world bank turkey partnership: country program...

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World Bank – Turkey Partnership: Country Program Snapshot

March, 2011

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Recent Economic & Sector Developments

Growth & Economic Management

Turkey bounced back from the global economic downturn much faster than many other countries in the region. By the second quarter of 2009 the economy was already growing again. In 2010 growth was more than 8 percent, while unemployment continued to fall. Looking past the general election scheduled for June 2011, Turkey faces the challenge of renewing momentum on supply-side reforms focusing on energy, taxation, labor markets, and the investment climate. Turkey has demonstrated solid fiscal and debt management, and consistent monetary and exchange rate policy. The Government‟s Medium Term Program for 2011-13 is both credible and ambitious, with a focus on fiscal quality. These hold the key to raising Turkey‟s potential growth rate in the medium term, allowing it to build sustainable higher living standards for Turkey‟s young, entrepreneurial population.

Turkish GDP: Year on Year Growth

Turkey was hit hard by the global economic crisis in 2008-9 but demonstrated resilience. GDP fell by 4.7 percent in 2009. The concentration of exports in highly cyclical sectors and reliance on EU markets compounded the impact of the crisis. Low domestic savings and high energy imports made Turkey‟s private sector a high net importer of foreign capital; between 2004 and 2008 the current account deficit averaged 5.2 percent of GDP. External debt financing was so prevalent that at the onset of the

crisis Turkish companies faced high external rollover requirements. The Turkish financial sector also remains relatively shallow, with a high rate of informal supplier credit, which dried up in late 2008. However, the availability of credit is now increasing. Credit given to the private sector increased from 29.6 percent of GDP in 2008 to 32.9 percent in 2009. Since 2001, the story of Turkey’s recent economic management has been one of remarkable turnaround. After a banking crisis in 2001, when GDP contracted by 5.7 percent and the Government undertook an expensive banking recapitalization, the country embarked on a concerted path of structural reforms. These included improved fiscal and public financial management, social security reform, and a completely new framework for macroeconomic management, in which an independent central bank is responsible for inflation-targeting and the lira floats freely against other currencies. These reforms yielded spectacular results following 2001. GDP growth in the five years from 2003 to 2007 averaged nearly 7 percent and poverty fell from 27 percent to 17 percent. EU defined gross public debt fell from 78 percent in 2001 (or 74 percent in 2002) to less than 40 percent in 2008 before increasing to 45.5 percent in 2009 (mainly due to a fall in GDP). Final numbers for gross public debt by the end of 2010 are expected to show a decline back to 42 percent of GDP or below. Key World Bank contributions: Multi-year development policy financing instruments (DPL) targeting macro-economic stability and key economic reforms include the „Restoring Equitable Growth and Employment DPL‟ and the „Environmental Sustainability and Energy Sector DPL‟. The World Bank has also contributed economic memoranda on informality, savings and growth as well as multi-year assessments focused on public expenditure and financial management.

EU Harmonization

Turkey continues to move towards membership of the EU. The process of harmonization with European legislation and regulation is a key anchor in the Turkish reform agenda. Among 35 Chapters of the EU Acquis Communautaire, 13 Chapters have been

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provisionally opened, and one Chapter has been provisionally opened and closed, since negotiation talks began in 2005. The EU‟s 2010 progress report concluded that Turkey has “made progress in meeting EU membership criteria, in particular through the reform of its constitution. However, further results are needed as regards fundamental rights.”

Financial Sector

The Turkish banking sector proved resilient to the effects of the global financial crisis. Due to fundamental reforms carried out after 2001, as well as the thorough professionalization of banking and continued strong banking supervision since then, Turkey‟s financial sector remained highly capitalized and profitable, proving a source of strength during the 2008-9 global crisis. Turkey was the only OECD country where no explicit or implicit public sector support was provided to the banking sector in the wake of the global crisis. Turkish banks had no direct

exposure to sub‐prime mortgages or similar derivative products that could lead to immediate

mark‐to‐market losses. The Turkish banking system relies on a strong and stable domestic deposit base. Loan to deposit ratios are well below 100 percent for the system. Capital adequacy was 19.3 percent at the end of August 2010.

Bank Loans in 2010

Source: World Bank

During 2010, commercial banks’ performance strengthened in line with the economic recovery, but challenges have started to emerge. Non-Performing Loans (NPLs) in the

banking system stood at 4 percent in mid-October 2010 (compared with 5.3 percent at end-2009 and around 3.5 percent pre-crisis) with a broad-based recovery in loan quality. Loan volumes have increased significantly, as annual credit growth exceeded 20 percent by September 2010.Much of this appears to have been fueled by abundant liquidity in international markets, with commercial banks showing rollover rates of over 100 percent of external obligations. Banks appear to be highly liquid, with stable coverage ratios of their external liabilities. Key World Bank contributions: The World Bank has produced an assessment of Turkey‟s investment climate; a survey to analyze the impact of the financial crisis on enterprises in Turkey; and a study into possible routes for the improvement of the Turkish corporate bond market.

Competitiveness & Private Sector Development

Over the last six years, Turkey has taken steps to implement its competitiveness and employment reform agenda. The Government‟s program aims to raise export competitiveness and foreign direct investment by improving the investment climate, enhance the financial sector‟s depth and efficiency, and broaden job creation. Reform efforts slowed somewhat in the wake of the global crisis and challenges remain. The Government‟s 2011 Annual Program states its objective to create a competitive structure for the business environment. It focuses on the development of an enterprise friendly system, in which efficiency is increased and bureaucracy reduced.

Small and Medium Sized Enterprise growth is key to job creation in Turkey. Nearly 80 percent of jobs in Turkey are created by SMEs. Their three biggest constraints to growth are access to finance; the ability to adopt and use knowledge; and the remaining regulatory hurdles. Further to these issues, studies have shown that top management spends a large amount of time (27 percent) dealing with red tape. Some of this “time tax” relates to frequent changes in rules and a discretionary, unpredictable implementation of rules, be it for taxes, for licenses, for procurement, or other transactions. This is much more than in

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comparator countries like Brazil (19 percent), Poland (13 percent) and Chile (9 percent). Moreover, nearly a quarter of Turkish firms surveyed rated the education and skills levels of the workforce as a “major” or “very severe” constraint to their operations and growth.

Top 5 Obstacles to Growth of Firms

Key World Bank contributions include: Private sector financing for small and medium sized enterprises and exporters in the current Country Partnership Strategy (FY08-11) has reached $1.9 billion USD. The Bank has also worked on studies identifying constraints to growth for small and medium-sized enterprises, and work assessing policies to promote private R&D and innovation; encourage the start up of knowledge-based companies; facilitate the commercialization of public R&D; and enable technology adoption.

Labor Markets

Low job creation and high job informality. Despite rapid economic growth after 2001, the employment rate among the working-age population (ages 15-64) has never risen above 46 percent (about 20 percentage points below the EU average). The combination of limited job creation and the sheer number of young people entering the labor force each year has meant that the unemployment rate has not fallen below ten percent. Job informality has remained high (about half of the workforce) despite rural to urban migration and a shift away from agriculture, as informality has increased in urban areas.

Image 1

Source: World Bank

Women and the young continue to face challenges. Employment rates are particularly low for women (22 percent in 2008). Female labor force participation declined from 34.3 percent in 1988 to 24.5 percent in 2008. Increasing urbanization and falling agricultural employment in rural areas are major reasons for this decrease. Unemployment is particularly high among the young (20.5 percent in 2008) due to the volume (around 700,000) of young people entering the labor force each year.

Turkish Labor Regulations: 3rd most rigid

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Addressing these challenges requires matching relevant skills with market needs and the reduction of labor market rigidities. Labor taxes were significantly reduced in 2008, as employers‟ social security contributions were reduced by 5 percentage points. However, employment legislation remains restrictive and focused on job protection. The Government has put employment at the top of its agenda, and a new Employment Strategy is in the making. The Turkish Government‟s 2011 Annual Program states: “The goal is to create an efficient labor market whereby a balance is established between flexibility and security, a wage system that bases itself in productivity, and equal rights and opportunities are offered to everybody, primarily including gender equality, through employment opportunities responding to technological development and change.” Key World Bank contributions: An ongoing series of World Bank policy-based financing operations supports reforms of Turkey‟s labor market policies and programs. Other work includes technical advice and studies on: improving labor market flexibility and worker protection, strengthening active labor market programs (ALMPs), and enhancing job opportunities for women and the young. Youth Unemployment: Twice Overall Figure

Poverty & Social Protection

With rapid economic growth after the 2001 crisis, Turkey’s social outcomes have improved. Poverty decreased from 27 percent in 2002 to 17 percent in 2008 while infant mortality rates declined sharply between 2003 and 2008. This reduction was achieved through economic growth and a marked reduction in social inequality. The crisis had an impact on households, mainly through the labor market. Unemployment peaked at 16 percent in the first quarter of 2009. The increase in unemployment was driven by new entrants to the labor force rather than job losses. In urban Turkey, most of the fall in labor incomes came from reduced earnings. The impact was seen in the labor market as an increase of about 1 percentage point in the poverty rate (from 17.1 percent to 18.1 percent). The Government responded to the crisis with a package of employment related measures. Crisis measures included short-time wage subsidies to reduce lay-offs; the expansion of vocational training delivered by the Turkish Employment Agency (ISKUR); and a public works program. Social assistance spending has been increasing rapidly in Turkey, although it remains low by international standards. Social assistance benefits accounted for only 0.94 percent of GDP in 2008. The share of social assistance expenditures in total public spending has increased significantly with the expansion of the Green Card Program (from 2.5 million beneficiaries in 2003 to 10.2 million in 2006) which provides health insurance to those not covered by other institutions. Social assistance is provided by a number of Government institutions as well as municipalities. The three largest Government programs are payments to the elderly and handicapped, the Green Card and the Conditional Cash Transfer (CCT) program.

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Despite recent efforts, social assistance spending is low by international standards

Source: World Bank, based on administrative data from

countries

Despite substantial improvements in social outcomes before the crisis, the inequality of opportunities has limited the ability of poor children to succeed in life. In 2008, about 29 percent of children in the low opportunity group suffer from stunting (very low height for age, an indicator of malnutrition), while only 3 in 100 children in the high opportunity group suffer from it. Early Childhood Development policies could have a substantial impact in Turkey: adding one year of pre-school education when children are 6 years old could increase family incomes by 8 percent and reduce the number of poor families by 10 percent. . Key World Bank contributions: A series of World Bank policy-based loans supporting labor reforms also supports the implementation of

Turkey‟s social security reforms. Other work includes multi-year technical advice related to welfare and social policies; an assessment of the welfare impact of the economic slowdown; and a survey focusing on the effect of the recovery from the financial crisis on jobs and employment.

Education

Employment According to Educational Level

OECD: 2008

Turkey has made significant progress in increasing access to schools. Since 1997 the Turkish education system has made progress in improving access to basic education, achieving almost universal primary school enrollment (98 percent in 2009/10). Similar improvements have been made at the secondary education level (65 percent in 2009/10). However, pre-primary education (3 to 5 year olds) and higher education net enrollment rates are about 27 percent, which is low compared to OECD countries. While the access gap has also narrowed significantly, in some cases enrollment continues to vary by locality and gender.

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%

Tajikistan 08

Azerbaijan 08

Latvia 08

Turkey 08

Macedonia 08

Armenia 08

Montenegro 08

Georgia 07

Kyrgyzstan 08

Bulgaria 08

Kazakhstan 07

Moldova 08

Poland 07

Kosovo 08

Lithuania 08

Estonia 06

Romania 07

Albania 08

Russia 06

Serbia 08

Ukraine 08

Uzbekistan 07

Belarus 08

OECD 05

Bosnia 08

Croatia 08

Hungary 06

Social Asssistance Spending (% GDP)

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New Pisa Results Show Significant Improvements for Turkey

Source: PISA 2009 Mean Scores

Looking ahead, the most important challenge is to improve the quality and relevance of education, while continuing to expand access at secondary and tertiary levels. The standard of basic education in Turkey is lower than in most OECD countries, with a significant gap between low and high performing students. An international assessment (OECD‟s PISA) shows that significant progress was made in student learning between 2006 and 2009, indicating the effects of recent reforms, most notably the new curricula introduced in 2004. Nonetheless, the average 15 year old Turk still significantly lags their OECD counterparts in mathematics, reading and science skills, with significant differences by region, socioeconomic status and school type. A high proportion of 15 year olds in Turkey continue to perform below basic educational proficiency levels. The new Education Sector Strategy tries to address some of these challenges.

Key World Bank contributions: The Secondary Education Project (SEP), financed new curricula for general and vocational secondary schools, a web-based career guidance system, and launched innovative school grants for sub-provinces with low enrollment rates. Multi-year analytical work on education quality, most recently focusing on early childhood education, has been jointly carried out with the Turkish Government and UNICEF

Healthcare

Turkey has come a long way since the introduction of the Health Transformation Program. In 2003, Turkey‟s health indicators

ranked behind most other OECD and middle-income countries: infant and maternal mortality rates were among the highest while life expectancy was 10 years below the OECD average. The public health sector underperformed and health services were often difficult to access. In response to this situation, the Government introduced the Health Transformation Program (HTP) in 2003 to reform the way health care was financed, delivered, organized, and managed. The reform program has produced significant improvements in access, financial protection, and service coverage for the population of Turkey. Turkey has considerably reduced maternal mortality, which fell from 29 deaths per 100,000 live births in 2005 to 23 deaths in 2008. It has therefore already met its Millennium Development Goal (MDG) on maternal mortality. Infant mortality remains high compared to countries with similar income levels and health spending. However, there has been a significantly sharp decline in infant mortality, from 25 deaths per 1,000 live births in 2005 to 19.9 in 2008. Turkey is on target to meet this MDG target. Turkey has achieved near universal health insurance coverage, increasing financial protection and improving equity in access to health care nationwide. 87 percent of Turkey‟s population is now covered by health insurance, while the ability to meet the costs of healthcare has risen dramatically. Turkey has increased access to, and utilization of, health services through improved coverage (mainly through the expansion of the Green Card Program) and the introduction of family medicine in 2004. As a result of improvements in service delivery consumer satisfaction has increased. Average patient satisfaction in family medicine provinces rose from 69 percent in 2004 to 86 percent in 2008 (75 percent in non-family provinces).

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Source: World Bank

Continued expansion of coverage and access might pressure public health expenditures unless efficiency gains are realized. Health expenditure as a share of GDP (5 percent) has risen steadily since 2003. In 2008 it constituted 6.2 percent of GDP; which was on par with countries with similar income levels. Key World Bank contributions: Turkey‟s Health Transformation Program was supported by the provision of two Adaptable Program Loans (APLs). Studies include a joint OECD-World Bank report on health system performance which benchmarked Turkey globally and brought international policy experience to bear on the system. A health sector integrated fiduciary assessment has also been conducted.

Energy & Climate Change

Turkey has an impressive track record in implementing reforms improving energy security through successful privatizations. It has increased new private investment; expanded electricity generation, transmission, and distribution capacity; while also introducing cost recovery pricing. Turkey saw an increase of 70 percent in electricity transmission from 2002 to 2009 and a nearly 30 percent rise in peak capacity. Between 2004 and 2008 the reliability of electricity supply nearly doubled with a 12,675 hours decrease in electricity interruptions.

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Source: World Bank

Renewable Energy Development is a success story in Turkey. There has been an impressive shift towards renewables, as electricity produced from privately owned renewable generation facilities more than doubled from 1490 GWh in 2002 to 3840 GWh in 2009. As part of its current comprehensive reform to create an efficient and economic energy sector, Turkey is raising the share of electricity generated from renewable sources to 25% of total installed capacity by 2020. The Government‟s target is to reach 30,000 MW of hydro power and 3, 000 MW of non-hydro renewable capacity (mostly wind) MW by 2020. The momentum is continuing as a new Renewable Energy Law was recently passed in Parliament, guaranteeing prices and providing incentives. Energy Efficiency is critical to Turkey’s energy security and a key component in Turkey’s National Climate Change Strategy. A legal, regulatory, pricing, and institutional set-up to promote energy efficiency has been established; including a comprehensive set of energy efficiency regulations. The Government and International Financial Institutions (including the World Bank and the European Bank for Reconstruction and Development) support specialized targeted credit lines. Climate Change is a threat to Turkey and the government is stepping up its engagement internationally and domestically. Turkey became Party of the Kyoto Protocol in 2009. Turkey developed a „path-breaking‟ National Climate Change Strategy in 2010 establishing strategic objectives for mitigation and adaption and triggering the preparation of sector based

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Climate Change Action Plans. Such a phased approach to major reforms has proved effective in Turkey‟s other major reform areas. Key World Bank contributions: The energy sector represents one of the largest portions of the World Bank‟s financing portfolio in Turkey, at about 25 percent. Through this financing, World Bank funds support: improved electricity and gas supply security; the financial viability of the electricity sector; increased energy efficiency; and greater private sector investment. World Bank financed projects include five energy sector investment operations, ranging from electricity transmission to private sector financing for renewable energy and energy efficiency, and support for the National Climate Change Strategy was an integral part of a Bank policy-based loan. Turkey was the first country to benefit from the Climate Technology Fund administered by the World Bank.

Environment Management & Municipal Services

As part of Turkey’s efforts to harmonize its legislation with EU environmental legislation Turkey is developing public policies and incentives supporting sustainable environmental management. Its strategy to advance its sustainable development agenda, as outlined in the National EU Approximation Strategy, is to strengthen environmental management processes in key sectors (water, air, industrial pollution prevention and control, and chemicals) and reduce environmental degradation. Chapter 27 of the EU Acquis Communautaire on the Environment was opened in December 2009. The key areas of focus for Turkey‟s agenda of alignment with the EU Acquis is the EU Water Framework Directive, concerning water quality and water resources, under which Turkey is preparing a national watershed strategy and a river basin pollution prevention program. In addition, Turkey has made substantial progress in transposing EU standards, such as the Environmental Impact Assessment Directive, and the EU Directives on Large Combustion Plants into national regulation. Turkey is implementing a national Air Quality Action Plan, which includes important measures for real time air quality

monitoring and online public disclosure of air quality data. Addressing the dual challenges of systematically strengthening environmental compliance, while maintaining the competitiveness of key industrial sectors, will remain a major priority in Turkey‟s agenda for EU Accession. The demand for quality urban environmental management and municipal services - water, wastewater treatment, solid waste collection, and waste disposal services - is expected to continue rising in Turkey, for several reasons. First, Turkey is experiencing a period of significant urbanization, with about 65 percent of Turkey's population living in urban areas amid expectations that this will increase to more than 80 percent by 2030. Investments to implement the EU Environmental Acquis are expected to place an increasing burden on Turkey's public sector finances over the next two decades. Large investments will be required for the implementation of investment plans, consistent with the EU environmental quality standards, in a wide range of areas including water and air quality, integrated pollution prevention and control, management of municipal and hazardous waste and chemical products, biotechnology, radiation protection and nature conservation. Key World Bank contributions: The ongoing series of World Bank policy-based loans supporting energy sector reform and climate change action also support the implementation of measures to strengthen environmental management. Technical assistance focuses on sustainable environmental management, compliance, and competitiveness of several key industrial sectors. In addition, the technical assistance supports the government‟s preparation of a National Watershed Management Strategy and the portfolio also includes a Watershed Management Project. In the urban sector, the Bank supports the Istanbul Municipal Infrastructure Project, the Land Registration and Cadastre Development Project, and the Municipal Services Project. A major result of the latter is that more than 870, 000 people now have municipal water supply for the first time.

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Disaster Prevention & Management

In 1999, a 7.4 magnitude earthquake struck at Marmara, claiming 17,000 lives. Turkey remains vulnerable to natural disasters, particularly earthquakes. Istanbul is most vulnerable due to its location on the North Anatolian Fault; high population; and commercial/industrial densities. The probability of a major earthquake affecting Istanbul in the next 30 years is over 50 percent, while the likelihood of such disaster in the next decade is around 30 percent. A 2002 study assessed that this could result in 87,000 fatalities, 135,000 injuries and heavy damage to 350,000 public and private buildings. Of these, 2,500 public buildings, primarily schools and hospitals that would have necessary emergency functions in the aftermath of a disaster, have been prioritized for retrofitting or reconstruction. Istanbul is implementing a seismic risk mitigation and emergency preparedness project. It is strengthening critical public facilities for earthquake resistance while supporting measures for enforcing building codes and land use regulations. To date, 418 public buildings have been retrofitted or reconstructed. Retrofitted schools serve about 1 million students and have over 33,300 teachers, while the reinforced and modernized hospitals serve over 25,000 patients daily (this number might triple in the event of a disaster). Key World Bank contributions: The World Bank supports the Istanbul Seismic Risk Mitigation and Emergency Preparedness Project. To date, 418 public buildings comprising schools and hospitals have been retrofitted. Work is also being carried out on places of historical interest like the Mecidiye Kiosk; the Archaeological Museum and Hagia Sophia. The European Investment Bank and the Council of Europe Development Bank are now providing parallel financing for this project.

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Source: World Bank

World Bank Partnership with Turkey

Turkey’s Ninth Development Plan (2007-2013) forms the basis of the partnership between Turkey and the World Bank. The current Country Partnership Strategy (CPS) for FY08-11 provides for up to US$8.1 billion in financing, of which US$6.5 billion had been committed by November 2010. In response to the global financial crisis the World Bank committed US$ 3 billion in financing for Turkey between July 2009 and June 2010. A new CPS for FY12-15 is being prepared. The World Bank‟s role has been mainly catalytic, as its finance account for a small fraction of Turkey‟s total external financing Turkey’s active portfolio of investment projects with World Bank financing includes 16 projects with total net commitments of $5.272 billion as of March 2011. The investment portfolio supports financial and private sector development (40 percent), urban development (27 percent), the energy sector (25 percent), transport (4 percent) and health and education (3 percent).

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Source: World Bank

Turkey values greatly the World Bank’s technical analysis, advice, international expertise and experience. The Analytical and Advisory Program (AAA) is carried out with the government and a broad range of stakeholders. Major tasks are focused on long-term structural and institutional issues like Investment Climate Assessments, Country Economic Memoranda as well as studies on Public Expenditure and Food Safety. The government uses the World Bank in seeking quick response policy advice on specific issues. In addition to the work discussed above, there is also a Trust Fund (TF) portfolio: This includes the Clean Technology Fund; the Global Facility for Disaster Reduction and Recovery; the Energy Sector Management Assistance Program; the Governance Partnership Facility; the Global Environment Facility and the Spanish Trust Fund.

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TURKEY ANATOLIA WATERSHED REHABILITATION PROJECT Updated on March 22, 2011

Key Dates: Approved : June 1, 2004 Effective: December 21, 2004 Closing: June 30, 2012 Figures in million US Dollars*: Financier Financing

IBRD Government of Turkey Other Donors (GEF) Local Community

15.70 8.65 7.00 9.46

Total Project Cost 40.81

World Bank Disbursements, million US Dollars*: Financier Total Disbursed Undisbursed

IBRD GEF

15.70 7.00

13.80 4.77

1.90 2.33

*As of January 2, 2011. Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement.

Background and Objectives: Turkey is at risk of being increasingly affected by climate change; and parts of Turkey‟s rural areas are seriously suffering from natural resource degradation. At the same time, Turkey‟s status as an EU candidate country calls for important changes in the country‟s environmental policy and regulatory framework (EU Directives on Water Resource Use, Nitrates, and Environmental Impact Assessment) and provides opportunities to finance supporting investments. The project‟s objective is to support sustainable natural resource management practices in 28 micro-catchment areas in Anatolia and Turkey‟s Black Sea Region and thereby raise incomes of communities affected by resource degradation. The secondary objective of the project is to introduce farming practices which will reduce the discharge of nutrients and other agricultural pollutants into surface and ground water in watersheds draining into the Black Sea. Project activities are being implemented in six provinces - Samsun, Tokat, Sivas, Kayseri, Corum and Amasya. The project consists of three components: (1) Rehabilitation of Degraded Natural Resources, providing support to protect degraded areas from further degradation, erosion and pollution; (2) Income Raising Activities: targeted communities are offered a menu of activities designed to raise household incomes in return for participation in conservation activities; (3) Strengthening Policy and Regulatory Capacity Towards Meeting EU Standard, to raise awareness amongst target beneficiaries and other stakeholders about micro-catchment development. Implementation involves extensive participatory processes in planning, implementation and monitoring.

Results achieved:

Micro-catchment plans are now completed for all 28 targeted micro-catchments and are being implemented in a manner consistent with the overall targets set during preparation.

228 km2 of degraded micro-catchment areas have been rehabilitated; target is 220 km2.

Vegetative cover has increased by 74 percent compared to the baselines available at project-start; target is 50%. At least 2,500 farmers in micro-catchment areas were provided with training in new agriculture based income Generation/diversification activities.

Household incomes in participating micro-catchments have increased by 53%; target is 40%.

Crop yields in targeted micro-catchment areas have increased: sainfoin by 145%; chickpeas by 56%; alfalfa by 30%.

Implementing Agencies: General Directorate for Afforestation and Erosion Control (AGM) and Ministry of Environment and Forestry. Key Development Partners include the Global Environmental Facility (GEF), which co-financed the project.

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TURKEY – LAND REGISTRATION AND CADASTRE DEVELOPMENT PROJECT Updated on March 21, 2011

Approved : May 11, 2008 Effective: August 13, 2008 Closing: September 30, 2013

Figures in million US Dollars:

Financier Financing

IBRD Borrower

203 7.10



IBRD 203 32.31 166.83 *As of March 21, 2011.

Background and Objectives: Turkey‟s Ninth Development Plan calls for a country with stable growth, increased competitiveness, and increased transformation to an information society, while completing harmonization with the European Union (EU). The Government‟s program puts emphasis on the provision of high quality public services and continued investment climate reforms. The Government aims to put into practice e-government systems to improve services, protect the environment and increase emergency preparedness and disaster risk mitigation. An effective and efficient cadastre and registration system forms a cornerstone of the Government‟s strategy in these areas by providing accurate and dependable base maps, spatial data and property information for planners and investors. The Turkish cadastre and registration system is reasonably effective and registration of property transaction is done speedily in the large offices. However, the system needs to be continuously upgraded to ensure that it modernizes to reach the same service level as in the European countries. Manual systems that exist in several cadastral and registry offices need to be computerized and paper documents digitized to improve accuracy, consistency and linkage to a national network that can support e-government applications. Property valuation methodologies for taxation need to be upgraded to similar systems in the EU, and institutional responsibilities in this area need to be clarified to provide the framework for property valuation guidelines and grievances procedures. Broader property valuation functions need to be developed in line with international standards. The project‟s objective is to improve the effectiveness and efficiency of the land registry and cadastre services in order to enable the support the Government‟s progress in the e-government agenda. To achieve this objective, the project supports: (i) renovation and updating of cadastre maps to support digital cadastre and land registry information; (ii) increased access to the land registry and cadastre information by public and private entities (iii) improvements in customer services in land registry and cadastre offices; (iv) improvement in the human resource capacities in the Cadastre and Registration Agency (TKGM); (v) development of policies and capacity building to introduce best international practices in property valuation.

Key Results Achieved: The number of cadastre disputes in courts decreased from 4% to about 2.5% (of annual transactions) due to improved technology and the consultative nature of the survey methods introduced by TKGM. Time to deliver data has been reduced from 1 week to 2 hours. Twenty four institutions have access to digital cadastral data. About 1 million parcels have been updated to digital formats (and another 1 million updated using government funds). Disbursements have reached $32.31 million in March 2011, up from $14.9 in September 31, 2010.

Implementing Agencies: Turkish Land Registration and Cadastre Agency (TKGM).

Key Development Partners: The Bank team collaborates closely with specialists from the Food and Agriculture Organization (FAO)

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TURKEY ACCESS TO FINANCE FOR SMEs II PROJECT Updated on March 15th, 2011

Key Dates: Approved : June 15, 2010 Effective: August 12, 2010 Closing: September 30, 2014 Figures in million US Dollars**: Financier Financing

IBRD Government of Turkey Other Donors

500

Total Project Cost 500


IBRD 500 111 389 *As of March 15, 2011. Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement.

Background and Objectives: Small and medium size enterprises (SMEs) play a very important role in the Turkish economy, owing to their considerable share in the total number of enterprises and in total employment. SMEs in Turkey represent 99% of all enterprises, 80% of the employment, 45% of the investments, and are estimated to account for up to 57% of value added A strong SME sector in Turkey would thus positively contribute towards key issues such unemployment, productivity, competitiveness and sustainable growth. Turkish SMEs are growing slower than both large enterprises in Turkey and the SMEs in comparator countries. Access to finance is perceived as the single most severe obstacle to growth by medium-sized firms. In 2009, in the aftermath of the global crisis, SMEs share in total credit declined by about 5 percentage points to little over 20%, but it has since recovered as the economy rebounded strongly in 2010. The project‟s objective is to broaden and deepen the access of Turkish small and medium enterprises to medium- and long-term finance, with a view to ultimately contributing to an expansion of productive activities and job creation. The project will also serve to provide credit in currently underserved regions, ensuring that these areas are not left behind and that the credit and productivity gap between less and more advanced regions does not widen. The project finances three credit lines to three participating borrowers for on-lending to SMEs: (i) a US$100 million wholesale credit line to Kalkınma Bank to be intermediated through private retail banks/leasing companies to SMEs; (ii) a US$200 million credit line to be intermediated through Ziraat Bank as a retail bank directly to SMEs; and (iii) a US$200 million credit line to be intermediated through Vakıf Bank as a retail bank directly to SMEs. The previously approved First Access to Finance for SMEs (SME I) project supports very similar objectives and activities, but with different intermediary banks (Halkbank and TSKB). These two projects are complemented by the Export Finance Intermediation Loan series, which has been providing medium to long term funds to exporting enterprises.

Results achieved: The project is still in the early stages of implementation, but already close to 60 companies have benefitted from financial support for new investment and much needed working capital.

Implementing Agencies: TKB, Ziraat Bank and Vakif Bank.

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TURKEY AVIAN INFLUENZA AND HUMAN PANDEMIC PREPAREDNESS AND RESPONSE (AIHP) PROJECT

Updated on: October 1st, 2010

Key Dates: Approved : April 24, 2006 Effective: September 11, 2006 Closing: December 31, 2011 Figures in million US Dollars*: Financier Financing

IBRD Government of Turkey Other Donors (USAID) Other Donors (EC)

34.40 7.06 1.00

12.73 Total Project Cost 55.19


IBRD 34.40 18.30 18.10 *As of September 6, 2010. Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement.

Background and Objectives: A widespread Avian Influenza outbreak occurred in Turkey between December 2005 and January 2006. As of mid-March 2006, the presence of the H5N1 virus was confirmed in 58 of Turkey‟s 81 provinces. The Government moved quickly with the culling of over 2.3 million birds and the monitoring of any possible spread in the affected provinces. The poultry sector incurred losses of roughly US$0.9 million daily between December 2005 and February 2006. The World Health Organization (WHO) confirmed 12 human cases in Turkey of the H5N1 virus in humans. Of these cases, four resulted in death. The project was prepared to respond to, and minimize the threat in Turkey posed to humans by the highly pathogenic Avian Influenza infection and other zoonoses in domestic poultry and prepare for the control and response to an influenza pandemic and other infectious disease emergencies in humans. To achieve this, three areas are being supported: (i) prevention, (ii) preparedness and planning and (iii) response and containment.

Results achieved:

Risk assessment analysis associated with outbreaks has indicated significantly reduced risk and Turkey Ai project has been used as example of best practice in international forum.

All backyard breakouts under control within 2 weeks after the outbreak and there have been no Avian Influenza breakouts since February 2007.

A Contingency Plan for Avian Influenza was prepared by the Ministry of Agriculture and Rural Affairs (MARA) and a Contingency plan for Influenza Pandemic was prepared by the Ministry of Health (MoH) including national, regional and local crisis centers, financial requirements, legal framework, prevention of the disease and tasks and responsibilities of the relevant ministries. Contingency plans were tested and local organizations and their staff were prepared against the pandemic through real-time simulation exercises.

Service level of laboratories were improved by modernization of machinery and equipment to address rising diagnosis demand during periods of pandemic and the three reference laboratories were upgraded to biosafety III level and the regional laboratories have been upgraded to biosafety II level.

Capacity was strengthened through a comprehensive training program. Related staff of public and private organizations were trained on outbreak containment and collection of specimen for laboratory tests. Training was provided to villagers and coops were built in pilot regions to reduce risk of disease in backyard poultry. Training was provided to small enterprises in the poultry sector to improve perceptions on biosafety and biosecurity MoH staff was trained on Fundamental Epidemiology, Pandemic Control and Site Study, Workshop on Preparation of Zoonotic Diseases Training Module was held with the participation of people made up of academicians from University and Training and Research Hospitals and experts working in public institutions along with representatives from the Ministry of Health. A Vaccination Drugstore project continues within the framework of human health component. Public awareness activities were held to raise awareness of avian influenza. Communication materials including posters, brochures, TV, and radio spots were produced.

Implementing Agencies: Ministry of Health and Ministry of Agriculture and Rural Affairs. Key Development Partners included European Commission (EC) and USAID which co-financed the project.

17

TURKEY ECSEE APL6 PROJECT Updated on: March 17, 2011

Key Dates: Approved : August 30, 2010 Effective: December 15, 2010 Closing: December 31, 2015 Figures in million US Dollars*: Financier Financing

IBRD TEIAS Other Donors

220 20



IBRD 220 11 225*

*As of March 17, 2011. Note: Disbursements may differ from financing due to exchange

rate fluctuations at the time of disbursement. Background and Objectives: Turkey is part of the Energy Community of South East Europe (ECSEE), established in 2005 with the objective to create a stable regulatory and market framework in order to: (i) attract investments in power generation and networks to ensure stable and continuous energy supply that is essential for economic development and social stability; (ii) create an integrated energy market allowing for cross-border energy trade and integration with the EU market; (iii) enhance the security of supply; (iv) improve the environmental situation in relation with energy supply in the region; and (v) enhance competition at regional level and exploit economies of scale. The Bank has been supporting these objectives in a number of ways, including through the March 2004 strategy paper for energy trade in South East Europe and the ECSEE Adaptable Program Loan (APL) series, approved on January 27, 2005. The objective of the ECSEE APL program is the development of a functioning regional electricity market in South East Europe and its integration into the internal electricity market of the European Union, through the implementation of priority investments. These include supporting: (i) electricity markets, and (ii) power system operations in electricity generation, transmission and distribution and providing technical assistance for institutional/systems development and project preparation and implementation. The development objective of Turkey ECSEE APL6 is to help improve the capacity and reliability of the power transmission system in Turkey and its ability to integrate renewable energy capacity into the system. APL6 continues to support the priority investments that APLs 2 and 3 financed earlier, in the area of system strengthening and expansion. The project finances priority investments that create a stable and safe electricity market in Turkey and the conditions for regional trade. In addition, the project will continue the advisory and investment support for internal market implementation and its integration with the European market.

Results achieved: The project became effective very recently, on December 15, 2010. Therefore, no results have yet been achieved. Some investments have begun implementation. Once implemented, the project is expected to help improve supply reliability, enable provision of supply to newer urban developments, and help improve the transmission system particularly for enabling sustainable integration of renewable energy into the grid.

Implementing Agencies: Turkish Electricity Transmission (TEIAS). Other close partners include the Ministry of Energy and Natural Resources.

18

TURKEY EXPORT FINANCE INTERMEDIATION LOAN ( EFIL IV) PROJECT Updated on March 5th, 2011

Key Dates: Approved : May 22, 2008 Effective: June 19, 2008 Closing: June 30, 2013 Figures in million US Dollars*: Financier Financing


600



IBRD 571 385 187

*As of March 15, 2011 using the exchange rate as of March 14. Note: Numbers in this

table differ from original financing due to exchange rate fluctuations.

Background and Objectives: The World Bank started providing the financial sector with long term funds to develop medium term financing for exporters with the first EFIL project in 1999. The focus on exporting enterprises ensured their ability to bear the risk of borrowing in foreign currency, as medium term interest rates in Turkish lira remained in double digits, and local currency borrowing was therefore not attractive for medium term financing. Despite improvements in access to finance, medium-term finance has remains underdeveloped, constraining investment and financial planning of enterprises. The fourth EFIL project was prepared as the crisis was looming in Turkey, and the project continues to support the banking sector in developing medium term finance for exporters. It is supported by a loan of US$300 million equivalent for Türkiye Sinai Kalkınma Bankası (TSKB) and a loan of US$296 million equivalent to Türk Eximbank. The project was approved by the Board in April 2008 and disbursements started in FY09. EFIL IV is the fourth in a series of very successful credit lines provided to medium-sized exporters in Turkey. Banks expanded into the SME segment in the middle of the decade, when liquidity conditions improved and the macroeconomic conditions stabilized. Two similar projects (SME and SME II) support medium term SME credit. The project‟s objective is to address the need for medium to long term financing of investment and medium term working capital of exporting enterprises, and to deepen financial intermediation. The project has three components: The first component is a US$300 million equivalent credit line to TSKB. TSKB in turn provides medium term finance to participating financial intermediaries for further on-lending to eligible private exporters. The second component (US$296 million equivalent) is a credit line to Türk Eximbank. Türk Eximbank on-lends to eligible exporters. The third component (US$4 million) supports capacity building for improved risk management at Türk Eximbank.

Results achieved:

Exports of target firms grew by 117% under EFIL II and by 95% under EFIL III (vs. aggregate export growth of 81%). In EFIL IV, the median participating firm outperformed its sector by 6.5 percentage points. EFIL III participating firms were more likely to introduce new products, improve environmental management and enter new export markets compared to a control group of non-participating firms.

Slowing economic growth is depressing demand for finance, but the contraction in alternative funding sources increases the project‟s relevance. Exports shrank as global demand slowed (exacerbated by Turkey‟s export composition). Participating enterprises are expected to show weak performance in response to the crisis.

Nevertheless, project implementation has advanced: 10 financial intermediaries are involved, and two thirds of available funds have been disbursed. There were no non-performing loans as of February 2011. Lending shifted from investment finance towards financing working capital in response to the global crisis.

Implementing Agencies: Türk Eximbank and TSKB Bank.

19

TURKEY ELECTRICTY DISTRIBUTION REHABILITATION PROJECT Updated on: March 17, 2011

Key Dates: Approved :April 19, 2007 Effective: March 21, 2008 Closing: December 31, 2012 Figures in million US Dollars*: Financier Financing


269.4 75



IBRD 269.4 72.9 211 *As of March 17, 2011. Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement. Background and Objectives: Turkey is seeing rapid urbanization, leading to growing demand for electricity. At the same time, investments in electricity distribution have not kept pace with system needs. In response to a need for increased investments and system efficiencies, the distribution network is being rehabilitated and strengthened, and private sector participation has been encouraged. Until 2008, the electricity distribution system, operated by 20 regional distribution companies, was owned by the Turkish Electricity Distribution Company (TEDAŞ). All of the regional companies have now been privatized, and the private owners are gradually taking over the management and operation of the distribution system. The objective of the Project is to help improve the reliability of power supply to consumers in Turkey by supporting the implementation of the electricity distribution network rehabilitation and expansion program. The project is part of the overall support currently being provided to the electricity sector in Turkey by the Bank in renewable energy, energy efficiency, and electricity distribution and transmission. The project supports the implementation of (i) medium and low voltage distribution network upgrades and expansion; and (ii); technical assistance for implementation supervision and performance monitoring. The project will thus assist in improving the distribution system in critical areas, reduce

interruptions in supply, expand capacity and assist in improving the potential for privatization. Moreover, the investments will enable the distribution network to become more compliant with safety regulations.

Results achieved:

Reduced number and duration of interruptions faced by consumers in the 8 regional companies targeted under the project

Collection efficiency improved in the 8 regional companies targeted under the project

New load served in targeted areas to meet increased demand

Implementing Agencies: Turkish Electricity Distribution Company (TEDAS). Key Development Partners included EIB, which is financing a similar project in parallel.

20

TURKEY GAS SECTOR DEVELOPMENT PROJECT Last updated: March 17, 2011

Key Dates: Approved : November 29, 2005 Effective: March 7, 2006 Closing: December 31, 2012 Figures in million US Dollars*: Financier Financing


325 213



IBRD 325 5.3 319.7 *As of September 7, 2010. Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement.

Background and Objectives: Turkey does not have significant domestic natural gas reserves and 99% of its gas is currently imported. Natural gas consumption has grown rapidly in Turkey over the past two decades – with an average annual growth rate of 24% - mainly as a means of reducing growth in the usage of the environmentally unsustainable domestic lignite. The largest user of gas is the electricity generation industry, but considerable amounts are also used in industry, commerce, and, increasingly, households. With increasing urbanization, and the resulting increase in the requirement for electricity and for heating, the demand for natural gas is expected to continue to grow rapidly in the medium term. Turkey obtains its gas supplies through imports, primarily from Russia through two pipelines, one through Bulgaria and the second one under the Black Sea. Other major gas suppliers to Turkey are Iran (by pipeline), Azerbaijan (by pipeline) and Algeria and Nigeria (in the form of LNG). Due to its unique geographical location, Turkey is well-placed to be a major gas transit country, exporting into mainland Europe. In addition to the growing in-country demand for gas, this role for Turkey as a transit country is likely to drive the economics of the natural gas market in the medium term. The project‟s objective is to increase the reliability and stability of the gas supply in Turkey by putting into place critically needed gas storage and network infrastructure, and supporting Petroleum Pipeline Corporation (BOTAŞ) in strengthening its operations as a financially stable and commercially managed corporation. The project has two components: (i) Underground gas storage facility: the gas storage facility will be located in an underground salt formation close to Tuz Gölü, a salt lake in South Central Turkey. The facility, upon completion, would have a storage capacity of about 960 million cubic meters of working gas and 460 million cubic meters of cushion gas. The facility would have the capacity to deliver 40 million cubic meters of gas per day up to 20 days and could be refilled at the rate of 30 million cubic meters per day over a period of 25 days; and (ii) Network Expansion: the project finances compressor stations for BOTAS as well as other network infrastructure. These stations are required to help transmit the increasing volumes of gas expected to be imported from existing and new sources.

Results achieved: Progress on implementation has been slow. The project is innovative and very challenging from technical and procurement points of view and it has thus taken significantly more time than initially envisaged to be completed – procurement processes are currently ongoing for both the gas storage facility and an important compressor station. Once completed, Turkey is expected to continue to expand storage at the Tuz Gölü site, with the potential to accommodate 10-12 bcm of storage. The storage project is of critical importance in the energy security, as it would help ensure gas supply at peak winter times. Gas storage in salt domes is relatively unusual, with few countries, such as the USA, having such facilities.

Implementing Agencies: Petroleum Pipeline Corporation (BOTAS).

21

TURKEY HEALTH TRANSFORMATION AND SOCIAL SECURITY REFORM PROJECT Updated on: March 13, 2011

Key Dates: Approved : June 11, 2009 Effective: September 29, 2009 Closing:: July 31, 2013 Figures in million US Dollars*: Financier Financing


75.5



IBRD 75.5 16.4 59.1 *As of March13, 2011. Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement.

Background and objectives: In 2003, the Government of Turkey launched its Health Transformation Program, a 10-year health reform initiative designed to bring Turkey‟s health indicators in line with other middle-income countries and those in the Organization for Economic Cooperation and Development (OECD). At the time, Turkey‟s health financing system was fragmented; contributing to inefficiency and inequity, and insurance coverage for the poor was scarce. Health care in rural areas was expensive and difficult to access. The World Bank has been supporting the Government‟s Health Transformation program through a two-phased approach. The first phase, through the Health Transition Project, supported the introduction of the family medicine model, and helped build the capacity of the Ministry of Health and the Social Security Institute to expand health insurance coverage and improve family medicine service delivery. The second phase, through the ongoing Health Transformation and Social Security Reform Project supports reforms aimed at increasing hospital autonomy, expanding family medicine services, and further strengthening performance management and pay-for-performance initiatives. The project includes a component that links incentives with results and is aimed at providing performance based incentives for primary care providers for the delivery of services that focus on early detection and control of non-communicable diseases and promotion of healthy behaviors among the adult population in Turkey.

Results achieved:

In 2003, 24% of the poorest population decile had health insurance, vs. 81% in 2009.

Population enrolled with family medicine increased from zero in 15 pilot provinces in 2003, to entire population in 2010.

Utilization of primary care services in provinces implementing family medicine increased: 2.45 outpatient visits per capita compared with 2 in non-family medicine provinces.

Patient satisfaction with primary care services in provinces where family medicine was introduced increased from 69% in 2004 to 86% in 2009.

Patient satisfaction with health services in public hospitals increased from 38% in 2003 to 67% in 2009.

Social security systems were unified, and all hospitals transferred to the MoH, so people can choose where to be treated.

Implementing Agencies: Ministry of Health and Social Security Institute.

24

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22

TURKEY ISTANBUL SEISMIC RISK MITIGATION AND EMERGENCY PREPAREDNESS PROJECT (ISMEP)

Updated on: March 10, 2011 Key Dates: Approved : May 26, 2005 Effective: February 03, 2006 Closing: December 31, 2011 Financing in million US Dollars* Financier Financing


400.0



IBRD 400 283.2 141.1 *As of Sep 6, 2010. Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement. Background and Objectives: Turkey is highly vulnerable to earthquakes. In 1999, the death toll of the Marmara earthquake reached over 17,000 people. The economic impact was estimated at about US$5 billion, or around 2.5 percent of GNP. Istanbul is particularly vulnerable because of its seismic-prone location on the North Anatolian Fault, and its high population and commercial/industrial densities. If a seismic event were to occur in or near Istanbul, the human suffering as well as the social, economic, and environmental impacts could be dramatic, as Istanbul is not only the financial, cultural and industrial center of the country, but is also a nexus of inter-continental importance and home of about 15 million people. An interruption of Istanbul‟s social, economic and financial life would be felt for many years to come. The objective of the project is to improve the city of Istanbul‟s preparedness for a potential earthquake through enhancing the institutional and technical capacity for disaster management and emergency response, strengthening critical public facilities for earthquake resistance, and supporting measures for better enforcement of building codes and land use plans.

Results achieved:

595 public buildings were retrofitted or reconstructed

The schools being retrofitted and reconstructed serve about 0.5 million students and teachers. The strengthened and modernized or reconstructed hospitals/clinics serve about 1 million patients annually.

The back-up Disaster Management Center is operational, and the construction of the Governorship‟s main Disaster Management Center on the European side of the city is nearing completion.

A first in Turkey digital inventory of cultural heritage buildings in Istanbul was developed under the authority of the Ministry of Culture and Tourism, as well as the designs for the strengthening and preservation of three historical buildings in Istanbul.

Implementing Agencies: Prime Ministry’s Project Coordination Unit. The Istanbul Governorship is also a key partner. The European Investment Bank (EIB) and the Council of Europe Development Bank (CEB) provide parallel financing to the seismic risk mitigation in public facilities under the framework of the ISMEP project.

23

TURKEY ISTANBUL MUNICIPAL INFRASTRUCTURE PROJECT Updated on: March 21, 2011

Key Dates: Approved : June 28, 2007 Effective: February 23, 2009 Closing: June 30, 2013 Figures in million US Dollars*: Financier Financing


322.15



IBRD 322.15 14.31 307.84 *As of March 15, 2011. Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement.

Background and Objectıves: Growing at rates far above the national average due to rapid in-migration from rural areas of Turkey, Istanbul‟s current population of about 15 million is expected to increase to about 20-25 million people by 2025. This rapid population growth causes severe pressure on municipal services and the natural environment. New and unplanned settlements are expanding at a fast rate and traffic congestion is a significant problem. Solid waste collection is adequate only in core city centers and safe disposal remains a serious issue. Compounding the challenges, Istanbul is vulnerable to several types of natural disasters, including earthquakes and floods. Despite large investments in seismic retrofitting which have focused on public buildings such as schools and hospitals, the majority of structures in the city, including most key infrastructure such as highway viaducts, are highly vulnerable to seismic shocks. Recognizing the complexity of handling Istanbul‟s rapid expansion in such a disaster-prone location, the two key areas of World Bank partnership with Istanbul are multi-hazard risk reduction and environmental management. The Istanbul Seismic Mitigation Project (ISMEP) has provided support for strengthening of public buildings and development of Istanbul‟s emergency response system. The Istanbul Municipal Infrastructure Project (IMIP) complements this work with a package of investments and technical assistance which includes support for multi-hazard microzonation mapping for key residential and commercial areas of the city, rehabilitation of creeks to reduce flooding risks, seismic strengthening of highway viaducts, and provision of emergency vehicles for fire and health safety. The project‟s objective is to assist the Istanbul Metropolitan Municipality (IMM) in: (i) the rehabilitation and clean up of unauthorized waste disposal sites and creeks; and, (ii) strengthening of the capacity of the IMM to mitigate the impact of earthquakes by retro-fitting infrastructure and providing training to respond to emergencies more effectively.

Results achieved: The project is complex and many of the activities require highly specialized technical skills for preparation and supervision. Moreover, implementation requires careful adherence to laws and procedures, especially with respect to expropriation and resettlement. IMM is spending considerable effort to ensure that such issues do not delay project implementation. Construction is already underway in 10 major creeks within Istanbul under the creek rehabilitation component, with works expected to start on several others within 2011. In total, around 25 creeks are expected to be rehabilitated under the project. Other activities such as the microzonation and fire safety activities are in the bidding stage and are expected to commence work imminently.

Implementing Agencies: Istanbul Metropolitan Municipality.

24

TURKEY MUNICIPAL SERVICES PROJECT Updated on: March 21, 2011

Key Dates: Approved : June 23, 2005 Effective: May 18, 2006 Closing: December 31, 2014 Figures in million US Dollars*: Financier Financing


515 70



IBRD 515 259.07 273.96 *As of March 15, 2011. Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement.

Background and Objectives: Currently, 70% of the population in Turkey lives in urban areas. This high urbanization leads to demand for core municipal services that include water, sanitation and solid waste management. High levels of investments at the local level are required to ensure the delivery of quality services at international standards. The objective of the project is to support sustainable municipal services in selected municipalities. To meet this objective, the project supports: (i) development of municipal infrastructure to improve water, wastewater and solid waste management services; (ii) strengthening the financial position and operational efficiency of municipal utilities; and (iii) institutional strengthening of Iller Bank. As a result of the project, water, wastewater, and solid waste investments are expected to improve the environment and public health, resulting in more safe and reliable municipal environmental services for the citizens. Iller Bank‟s financial and banking capacity is expected to strengthen, enabling it to more efficiently assist in the broader program of municipal reform and allocate resources more effectively.

Results achieved:

Water losses were significantly reduced in targeted cities. In Asat (Antalya), losses have been reduced from 52% to 42% in 3 years, with another reduction to 35% expected by 2011.

More than 870,000 populations in 8 cities around the country have been connected to municipal water supply systems for the first time. Sewerage services increased dramatically in some cities. In Ilica the percentage of city population connected to the sewer increased from 40% in 2006 to 85% in 2009, through investments carried out under the project.

The solid waste landfill in Gelibolu, with a capacity of 32,000 tonnes per year, is under final certification

Implementing Agencies: Iller Bank of Turkey.

25

TURKEY PRIVATE SECTOR RENEWABLE ENERGY AND ENERGY EFFICIENCY PROJECT Updated on: March 17, 2011

Key Dates: Approved : May 28, 2009 Effective: August 12, 2009 Closing: December 31, 2014 Figures in million US Dollars*: Financier Financing

IBRD Government of Turkey Other Donors (CLEAN TECHNOLOGY FUND) Other Donors

500

100

550



IBRD 500 341 159 *As of September 7, 2010. Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement

Background and Objectives: Turkey is short of domestic energy resources except for lignite, and relies for much of its electricity generation on imported natural gas. In order to reduce Turkey‟s dependence on imported fuels and also reduce green house gas emissions, the Government is encouraging participation of the private sector to utilize the country‟s large renewable energy resources. These consist primarily of hydropower and wind, but there are also smaller resources of geothermal heat, biomass and solar. In order to assist the Government, the World Bank in 2004 financed a Renewable Energy loan, which was implemented by the privately-owned Industrial Development Bank of Turkey (TSKB) and the Government-owned Development Bank of Turkey (TKB). The ongoing project builds on the previous one, covering a wider range of activities. It finances energy efficiency sub-projects and it includes some concessionary financing by the Clean Technology Fund, supporting renewable technologies and energy efficiency. The two banks have requested additional financing, and this is under preparation. The additional loan aims to broaden the environmental safeguards coverage to also include the assessment of the cumulative environmental impact of multiple hydroelectric projects on a river. Given the large number of hydroelectric projects being constructed, it has become important to focus on the cumulative environmental impact of these projects. The project‟s objective is to help increase privately owned and operated energy production from indigenous renewable sources, enhance energy efficiency, and thereby help reduce greenhouse gas emissions.

Results achieved: The project is expected to help improve Turkey‟s supply security by providing domestic energy resources. It is also expected to help reduce greenhouse gas emissions compared to building new fossil fuel fired plants. It is expected to generate a relatively higher number of jobs in remote and poorer areas since the areas where hydro power sites are found (most of the new generation plants are hydro power) tend to be in more remote, mountainous and poor areas. So far, from IBRD and CTF resources, about renewable energy projects with a total capacity of 2118 MW have been financed, and are under construction. While the majority is hydroelectric projects, the project also finances 3 wind projects, and 1 geothermal project is currently under appraisal. 10 energy efficiency projects have also been financed so far – these are in industries such as paper, petrochemicals, plastic and iron & steel. Projects financed so far are estimated to contribute to greenhouse gas emission reduction of 1.9 million ton per year. CTF financing has been utilized for 9 small hydros (less than 10 MW), 3 wind projects, and 10 energy efficiency projects.

Implementing Agencies: (TKB and TSKB. Other key agencies include the Ministry of Energy and Natural Resources, the State Planning Organization, and the Undersecretariat of Treasury. Key Development Partners include UNDP and KfW who are providing TA related to energy efficiency.

26

TURKEY SEDONDARY EDUCATION PROJECT Updated on October 5, 2010

Key Dates: Approved : March 15, 2005 Effective: May 8 , 2006 Closing: December 31, 2011 Figures in million US Dollars*: Financier Financing

IBRD Government of Turkey

104



IBRD 104 35.02 65.98 *As of March 22, 2011. Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement.

Background and Objectives: The need to raise the educational qualifications of the population is one of Turkey‟s highest priorities. Despite having achieved close to universal primary education, net secondary school enrollment rates continue to be low (60%) and secondary education does not sufficiently equip young people with the skills they need for further learning and work. PISA scores have improved markedly in latest round of PISA tests conducted in 2009, however the average 15-year-old Turk is approximately 1 school years behind the average OECD counterpart in reading, math and science skills, with significantly lower proficiency levels in Eastern regions. The project was approved in 2005, and was subsequently restructured to strengthen focus and increase pace of implementation. The project‟s objective is to improve the conditions for students‟ learning in secondary education and in schools in sub-provinces with low enrollment rates. The project supports Turkey‟s secondary education system reform by helping to revise and implement new secondary general and vocational curriculum programs, providing secondary school students with equipment and competencies in information and communication technologies, by providing training to secondary school teachers, and by implementing improved career guidance and counseling services to secondary students. A new project component approved in April 2010, the School Development Program (SDP), provides grants to primary and secondary schools in sub-provinces with low enrollment rates to address schools‟ educational needs and help improve the conditions for student learning.

Results achieved: Progress under this project has been slower than anticipated, but activity implementation has accelerated over the past few months.

New curricula for more than 66 general secondary education programs and over 700 modules for vocational secondary education programs were developed and are under implementation. These curricula are more closely aligned to student competencies and international standards of learning

A new web-based career guidance system, bringing together students' interests and abilities with available educational offerings and career opportunities, is operational

School Plans have been approved for all 2710 school in all 46 sub-provinces covered under the SDP, and activities are proceeding well.

The direct beneficiaries are expected to be secondary education students, both in vocational/technical schools and general secondary schools, who will gain from an improved curriculum, better education materials, and more motivated and qualified teachers. Teachers will also benefit from the improved training in new curricula. The beneficiaries of the recently introduced School Development Program are students, parents, teachers and administrators of schools receiving the grants in sub-provinces with low enrollment rates.

Implementing Agencies: Ministry of National Education (MONE)

27

TURKEY ACCESS TO FINANCE FOR SMES I PROJECT Updated on March 14th, 2011

Key Dates: Approved : June 8, 2006 Effective: July 26, 2007 Closing: April 30, 2012 Figures in million US Dollars: Financier Financing

IBRD Government of Turkey Other Donors Other Donors

697



IBRD 697 684 45 *As of March 14, 2011. Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement.

Background and Objectives: Small and medium size enterprises (SME) play a very important role in the economy, owing to their considerable share in the total number of enterprises and in total employment. SMEs account for 99 percent of all enterprises, 80 percent of employment, and are estimated to account for up to 57 percent of total value added. A strong SME sector in would thus positively contribute towards key issues such as lowering unemployment and increasing productivity, competitiveness and growth. SMEs ability to play an even bigger role in the economy is however undermined by severe constraints in accessing credit. In fact, according to a World Bank enterprise survey, access to finance is perceived as the single most severe obstacle to growth by SMEs. Moreover, as a result of the recent global crisis, SMEs share in total bank credit declined by about 5 percent and its share in comparison to total corporate credit dropped from about 53percent to about 45percent. In addition, most of the banking sector funding available is short term in nature, with average maturities not extending beyond one year. Under the above backdrop the Access to Finance for SMEs I project aims to address the lack of medium and long term financing for SMEs. Specifically: The project‟s objective is to broaden and deepen the access of Turkish SMEs to medium and long-term finance, with a view to ultimately contribute to an expansion of productive activities and to job creation. The project also targets some of the most underserved regions, as data has shown that finance is generally concentrated around large urban centers. The Access to Finance for SMEs I project consists of two credit lines of US$577 million (equivalent) to Halkbank and US$120 million (equivalent) to Türkiye Sinai Kalkınma Bankası (TSKB). The two intermediary banks channel the credit lines directly to SMEs, including those located in targeted underserved areas in the eastern and central part of Turkey. The original project was topped up twice through additional financing, highlighting continued demand and the successful implementation by the intermediary banks.

Results achieved:

Access to medium term finance provided to over 650 firms.

Geographical coverage extends to most parts of Turkey, with an emphasis on underserved areas such as the Eastern and Central regions.

Participating SMEs represent more than 20 sectors including printing, plastic processing, tourism and food processing.

The expected employment impact of the project has been the creation of more than 9300 jobs.

Implementing Agencies: Turkiye Sinai Kalkinma Bankasi (TSKB) and Turkiye Halk Bankasi (Halkbank) (Borrowers)

28

TURKEY RAILWAYS RESTRUCTURING PROJECT Updated on: September 27, 2010

Key Dates: Approved : June 9, 2005 Effective: June 19, 2006 Closing: June 30, 2012 Financing in million Euro: Financier Financing


143.7 51.2


World Bank Disbursements, million Euro*: Financier Total Disbursed Undisbursed

IBRD 143.7 49.5 94.0 *As of March 14, 2011. Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement.

Background and Objectives: Turkey's geopolitical position as a link between Europe and Asia makes the transport sector crucial for the economic development of the region. Turkey‟s role both as a transit country and as an origin and destination of freight make the focus on transport extremely important. The restructuring of the transport sector is challenging for two main reasons: (i) strategic decisions have to be taken regarding the optimal transport modal split and the future of the railways; and (ii) the scope and pace of the Turkish State Railways (TCDD) restructuring has to be carefully assessed, in compliance with EU “Acquis Communautaire” to facilitate Turkey‟s integration within the EU in the near future. The project is the first phase of an Adaptable Programmatic Lending program, whose objective is to improve the financial viability, productivity, and effectiveness of railway operations. The objectives specific to the project are: (a) to improve the effectiveness of railway operations on the Mersin-Toprakkale and Yenice-Bogazkopru railway lines by increasing the capacity and improving service quality; and (b) to lay the groundwork for restructuring the Turkish Railways (TCDD) by developing experience with financially viable contract arrangements for loss making public services and access pricing of infrastructure.

Results achieved: Progress has been limited, but activities for the modernization of the railway lines started in late 2009. Once the infrastructure investments on the railway lines are completed, the project is expected to yield benefits in relieving congestion on the railway lines to/from Mersin‟s port so that more of the port traffic may be handled by rail rather than road. The project is expected to benefit the railway financially by attracting freight traffic and improving network density. It also supports the transformation of TCDD into a commercial and market-oriented railway. Over time, this would improve the railway delivery of both passenger and freight services, as well as reduce the subsidy needs of the railway, freeing public funds for other uses.

Implementing Agencies: Turkish Railways (TCDD). Key Development Partners include the European Union, which has provided financing to Turkish Railway for support on reform of the railway.

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