The European Bank for Reconstruction and Development (EBRD) has invested 2.2 billion euros ($2.3 billion) in Türkiye so far this year, according to its president, bringing the total investments in the country to over $22 billion.

EBRD President Odile Renaud-Basso arrived in Türkiye this week on a visit that included a meeting with President Recep Tayyip Erdoğan to discuss future investment opportunities and how the bank can support the country's projects and strategic priorities.

The EBRD has been investing in Türkiye since 2009. The country has become the bank's largest investment destination.

"This year, we've already signed 2.2 billion euros of investment, and with some time still left before the year ends, we expect to come close to last year's investment level of 2.5 billion euros, which was our highest annual investment in Türkiye," Renaud-Basso told Anadolu Agency (AA).

About 50% of EBRD's investments are directed toward the green sector, with over 60% of these investments incorporating a gender component aimed at increasing female participation in the workforce, she noted.

Macroeconomic policy changes

Renaud-Basso praised the changes in Türkiye's macroeconomic policies, noting progress in the country's economic rebalancing.

"High inflation causes significant uncertainty and distortions, and is unsustainable in the long run. It presents a major risk to the economy, so adjusting the macroeconomic framework was crucial, and we see positive progress," she said.

She added that inflation is on a downward trajectory, with Türkiye's annual inflation expected to fall to around 40% by the end of the year, but emphasized that it remains a priority to continue the decline.

During her visit, Renaud-Basso also held "productive" talks with Treasury and Finance Minister Mehmet Şimşek and the Central Bank of the Republic of Türkiye (CBRT) Governor Fatih Karahan.

"There's a clear determination to remain on course, and this is crucial for creating a favorable environment for sustainable economic growth," she said.

While acknowledging the short-term challenges of tightening monetary policies, Renaud-Basso stressed that these steps are essential for building a sound economy based on solid fundamentals that will enable long-term growth.

Green energy focus

Renaud-Basso also expressed support for Türkiye's commitment to expand its wind and solar capacity by 90 gigawatts by 2035, calling it a "much welcome commitment" and a "very positive" step.

Türkiye's long-term energy strategy includes boosting renewable energy capacity, improving energy efficiency, increasing nuclear power generation, and adopting technologies like hydrogen and battery storage, alongside investing in critical minerals.

By 2035, Türkiye aims to raise its combined wind and solar energy capacity from 30 gigawatts to 120 gigawatts. These efforts will require at least $80 billion in investments, according to Energy and Natural Resources Minister Alparslan Bayraktar.

"Given the geopolitical challenges, energy security is more crucial than ever. Developing renewable energy plays a key role in this strategy, and it is increasingly competitive due to the falling costs of renewable energy," Renaud-Basso said.

She added that the development of the electricity network is vital to absorb the expanded renewable energy capacity and that international institutions would support these efforts.

Decarbonizing key sectors

Renaud-Basso highlighted the EBRD's collaboration with Türkiye's Industry and Technology Ministry to decarbonize sectors like steel, aluminum, fertilizers and cement, which are vital to the country's manufacturing base.

This initiative aims to boost the competitiveness of Turkish companies in foreign markets and will involve private investors and concessional funds to support energy efficiency improvements, technology integration and decarbonization efforts.

Global uncertainties

On global economic uncertainties, Renaud-Basso cited geopolitical tensions, including Russia's war in Ukraine and Middle Eastern conflicts, which contribute to investment challenges.

She noted the potential risks for Türkiye due to Europe's economic slowdown despite strong trade relations, and warned that protectionist policies and trade wars could harm global growth.

"I hope international cooperation will prevail, and countries will find solutions to avoid a damaging protectionist trade war," she said.

Renaud-Basso mentioned the EBRD's $1.6 billion investment program for Türkiye's southeastern region, which was struck by devastating earthquakes in February 2023, with $1.3 billion already allocated to various projects.

The program may be extended depending on further needs, she added.