donors and partners to reintegrate the earthquake-affected regions into the broader Turkish economy with a focus on building back better and providing advisory to affected businesses.
Commenting on the new strategy, EBRD managing director for Türkiye, Elisabetta Falcetti, said: "Over the past 15 years, the EBRD has invested over 20 billion euros in Türkiye’s economy – testament to the country’s importance as one of our primary markets."
"By fostering robust partnerships with the private sector and engaging in comprehensive policy dialogue, we will continue to support Türkiye’s evolution as a global economic player," she added.
Speaking to Anadolu Agency (AA), Falcetti explained that prioritizing green transformation means, in practice means prioritizing projects that promote renewable energy integration, resource efficiency and decarbonization.
In addition, Falcetti stated that they have expanded their focus to include sustainable municipal services and will strengthen their collaboration with local governments to increase climate resilience in cities in Türkiye.
"Designating infrastructure and municipal services as an investment priority is also in line with our commitment to support reconstruction efforts in earthquake-affected regions, ensuring that these regions become greener and more resilient to climate risks," she said.
Furthermore, she pointed out that green standards and requirements will play a key role in shaping Türkiye's trade relations, particularly considering that half of Turkish exports go to the European Union.
EU carbon mechanism
"The projected costs of the EU's Border Carbon Adjustment Mechanism (CBAM) for Türkiye could range from 138 million euros in 2027 to 2.5 billion euros in 2032, with energy-intensive sectors such as iron, steel and cement particularly affected," the EBRD official said.
"This will likely increase the production costs of private sector companies and pose a risk to their global competitiveness," she added.
"In this context, we believe that taking proactive measures will increase the competitiveness of Turkish industry in export markets, reduce dependence on costly imported fossil fuels and create new market opportunities."
In a recent report, the EBRD shared its growth forecast for Türkiye, expecting growth of 2.7% in 2024 and 3.0% in 2025.
The EBRD is among Türkiye’s key investors, with more than 20.3 billion euros committed through 455 projects and trade finance limits since 2009, most of it in the private sector.