Turkey has announced that it has reached an agreement with Gazprom, the Russian company, to defer payment for some imported natural gas after experiencing a price spike last year.
Turkey seeks solutions to reduce energy import costs
Energy Minister Fatih Donmez said that negotiations were underway, including the deferral of payments, and that the agreement was reached in coordination with the Ministry of Treasury and Finance. However, Donmez did not specify a specific figure for the deferred payment, nor did he indicate when the agreement was reached.
Last year, Turkey ‘s current account deficit increased significantly, reaching $48.75 billion, largely driven by an increase in energy import costs. That was nearly double the average of recent years, with energy prices softening as markets adjusted to the disruption caused by Russia’s invasion of Ukraine.
The agreement with Gazprom could help Turkey improve its current account balance
Despite the lack of detail in the announcement, it is clear that the deal was made to help balance Turkey’s current account. Turkey has prioritized investment and exports, while keeping interest rates low, in an effort to reverse its chronic current account deficits and move into surplus under its economic program.
Since January, the cost of energy imports has begun to fall, and government data showed a 19 percent year-over-year decline in the first four months of 2023. The agreement with Gazprom to defer payment for some of its natural gas imports should help Turkey further improve its current account balance.
Indeed, Turkey has reached an agreement with Gazprom to defer payment for some of its natural gas imports after a price spike last year. Although the details of the deal are not fully disclosed, it is clear that the agreement was reached to help balance Turkey’s current account, which has been negatively impacted by rising energy import costs.
