PROGRAM INFORMATION DOCUMENT (PID) CONCEPT STAGE January 30, 2014 Report No.: AB7504 Operation Name Turkey Sustaining Shared Growth DPL Region EUROPE AND CENTRAL ASIA Country Turkey Sector Other social services (20%); General public administration sector (20%); General industry and trade sector (20%); Capital markets (20%); Public administration- Other social services (20%) Operation ID P146322 Lending Instrument Development Policy Lending Borrower(s) REPUBLIC OF TURKEY Implementing Agency Undersecretariat of Treasury Date PID Prepared January 30, 2014 Estimated Date of Appraisal March 21, 2014 Estimated Date of Board May 30, 2014 Approval Corporate Review Decision Following the corporate review, the decision was taken to proceed with the preparation of the operation. Key development issues and rationale for Bank involvement 1. Turkey’s rapid growth and development over the past decade is one of the success stories of the global economy. After a banking crisis in 2001, the country embarked on a concerted path of structural reform supported by strong fiscal consolidation, strengthened banking supervision, a reform of the social security system, and the shift to a flexible exchange rate regime with an independent Central Bank responsible for inflation targeting. Per-capita income subsequently almost tripled in less than a decade, and Turkey, with a population of 75 million, is now an upper middle-income country with the world’s 18th largest economy. Social outcomes have also improved considerably as a result of economic growth and improved public service delivery, with an increased in access to education and health services. Further enhancing the economy’s potential over the medium term and reaching high-income status will require more structural reforms, particularly at the micro level, to bolster competitiveness and boost private savings. Proposed Objective(s) 2. This is the first in a series of two Development Policy Loans (DPLs) supporting Turkey’s goal of continued socially and environmentally sustainable growth, which is key to fostering shared prosperity and particularly income growth for the bottom 40 percent of the population. 3. The proposed DPL series is central to the Bank’s engagement in Turkey, as described in the Country Partnership Strategy (CPS) endorsed by the Executive Board on March 27, 2012> The proposed operation advances selected outcomes under the first and third pillar of the CPS (enhancing competitiveness and employment and deepening sustainable development). Preliminary Description 4. The programmatic DPL is structured around the following three pillars: (A) building competitiveness and investor confidence; (B) sustaining inclusive growth and widening access to finance; and (C) sustaining Turkey’s infrastructure reforms. While focusing on Turkey’s medium-term structural agenda, the proposed series contains measures to promote transparency and good governance in the context of building investor confidence and strengthening the regulatory framework in selected infrastructure areas. 5. The proposed prior actions are for the first DPL are: Pillar A: Full implementation of integrated company regulation system (MERSIS); the publication by the Public Oversight Authority of the full set of Turkish Standards on Auditing foreseen by the Commercial Code, in line with international standards; new credit bureau to become fully operational; adopting critical secondary legislations to implement the CML; enactment of a new Consumer Protection Law and Enactment of the Law on Payment and Security Settlement Systems, Payment Services and Electronic Money Institutions. Pillar B: Approval of National Employment Strategy; enactment of Secondary Legislation to the Leasing Law. Pillar C: Enactment of a new Electricity Market Law and issuance of critical secondary legislation; issuance of articles of association and regulations for a new Energy Markets Operation Corporation EPIAŞ by the energy regulator EMRA; enactment of a new railway law that enables open access and private freight operation and consultation on secondary legislations. Poverty and Social Impacts and Environment Aspects 6. The policies and reforms supported by the DPL program are expected to have positive distributional impacts in Turkey. All policy actions supported by the operation are expected to contribute to higher and sustainable growth, a stronger fiscal position and ultimately higher living standards over the long term, while specific measures under both pillars are also likely to have direct and positive distributional impacts over the short-term. 7. The specific policies supported by the DPL series are not likely to have significant effects on Turkey’s environment, forests, water resources, habitats or other natural resources. Tentative financing Source: ($m.) Borrower 0 International Bank for Reconstruction and Development 500 Borrower/Recipient IBRD Others (specifiy) Total 500 Contact point World Bank Contact: Marina Wes Title: Lead Economist and Sector Leader, PREM Tel: 5242+8359 / 90-312-459-8359 Email: mwes@worldbank.org Location: Ankara, Turkey (IBRD) Borrower Contact: Gokben Yener Title: Head of Department Tel: (90-312) 204-6000 Email: hazine@hazine.gov.tr For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop