Last Updated on July 14, 2024 by Ideal Editor
Turkey’s Removal from the Grey List expected to boost foreign investments
Turkey’s removal from the grey list by the Financial Action Task Force (FATF) is anticipated to draw in more foreign investments into the country. On June 28, FATF declared that Turkey has been removed from the “grey list” of nations requiring special scrutiny. FATF recognized Turkey’s efforts to enhance its anti-money laundering and combating the financing of terrorism as “significant progress,” leading to the country no longer being under increased monitoring.. The Finance Ministry stated that this outcome will boost confidence in the financial system and support the government’s program objectives.
In 2021, the international watchdog organization downgraded Turkey to the “grey list” as part of its dedication to combating money laundering. Mohamed Daoud, Industry Practice Lead at Moody’s, asserts that this development is poised to enhance Turkey’s global standing and has the potential to strengthen foreign investment and relations with European and U.S. institutions. Local analysts confidently anticipate that FATF’s decision will result in a substantial increase in both foreign direct investments (FDIs) and portfolio investments in Turkey.
Çağlar Toros, a strategist at İnfo Yatırım, expressed that the removal from the list was anticipated, but there were still some uncertainties surrounding it. Toros added that compared to other nations on the grey list, Turkey is significantly more developed. However, some foreign funds hesitated to invest in Turkey while it was on the list. He mentioned that following FATF’s decision, an increase in foreign capital inflows should be expected.
FATF’s Decision
Cemal Demirtaş at Ata Yatırım concurred that the removal from the grey list is a significant development that could boost foreign direct and portfolio investments. Demirtaş stated that the grey list issue had been a topic of concern since the beginning of the year, and FATF’s decision is a positive move in terms of foreign fund inflows and its long-term impact on the Turkish economy.
Seyit Ardıç, the president of the Ankara Chamber of Industry (ASO), commented that the removal from the grey list will ease the additional burden on companies engaged in foreign trade, reduce scrutiny, and ultimately help increase exports.
In April, Turkey attracted FDI worth $1.3 billion, with inflows totaling $2.75 billion in the first four months of the year. Portfolio investments recorded a net inflow of $5.78 billion in January-April. Last year, FDI inflows to Turkey amounted to $10.6 billion, down from the previous year’s $13.7 billion. In 2007, Turkey saw record FDI inflows at $22 billion. Since 2002, total FDI inflows to Turkey have exceeded $266 billion.
FAQs: Turkey’s Removal from the Grey List
- What does it mean for Turkey to be removed from the “grey list”?
Turkey’s removal from the “grey list” by the Financial Action Task Force (FATF) signifies that the country has made significant progress in improving its anti-money laundering and combating the financing of terrorism measures, reducing the need for increased monitoring. - How will this decision impact foreign investments in Turkey?
Experts believe that being off the grey list will enhance Turkey’s international reputation and lead to increased foreign direct investments (FDIs) and portfolio investments, as foreign funds are more likely to invest without the concerns that come with grey list status. - What were the reasons for Turkey’s initial downgrade to the grey list in 2021?
Turkey was downgraded to the grey list due to concerns related to money laundering and the financing of terrorism, necessitating increased scrutiny from international financial watchdogs. - What do analysts expect in terms of economic benefits following this removal?
Analysts anticipate that the removal from the grey list will boost confidence in Turkey’s financial system, increase foreign capital inflows, support government objectives, and potentially lead to higher exports due to eased scrutiny on companies engaged in foreign trade. - Are there any lingering concerns despite this positive development?
While the removal from the grey list is seen as a significant achievement, some experts, like Çağlar Toros, mention there are still uncertainties that may affect future investments, emphasizing that Turkey is more developed compared to other nations previously on the list.
