Turkey is mobilizing billions of dollars from pension funds, a sovereign wealth fund and state banks to support the Istanbul Stock Exchange, which plans to reopen today. It was closed last week when investors staged a massive sell-off after a devastating earthquake, sending stock prices plummeting and forcing authorities to suspend operations.

Following a Monday meeting between Economics and Finance Minister Nureddin Nebati with central bank, regulators and state bankers, the government announced that the country’s sovereign wealth fund TVF is implementing an internal mechanism to prop up the country’s stock prices. In case of high volatility, he will intervene by buying large shares with funds that will be allocated for this purpose by state banks.

At the same time, the government is temporarily abolishing the so-called 15% withholding tax that listed companies are required to pay on buybacks of their shares. This measure aims to encourage share buybacks and thus support the Borsa Istanbul 100 index.

As for the role of pension funds, this applies to those that receive contributions from the state in the amount of 30% of the contributions of the insured. According to the new regulation, published yesterday in the official government gazette, they are now required to use at least 30% of this Turkish government money to buy shares.

It should be noted that until now there was a corresponding regulation for pension funds, but it concerned 10% of state contributions. According to a website that tracks and records changes to Turkey’s pension system, the government’s contributions to the funds have reached approximately 50 billion Turkish liras, equivalent to $2.7 billion.

Eventually, according to Mehmet Hertz, head of investment at Ata Portfoy in Istanbul, this new regulation will result in about 9 billion Turkish lira invested in Turkish company shares over the next 10 days.

A wave of share buybacks is already underway, with telecommunications company Turk Telekom announcing a share buyback program and mobile operator Turkcell Iletisim Hizmetleri AS is already increasing its share buybacks. Similarly, state-owned banks Turkiye Halk Bankasi AS and Turkiye Vakiflar Bankasi TAO, as well as insurance company Turkiye Sigorta, have accelerated their own share buyback programs.

Commenting on this, Murat Gulcan, managing director of OMG Capital Advisors in Istanbul, believes that investors will react positively to the government’s statements, but believes that the measures “could interfere with the healthy formation of share prices and subsequently cause big problems.”

To free the Turkish economy from the cost of buying gold, the government is currently suspending imports of the metal. Last year, the Bank of Turkey was the first in gold imports among all the central banks of developing countries. After all, a significant number of Turks have invested in gold to secure their savings and protect them from the breakneck inflation that is around 85%.