Türkiye Gets $2.8 Billion Green Loan for Nakhchivan Railway

Türkiye has secured €2.4 billion ($2.8 billion) in international funding to develop the Kars-Igdir-Aralik-Dilucu Railway Project, an ambitious infrastructure plan that aims to boost regional railway connectivity. A central objective of this initiative is to establish a direct rail link between Türkiye and the autonomous Nakhchivan region of Azerbaijan, marking a significant milestone in regional integration efforts. Announcing the deal, Treasury and Finance Minister Mehmet Simsek described it as a pivotal move in enhancing the country's strategic transportation routes.

A Pillar of Türkiye’s Medium-Term Development Vision

This landmark financing arrangement is in line with Türkiye’s Medium-Term Program, which emphasizes the expansion of public infrastructure to support broader economic and social growth. The program envisions infrastructure not only as a driver of economic output but also as a catalyst for enhancing Türkiye’s connectivity with neighbouring regions. By securing this funding, the government reinforces its long-term commitment to improving national logistics and regional trade corridors.

Green Financing for Sustainable Infrastructure

The financing package was classified as green funding, reflecting its alignment with sustainability and environmental goals. The agreements were signed between the Turkish Treasury and a consortium of international financial institutions led by MUFG Bank. The use of green financing underscores Türkiye’s intention to integrate climate-conscious practices within its infrastructure development strategies, particularly in transportation, which remains a critical sector in reducing emissions and promoting cleaner growth.

Global Financial Institutions Rally Behind the Project

The structure of the financing deal involves a coalition of global export credit agencies and multilateral insurers. Sweden’s EKN and Austria’s OeKB are among the key agencies backing the project. Also contributing is the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a part of the Islamic Development Bank Group. Their participation, along with that of other banks and institutional investors, reflects broad-based international support secured through sovereign guarantees and export credit mechanisms.

Implementation Led by Transport Ministry’s Infrastructure Arm

The General Directorate of Infrastructure Investments, operating under Türkiye’s Ministry of Transport and Infrastructure, has been designated to carry out the railway project. Once completed, the line will provide a direct, efficient, and sustainable rail connection from Türkiye to Nakhchivan. In doing so, it aims to facilitate smoother trade flows and foster deeper economic ties between the two regions while contributing to Türkiye’s long-term goal of becoming a major Eurasian transit hub.

Railway to Strengthen Regional Trade and Market Access

Government officials have framed the railway as more than just a transport link, it is viewed as a cornerstone of an integrated regional development approach. By improving connectivity, the project is expected to provide easier access for production centres in eastern Türkiye and surrounding regions to reach international markets. This boost in logistical capacity is projected to strengthen the region’s economic competitiveness and attract investment.

Türkiye’s Project-Based External Financing Crosses $6 Billion

With this new injection of funding, Türkiye’s total external borrowing for project-specific investments in 2025 has reached nearly $6 billion. This trend illustrates the country’s growing reliance on international partnerships to drive large-scale development initiatives. Such projects, particularly those tied to sustainability and regional cooperation, are increasingly viewed as credible vehicles for long-term growth.

Confidence in Türkiye’s Economic Direction Grows

Minister Simsek underscored the importance of continued access to international capital markets as a sign of renewed investor trust in Türkiye’s economic policy direction. He highlighted that the successful closure of this financing deal demonstrates confidence among foreign lenders and institutions in the country’s macroeconomic program. With more infrastructure initiatives expected to follow, the government is positioning itself to further attract global capital to support its transformation agenda.

Simsek says the sustained inflow of funding reflects global confidence in Türkiye’s economic agenda, adding, “We continue to support infrastructure investments that enhance our country’s competitiveness and productivity, while maintaining close cooperation with international institutions.”