The public-private partnership (PPP) model has become a prominent form of public investment in Turkey during the 17-year rule of the Justice and Development Party (AKP), used in key projects such as motorways, airports, hospitals and energy procurement. Yet the multibillion-dollar contracts remain opaque even though they contain major government guarantees for the companies involved, including on profits and foreign loan liabilities. How much burden the guarantees bring on the budget remains unclear, and even the Court of Accounts, the country’s top public auditor, appears to be at a loss.

Most of the PPP contracts were signed in the 2011-2017 period on the assumption that robust economic growth would continue and the Turkish lira would remain stable, but a severe currency crisis hit Turkey last year, sending the economy into recession. Though the contracts have already placed a hefty burden on the budget, the funds allocated to such payments remain ambiguous, bundled into general rubrics such as “current transfers” and “capital expenditures.” 

Most PPP contracts have been signed for 25 years, meaning a long-term uncertainty on their burdens on the budget and potential impact on budget deficits. Public liabilities could emerge also from government guarantees on foreign loans used by the companies in the projects, which amount to $17.2 billion. 

In the presidency’s annual program for 2020, the status of the PPP projects is summarized as follows: “Four main [PPP] models are being implemented, including build-operate-transfer, build-operate, built-lease-transfer and transfer of operating rights. Using those models, implementing contracts have been signed for 246 PPP projects from 1986 to June 2019. Their investment value reaches $67.5 billion in 2019 prices. The transport sector ranks first, with an investment value of $41 billion, followed by the energy sector with $11.9 billion and the health sector with $11.5 billion. As of now, 218 projects have become operational, while 28 projects continue to be carried out.”