The European Bank for Reconstruction and Development (EBRD) will pump €1.5 billion (£1.32 billion) into Turkey this year, it has now been revealed.
The EBRD is owned and funded by several countries, including Turkey, as well as the European Union and the European Investment Bank.
It was founded in 1991 to increase market economies in central and eastern Europe but has since expanded its influence in north Africa and central Asia.
EBRD president Suma Chakrabarti announced the investment during a trip to Turkey last week, during which he met and praised President Erdogan.
During the trip he told President Erdogan: “We look to you for even more leadership on innovation and investments that are both sustainable and inclusive.”
And in an additional statement, the bank said: “The EBRD is a major investor in the country. Since 2009, the Bank has invested €10 billion in various sectors of the Turkish economy with almost all investments in the private sector.
“These are combined with support for policies which help modernise the country’s economy and build up its resilience.”
During the trip Mr Erdogan said Turkey’s growing partnership with the EBRD was one of “exceptional cooperation”.
He said: “Since I last met EBRD President Chakrabarti at the Bank’s annual meeting in 2013 which we hosted here in Turkey, we have seen our relationship develop into an exceptional cooperation.
“Having skilfully assessed the country’s potential, the EBRD believes in Turkey. Its investments here are performing in a stellar way and its commitment to Turkey proves that our relationship is very productive.
“The government reform programme and the EBRD’s priorities in the country are aligned which provides for solid cooperation. With the creation of a donor fund, we are taking our relationship to the next level.
“Turkey wholeheartedly believes that our funds will provide a great return on investment for the benefit of people.”
The EBRD says it rewards countries which “commits to and apply the principles of multiparty democracy, pluralism and the market economy”, as well as environmental protection.
In November Mr Chakrabarti praised Turkey as achieving “considerable success” during the past 15 years.
He said: “The investments of the EBRD are spread over the areas of finance, infrastructure, energy and agriculture. Turkey has achieved considerable success over the past 15 years, changing its growth model as well. The country’s focus has been on technology adaptation and the creation of new technologies “.
But Turkey has been scarred by a harsh crackdown by President Erdogan on journalists, teachers, police officers and others in the country following the unsuccessful but bloody 2016 attempted coup.
This response badly damaged relations with the EU and appeared to have scuppered talks on Turkey’s accession to the bloc.
In September Jean-Claude Juncker warned Turkey was “moving away from the European Union in leaps and bounds”.
He said: “Journalists belong in editorial offices amid heated debate, and not in prison. I appeal today to the powers that be in Turkey: Let our journalists go. And not just our journalists.”
And he called for an improvement in democratic processes in Turkey, who he said was “pulling up the drawbridge”.
(Additional reporting by Monika Pallenberg.)