In times of economic crisis, the cost of recovery is often borne by taxpayers at the end of the day. Turkish taxpayers, who are no stranger to such injustice, are made to shoulder the burden again as Ankara scrambles to contain the economic crisis bruising the country since 2018. To clear the road wrecks the crisis has caused, the government is intervening both directly and indirectly, but, more often than not, its measures enlarge the gaps in public finances, billing the ultimate cost to taxpayers.

Public banks have been used in efforts to curb foreign-exchange prices, selling foreign currency at below-market prices. They have been tasked also with financing projects, including non-feasible ones, acting largely at the behest of President Recep Tayyip Erdogan. Public lenders Ziraat and Halk have provided the loans for Istanbul’s posh new airport after its builders failed to secure funds from foreign creditors. Even the acquisition of Turkey’s largest media group, Dogan, by the pro-government Demiroren group was financed through a Ziraat loan.

Under the worsening impact of the crisis, however, collecting on such loans issued on instructions from above has become increasingly difficult. With their balance sheets crippled by bad loans, public banks — placed in a sovereign wealth fund chaired by the president — have become largely incapable of lending. As a result, they have been provided with fresh capital, first via the Unemployment Fund and, most recently, through an injection of 3.7 billion euros by the Treasury, making them fit for new rescue operations, the first of which aims to salvage the construction sector.

The plan was first brought up April 10 by Treasury and Finance Minister Berat Albayrak as he announced measures to tackle the economic crisis. Albayrak said two separate funds would be set up for the debt-ridden energy and construction sectors “to clear bad assets via debt-shares swap and improve the balance sheets of banks.”