WASHINGTON, August 28, 2020—The World Bank’s Board of Executive Directors today approved a loan in the amount of $500 million for the Turkey Emergency Firm Support Project. The project aims to ensure access to finance for private Small and Medium Enterprises (SMEs) affected by - or adapting to - the economic impacts of COVID-19.
In Turkey, the COVID-19 pandemic has created a combination of both supply and demand shocks to firms on a scale which has not been seen in recent history. Access to finance has deteriorated for firms - particularly underserved SMEs, that were credit constrained even before the crisis struck. Without adequate and timely support, otherwise viable firms face the risk of permanent closure, threatening jobs as well as the prospect for a speedy economic recovery.
“A key pillar of the World Bank Group’s approach to supporting client countries in mitigating the impact of COVID-19 on their economies, firms, and workers entails ensuring sustainable business growth and job creation as countries restructure their economies in the face of COVID-19 and lay the foundation for a resilient recovery,” said Auguste Kouame, World Bank Country Director for Turkey. “Consistent with this framework, the World Bank is working with the Government of Turkey and other stakeholders to contribute to supporting viable firms and protecting jobs.”
The project will ensure money is available to support otherwise viable SMEs that were severely affected by COVID-19, a critical component in both containing the fallout from the shock and preparing for recovery.
The project will be implemented through two public banks and will include a $250 million line of credit to VakifBank, to be lent directly to eligible SMEs, and a $250 million line of credit to the Turkey Development and Investment Bank (TKYB), which will be available to commercial banks, leasing companies, and factoring companies under a wholesale structure.
“The World Bank financing provided under the Project, mostly in the form of working capital sub-loans, will help keep SMEs afloat, maintain employment during the acute phase of the crisis, and support their recovery,” remarked Gunhild Berg, Alper Ahmet Oğuz and David Stephen Knight, Task Team Leaders of the Project.
The project will pay special attention to women-centered firms and firms operating in lagging regions and is aligned with Turkey’s Country Partnership Framework (CPF) for the FY18-21, which focuses on the three strategic areas of growth, inclusion, and sustainability.