Project Description
This summary covers an application by J.P. Morgan SE for coverage of a proposed short-term loan facility, focused on supporting trade, to VakifBank (VB). The Multilateral Investment Guarantee Agency (MIGA) would provide the lender with up to $257.3 million in trade finance guarantees against the risk of non-payment by VB.
The MIGA-covered facility would be used to provide short-term loans for trade-related payments, aimed mainly at supporting imports of (i) steel scrap to be recycled in Türkiye; and (ii) wind turbines and related parts. The tenor of each loan to be made under the facility is up to 367 days.
Environmental Categorization
The MIGA-covered facility will be used by VB to on-lend to their clients for trade-related activities. These transactions pose minimal environmental and social (“E&S”) risks and impacts and as such, the project has been categorized as ‘FI-3’ under MIGA’s Policy on Environmental and Social Sustainability (2013).
The applicable E&S requirements for this Guaranteed Transaction are the MIGA Exclusion List, applicable E&S laws in Türkiye and sector specific screening, as applicable. VB will be responsible for screening the transactions against the MIGA E&S requirements; VB will also be required to comply with the labor standards set forth in MIGA Performance Standard 2: Labor and Working Conditions.
Development Impact
The Guaranteed Transaction is expected to contribute to Türkiye’s national economic strategy to support its export sector and transition to an environmentally sustainable economy. The steel recycling sector plays a key role in supporting the export-oriented steel sector in an environmentally sustainable way by reducing reliance on primary iron raw materials and contributing to the efficient use of resources. Additionally, the country continues to increase its installed wind onshore power capacity. The import of wind turbine parts would support local energy producers in developing additional wind power capacity, thereby supporting the government’s transition to renewable energy and helping to reduce dependence on imported energy sources.
The Guaranteed Transaction is aligned with the priorities set under MIGA’s FY24-26 Strategy and Business Outlook, as it will support the expansion of trade finance. In addition, the Guaranteed Transaction is consistent with MIGA’s strategic focus of supporting the transition to an environmentally sustainable economy.
