Ankara, June 30, 2006 — The World Bank approved last night a Euro 403 million (approximately US$500 million) Programmatic Public Sector Development Policy Loan (PPDPL) for Turkey.
The PPDPL will support policy actions under the Government’s Public Sector Management and Fiscal reform program in four connected components:
The first component will support the maintenance of the currently enabling macroeconomic framework which has underpinned Turkey’s recovery after the 2001 crisis as well as the ongoing sustained economic growth that began in 2002 and continues to date.
The second component will focus on the improving quality of fiscal adjustment by addressing the growing deficits in the social security system through (a) parametric reforms of pensions and (b) structural improvements in the institutional and administrative framework for the provision of social security benefits and social assistance. This component also supports universal access to health services while deploying actions to increase the efficiency and contain the cost of health services funded by the state.
The third component will support the continued implementation and broadening of the structural and institutional reforms of the public financial management and budget systems.
The fourth component will support improving the administration and governance of the public sector through actions required to reduce regional disparities, promote decentralization and combat corruption at all levels of the public sector.
On the occasion of the Board Approval of the Policy Loan, Andrew Vorkink, Country Director for Turkey stated: “The World Bank is pleased to support the Government’s Reform Program with this Loan which will help Turkey not only to support the enabling macroeconomic framework which continues to be an important underlying driver for sustained growth, but also to help Turkey to create further fiscal space by improving its fiscal adjustment structure.” He continued: “The reforms supported by the PPDPL are among the most progressive occurring in the world today and are vital both to long-term fiscal stability and to modernization of the economy including convergence with the EU. We would like to congratulate the Turkish Government for undertaking these bold and important reforms which will bring important benefits to the population through more equitable and sustainable pensions, universal health insurance and improvements in the management of the public sector.”
Regarding the lending instrument for the Programmatic Public Sector Development Policy Loan (PPDPL), the principal amount of the Loan will be repaid in a single maturity in 2016 with interest payable for each interest period at a rate equal to Libor for Euro plus the World Bank’s Fixed Spread. Fixed Spread Loan (FSL) will be automatically converted into fixed rate at the time of disbursement.