continuation of the Bank's long-term support to programs in education, health, community-based watershed management, and community development and heritage.
In banking and public sector reform, the CAS Update included a first Programmatic Financial and Public Sector Adjustment Loan (PFPSAL) of $1.1 billion in July 2001, followed by a second PFPSAL II approved in May 2002, for the amount of US$1.35 billion. The CAS Update also included a loan to support the Social Risk Mitigation Project, which was approved in September 2001. An Agriculture Reform Implementation Project will support structural reform in agriculture and the implementation of a direct income support system for farmers.
For further details please see the World Bank's Country Assistance Strategy for Turkey for 2001-2003, and the CAS Progress Report of 2001.
Impact on the Ground
In collaboration with the Government and other partners, in particular the IMF and increasingly the EU, World Bank programs have helped make a significant difference on the ground over the past several years. The major results achieved are :
Enrollment in schools increased, with more rapid enrollment by girls, and the quality of education improved. World Bank support to the country's Basic Education Program has helped increase enrollment in schools by 1.2 million, with more rapid enrollment for girls. Computers have been provided to 6,000 urban and 22,000 rural schools all over the country. Over 22,000 rural schools have benefited from the provision of educational materials. More than 600,000 children in the least served areas have been given access to education. In-service training has been provided to 370,000 school inspectors, teachers and administrators.
Back-to-school and winter heating support was provided to the most vulnerable. Over 1 million poor school children have benefited from back-to-school support and 400, 000 poor households have been assisted with winter heating and food. Some 2,000,000 children have benefited from 6 pilot schemes to fund cash transfers to the poorest families upon the condition that they demonstrate that their young children receive basic healthcare and attend school. A system to monitor poverty, based on annual Household Income and Expenditures Surveys has also been established.
Afforestation, irrigation and training led to better management of natural resources. A total of 88 micro-catchments in 11 provinces were rehabilitated and rural income was increased by some US$ 600 per family per year. An area of 27,000 hectares was afforested for soil conservation purposes. Some 20,000 hectares of rangeland in forest areas was rehabilitated and small scale irrigation was developed over 12,368 hectares. Some 1.2 million wild pistachio trees were grafted over an area of 6,000 hectares and 1,533 technical government personnel were trained in participatory watershed management.
Timely assistance was delivered to victims of the Marmara earthquake. Cash assistance of some US$ 250 million helped over 200,000 families in tent cities. Since 1999, some 15,000 housing units have been completed and distributed. Approximately 2.4 million insurance policies have been issued since the catastrophic insurance pool scheme was launched in September 2000. A targeted trauma program was launched, which included the design and implementation of a mental health strategy, with special emphasis on emergency preparedness.
Public Expenditure Management improved. The primary budget reflected a sizeable surplus of 5-6 percent of GNP in 2000-01 . The budgetary envelopes for health, education and social protection were protected. Most extra-budgetary funds (EBFs) were eliminated to improve the transparency and comprehensiveness of the budget. Legislation eliminating all existing provisions authorizing creation of duty losses in the state banks was adopted. The public investment program was rationalized which resulted in the reduction of an estimated 32 percent in the average completion time of investment projects in the 2002 budget. Some 15,000 public sector workers were retired in late 2001/early 2002 to reduce costs.
Progress was made in institutional reform and improved governance. A new public procurement agency was established and a new public procurement law was enacted that will reduce costs by 50 percent , in addition to corruption. A middle office for public debt management was established in the Treasury and a public debt law was enacted. A new internet-based public accounting system was introduced. Complex indirect taxation was simplified with the introduction of a Special Consumption Tax. The public pension system adopted in 1999 that contained deficits of 2 percent of GNP was reformed . Public awareness of the anti-corruption/good governance agenda was increased through Diagnostic Surveys conducted by the Turkish Economic and Social Studies Foundation.
A clean-up and reform of the banking sector was undertaken. An independent banking authority was established. State banks, whose losses had amounted to over US$ 20 billion (over 10 percent of GNP) were cleaned up. A new Banking Act, and accompanying regulation, up to EU standards was enacted. Some 19 insolvent banks, whose losses amounted to over US$ 10 billion (over 5 percent of GNP) were closed. The remaining banks were offered a bank re-capitalization scheme.
The Real Sector was helped to overcome crisis. The framework on corporate sector restructuring (Istanbul Approach), that will assist 200-250 debt-laden companies to recover, was developed. Technical assistance and access to medium term finance was provided to exporters through the Export Finance Intermediation Loan (EFIL) with net increases in exports of over US$ 300 million / year.
Investment was promoted. Constitutional change to allow International Arbitration was approved. FDI legislation was revised. (The previous legislation had been approved in 1954.) A Patent Institute was established and a new Patent Law submitted to Parliament to protect industrial property.
Markets were improved. State Monopolies in electricity and the telecommunication sector were unbundled. The Electricity Market Law was passed in March 2001 and the Gas Market Law in May 2001. An energy regulatory agency ( EMRA ) was established and a petroleum distribution company (POAS) was privatized. A regulatory agency for telecommunication was established in May 2001 and a new plan for corporatization and privatization of Turk Telecom was approved in May 2002.
Agriculture was modernized. Distortive output and input subsidies were reduced by 70 percent , from US$5 billion in 1999 to US$1.65 billion in 2001. A Direct Income Support Program was established that benefited some 2.3 million farmers. A wheat and cotton grading system was developed as a first step toward receipt-based ( de-materialized) trading. Research master plans in agriculture and forestry were established to provide mid to long term prioritization of agricultural research systems.
For details of World Bank projects in Turkey, please click here.
Challenges Ahead