Document of The World Bank FOR OFFICIAL USE ONLY Report No. 142353-TR INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY PERFORMANCE AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP FRAMEWORK FOR THE REPUBLIC OF TURKEY FOR THE PERIOD FY18-FY21 February 13, 2020 Turkey Country Management Unit Europe and Central Asia Region The International Finance Corporation Europe and Central Asia Region The Multilateral Investment Guarantee Agency This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Group authorization. The date of the last Country Partnership framework FY18-FY21 was August 29, 2017. FISCAL YEAR [2020] CURRENCY EQUIVALENTS [1 USD = 5.98 TRY (01/31/2020)] ABBREVIATIONS AND ACRONYMS ASA Advisory Services and Analytics IFC International Finance Corporation AIIB Asian Infrastructure Investment Bank IFI International Financial Institution BOTAS Boru Hatlari ile Petro Tasima A.S. IPF Investment Project Financing CE Citizen Engagement ISKUR Public institution for employment services CEM Country Economic Memorandum MFD Maximizing Finance for Development CLR Completion and Learning Review MIGA Multilateral Investment Guarantee Agency CPF Country Partnership Framework MSMEs Micro, Small, and Medium Enterprises CPS Country Partnership Strategy NPLs Non-Performing Loans CTF Clean Technology Fund OIZ Organized Industrial Zones DP Development Plan PIU Project Implementation Unit DPL Development Policy Lending PPIAF Public-Private Infrastructure Advisory Facility DRM Disaster Risk Management PLR Performance and Learning Review ECA Europe and Central Asia PPP Public-Private Partnership ESF Environmental and Social Framework RAS Reimbursable Advisory Services EU European Union RETFs Recipient-Executed Trust Funds FDI Foreign Direct Investment SCD Systematic Country Diagnostic FRiT Facility for Refugees in Turkey SCP Sustainable Cities Program FY Fiscal Year SuTP Syrians under Temporary Protection GDI Graduation Discussion Income TA Technical Assistance GDP Gross Domestic Product TANAP Trans-Anatolian Pipeline GEF Global Environment Facility TOBB Turkey Union of Chambers GNI Gross National Income UMIC Upper-Middle-Income Countries GTFP Global Trade Finance Program WB The World Bank IBRD International Bank for Reconstruction and WBG The World Bank Group Development IBRD IFC MIGA Vice President: Cyril E. Muller Georgina Baker Hiroshi Matano Director: Auguste T. Kouame Wiebke Schloemer Merli M. Baroudi Task Team Leader: Eavan O’Halloran Arnaud Dupoizat Gianfilippo Carboni Mustafa Ugur Alver Fernando Blanco ii Table of Contents I. INTRODUCTION .................................................................................................................................... 1 II. MAIN CHANGES IN COUNTRY CONTEXT.............................................................................................. 2 Changes in Political and Institutional Context ...................................................................................... 2 Changes in Key Economic Developments ............................................................................................. 3 New Development Plan ........................................................................................................................ 6 III. SUMMARY OF PROGRAM IMPLEMENTATION .................................................................................... 7 Lending and Investments ...................................................................................................................... 7 Partnerships, Leveraging and WBG Synergies ...................................................................................... 8 Progress Towards Corporate Commitments ........................................................................................ 9 Progress toward achieving CPF Objectives ......................................................................................... 10 Focus Area 1: Growth ..................................................................................................................... 10 Focus Area 2: Inclusion ................................................................................................................... 11 Focus Area 3: Sustainability............................................................................................................ 12 IV. EMERGING LESSONS .......................................................................................................................... 13 V. ADJUSTMENTS TO THE COUNTRY PARTNERSHIP FRAMEWORK ...................................................... 15 Focus Area 1 – Growth ....................................................................................................................... 16 Focus Area 2 – Inclusion..................................................................................................................... 17 Focus Area 3 – Sustainability ............................................................................................................. 18 Greater Focus on Cross-Cutting Issues ............................................................................................... 20 Implementation Period and Lending Envelope .................................................................................. 20 VI. RISKS TO CPF PROGRAM .................................................................................................................... 21 VII. ANNEXES............................................................................................................................................. 23 Annex 1. Updated CPF Results Matrix (basis for Completion & Learning Review self-evaluation).... 23 Annex 2. Changes to the Original CPF Results Matrix ........................................................................ 32 Annex 3. Progress on the Original CPF Results Matrix ....................................................................... 47 Annex 4. Citizen Engagement ............................................................................................................. 57 Annex 5. CPF IBRD Lending Approvals (Planned and Actual) ............................................................. 59 Annex 6. CPF ASA Deliveries (Actual).................................................................................................. 61 Annex 7. Planned ASA ......................................................................................................................... 63 Annex 8. Statement of IFC's Committed and Outstanding Portfolio .................................................. 64 Annex 9. Selected Indicators of Bank Portfolio Performance and Management ............................... 67 Annex 10. Operations Portfolio (IBRD/IDA and Grants) ..................................................................... 68 iii REPUBLIC OF TURKEY PERFORMANCE AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP FRAMEWORK I. INTRODUCTION 1. The Performance and Learning Review (PLR) assesses the implementation to date of the World Bank Group (WBG) Country Partnership Framework FY18-FY21 (CPF) for Turkey1 and evaluates where it has supported the Government’s program and where it is making progress towards the WBG’s goals of ending extreme poverty and boosting shared prosperity. Since the CPF was launched in August 2017, Turkey has experienced important political, institutional and socio-economic changes and has witnessed significant macro-financial volatility that resulted in a marked economic growth slowdown. The PLR details that good progress has been made towards achieving many of the CPF objectives, which is particularly noteworthy given the challenging country circumstances. The PLR confirms that CPF objectives remain valid for the most part and proposes some amendments to reflect the changes in country circumstances, client demand and program evolution. The WBG is using the flexibility embedded in the CPF design to make adaptations to the program at this PLR stage to take into account progress achieved, to allow for more time to implement programs and to respond to new issues. In addition, during the CPF, the Government launched its 11th Development Plan (DP, 2019-2023) and its New Economic Program (2018- 21) and the PLR ensures continued alignment between these client strategies and the WBG program. 2. The relevance of the CPF’s three focus areas – 1) Growth, 2) Inclusion and 3) Sustainability – is confirmed in the PLR. Amendments are proposed to some of the objectives and indicators within these areas to reflect where the adapted program will focus and the appropriate scale of ambition going forward. Under Growth, the emphasis on stronger macro-economic and fiscal management has become more important given the economic volatility experienced by Turkey in the past couple of years. Under Inclusion, the challenge of increasing equitable access to jobs and services to boost human capital and attenuate poverty in the midst of economic volatility is heightened, exacerbated by the need to support at least 4 million refugees2 living in Turkey (about 90% of whom are Syrian). Under Sustainability, Turkey has recently reaffirmed its commitment to scale up its actions on addressing climate change and has requested international support for this, and the PLR responds accordingly. While IFC’s own-account program is expected to be in line with amounts projected at the time of the CPF, it will be lower than in recent years due to less favorable market conditions and heightened political and economic risk. Turkey is MIGA’s largest country exposure globally; as a result, MIGA will be selective in exploring project opportunities in the context of high additionality and development impact. 3. The PLR assesses Turkey’s progress towards IBRD graduation3 given that its Gross National Income (GNI) per capita is above the Graduation Discussion Income (GDI) threshold. The SCD had highlighted the importance of enhancing the quality of Turkey’s institutions, a pre-requisite for IBRD graduation, and the CPF outlined that the program would focus on the governance and institutional issues in sectors where the WBG is most active. The PLR notes that this focus remains central to the program going forward, with a continued sectoral approach to addressing governance and institutional challenges 1 Report # 11096-TR discussed by the Executives Directors on August 29, 2017 2 The Syrian refugees in Turkey are given a special official status called Syrians Under Temporary Protection (SuTPs) and the report uses the term “refugees” for all others, regardless of country of origin 3 The Graduation Discussion Income threshold is $6,795. Turkey’s GNI per capita (Atlas method) was $10,420 in 2018 (data.worldbank.org), down from a high of $12,560 in 2014. The exchange rate depreciation in 2018 and 2019 will further decrease the GNI per capita for the next couple of years. 1 for effective government policies (further elaborated in Section V below). IBRD support to Turkey remains important because: (i) Turkey continues to face a challenging economic context, with decreasing rather than increasing income per capita in dollar terms; (ii) it has the greatest number of poor people in the ECA region: (iii) it is hosting the largest number of refugees in the world and thus providing a critical global public good; and (iv) the government faces high borrowing costs partly due to relatively under-developed financial sector institutions and a challenging macroeconomic environment, thus creating more difficult access to international capital markets. Market access for private sector financing of long-term investments is limited by high risk perceptions. These elements underscore the need for the WBG to continue supporting Turkey and assist it in IBRD graduation. 4. The PLR proposes extending the CPF by two years to encompass FY22 and FY23. The PLR recognizes that the program is being implemented in a satisfactory manner, despite the difficult country circumstances. The WBG has carefully managed its engagement in Turkey as regards the shift in the use of IBRD instruments during the CPF period and adjusting IFC’s program to the evolving situation of the private sector in the country. The CPF would benefit from additional time for implementation so that a critical mass of CPF results can be achieved, while also creating the space for the WBG to work with Turkey to deepen engagement in areas that are important for IBRD graduation. Turkey continues to face economic headwinds and the private sector has been severely impacted. The IFC program would, therefore, benefit from having a more stable environment in order to develop a full program, as would be required for a new CPF. Furthermore, the Government has requested the WBG to align the CPF period with Turkey’s 11th DP, that itself covers the 2019-2023 period. II. MAIN CHANGES IN COUNTRY CONTEXT Changes in Political and Institutional Context 5. During the CPF implementation period, Turkey’s political context changed significantly with the adoption of a new Constitution for an executive Presidential system and a major reorganization in Government. It carried out broad governmental and institutional changes that have moved it from a parliamentary system to an executive Presidential system. These changes included abolishing the Prime Minister’s office and several ministries, mandating that all ministries be under the control of the president and transferring some of the parliament’s oversight functions to the presidency. The state of emergency put in place nationwide after the failed coup attempt of July 2016 was lifted in July 2018, although some of the emergency decree laws remain effective to date. Domestic and international observers have raised concerns about the weakening of institutions. 6. The influx of Syrian refugees has continued during the CPF implementation period; making Turkey the largest refugee-hosting country and creating some social unease. Turkey remains a recognized global leader in its refugee response, hosting more refugees than any other country in the world (there are approximately 4 million refugees in Turkey, of which 3.6 million are Syrians4). Only 2.5 percent of the total Syrian population in Turkey is living in refugee camps, with the rest living predominantly in the south-east regions (mainly Gaziantep and Sanliurfa) and across big municipalities (Istanbul, Izmir, Bursa, Adana, Mersin and Hatay). Turkey offered most refugees access to housing, education, health facilities, a limited number of work permits, and some monetary social assistance managed jointly by the UN. At the start of the influx in 2013 until late 2016, Turkey largely financed the response from its own resources. As of 2016, and with an increasing number of refugees, the European 4 The Syrians in Turkey are given a special status called Syrians Under Temporary Protection - SuTPs 2 Union (EU) committed Euro 6 billion (in two tranches of Euro 3 billion each) to Turkey to support its efforts through direct support to Government services and through targeted projects administered by partner development agencies, including the WBG. This funding has been channeled through the EU’s Facility for Refugees in Turkey (FRiT). Changes in Key Economic Developments 7. The CPF implementation period has been marked by a time of economic volatility. A strong policy stimulus helped counter a mid-2016 downturn caused by the effects of the failed coup attempt of July 2016 and external shocks. With the contribution of ongoing policy stimulus, economic growth accelerated from 3.2 percent in 2016 to 7.4 percent in 2017. By end 2017, annual inflation jumped to 11.1 percent from 7.8 percent in 2016 (Figure 2) and the current account deficit widened to 5.6 percent of GDP from 3.8 percent in 2016. By May 2018, a combination of policy responses and growing international tensions accelerated capital outflows and currency pressures. 18 10 Fig 1: GDP growth (% real) Fig 2: Inflation (% annual avg) 16 8 14 6 12 4 10 2 8 0 6 2013 2014 2015 2016 2017 2018 2019 2020 2013 2014 2015 2016 2017 2018 2019 2020 Inflation (CPF) Inflation (outturn) GDP growth (CPF) GDP growth (outturn) 8. By August 2018, the situation came to a head with a market crash that produced strong ripple effects across the economy. The Lira-US Dollar exchange rate fell to 60 percent below its value in January 2018 and Turkey had some of the highest market risk indicators among emerging markets. Inflation rose sharply (peaking at 25 percent annually in October 2018), the economy contracted in the second half of 2018, unemployment rose (jumping from 10 percent in January 2018 to 14 percent by mid-2019 - Figure 3), and banks’ asset quality deteriorated. 9. Elevated debt, including external exposure, of Turkish corporates and banks added stress to the economy. Among emerging markets, Turkey has one of the highest corporate debt to GDP ratios, rising from 56 percent of GDP in 2014 to over 75 percent in 2018 Q3, driven almost entirely by foreign exchange denominated debt. Leverage and economic downturn combined into a sharp rise in liquidity and solvency risks for corporates. 10. A combination of policy and other factors helped to gradually reduce external market pressures at the end of 2018. Firstly, a significant tightening in monetary policy and the release of a New Economic Program (in September 2018) helped gradually restore market confidence. This enabled banks to secure much needed refinancing, though private banks also responded rationally by cutting lending and reducing their external exposure. By mid-2019, developed markets’ monetary policy also turned more accommodative, which further helped to ease external market pressures. Whilst higher costs of financing throughout 2018 H2 and 2019 H1 created pressures for firms, a combination of debt restructuring for 3 large enterprises, extensions of the Credit Guarantee Fund for SMEs, and credit stimulus by state banks helped to smooth the short-term transition. Table 1: Key Macroeconomic Indicators and Projections 11. Low levels of public debt have afforded Turkey fiscal space to respond to the downturn. Tax collections in 2018 declined, which was partly offset by expenditure adjustments, particularly to capital, goods and services. At the same time, public transfers, including social assistance spending for poorer households, also accelerated. The fiscal deficit rose from 2.4 percent of GDP in 2018 to an estimated 3 percent in 2019. The fiscal deficit could have been higher if it were not for a windfall in non-tax receipts. Turkey maintained access to external finance over this difficult economic period, though at less favorable conditions. Government Eurobond issuances increased by nearly 45 percent in 2019 compared to 2018; average cost of funding remained similar, but average maturity fell from around 16 to 6 years between 2017 and 2019. Government external debt rose from 30 percent of GDP to an estimated 32 percent between 2018 and 2019, in part driven by exchange rate effects. 12. State Owned Banks in Turkey continue to play a key role. They account for around 46 percent of outstanding corporate loans and 40 percent of outstanding retail loans. As credit expansion has significantly slowed down during the downturn, State Owned Banks have tried to fill the gap; over 2019, State Owned Bank credit expanded by around 15 percent compared to 3 percent for private banks. In terms of prudential indicators, State Owned Banks’ capital adequacy ratio is around 16.5 percent (vs. 19.1 percent for private banks) whilst the Non-Performing Loans’ ratio is around 3.6 percent (vs. 6.6 percent for private banks). Official NPLs are low but credit risk is higher as reflected in loans under close watch (Stage 2 loans). 13. Growth resumed by early 2019 on the back of fiscal and credit stimuli, but markets remained volatile in the first half of 2019. This was a challenging period marked by declining foreign exchange reserves, uncertainty over the Istanbul local elections (that had to be run twice), political tensions with the US, and regional conflict. These shocks have posed challenges to the overall policy framework. 4 14. Despite ongoing fragilities, external market pressures have declined and the economy is recovering. The current account has turned positive, banks have reduced their foreign exchange debt, and forex reserves have gradually recovered. Inflation has started to come down, which has prompted the Central Bank to cut interest rates. As a result, credit growth has resumed, driven mostly by consumer rather than commercial credit in line with low investment demand. 15. Economic developments over the CPF implementation period have increased pressures on low income households. The slowdown in the economy has increased unemployment from 10.9 percent to 13.9 percent between June 2018 and June 2019 (Figure 3); the non-agricultural unemployment rate rose to 16.2 percent from 12.9 percent. The highest job losses were in the agriculture and construction sectors, where low-income households comprise most of the workforce. Similarly, youth unemployment rose to 25.8 percent from 20.2 percent a year earlier. These trends are putting upward pressure on the incidence of poverty, which has remained steady at around 9 percent for the last three years (Figure 4). Fig 3: Unemployment Rate Fig 4: Poverty (% below UMIC poverty line) 10.5 25.0 23.0 10 21.0 19.0 17.0 9.5 15.0 13.0 9 11.0 9.0 8.5 2013 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 Total Non-agriculture Youth Poverty (CPF) Poverty (Outturn) 16. Medium-Term Prospects: Turkey is projected to have a gradual recovery in the medium-term with risks tilted to the downside. Inflation is projected to fall to high single digits in the medium term. Poverty is expected to increase in 2019, before declining gradually over the medium-term. The pace and sustainability of the current incipient recovery will depend in great part on reducing economic uncertainty and restoring investor confidence. Key to restoring confidence and reducing Turkey’s risk premia is strengthening external buffers. Though Turkey’s reserves are adequate compared to possible short-term calls, it nevertheless remains vulnerable to external market pressures. 17. Monetary policy going forward will be critical to reducing risk premia and strengthening external buffers, but monetary authorities have a complex balance to strike. Recent progress in disinflation has prompted the Central Bank to cut its policy rate from 24 percent to 11.25 percent between June 2019 and January 2020. An overly expansionary monetary policy could fuel currency pressures and further stress corporate and bank balance sheets. Market interventions to accelerate credit expansion could delay recovery (given existing leverage, short-term finance and low demand) and exacerbate financial instability. Corporate debt overhang in Turkey is likely to be an important drag on private investment over the medium-term. Addressing this challenge will require a holistic approach to dealing with distressed assets in the banking sector. It will also require efforts to increase access to long-term finance including through the development of capital markets. 5 18. Effective use of available fiscal space can play a useful role in supporting Tur key’s economic recovery. Turkey experienced economic turmoil in 2018 H2 with more fiscal space compared to selected peer countries in comparable recessions in recent years. Analysis of how fiscal space evolves under different macroeconomic scenarios suggests that Turkey can absorb limited shocks. The effectiveness of Turkey’s countercyclical response will not only depend on the level on the composition of the stimulus. In the short-term, an acceleration in transfers has supported the fiscal multiplier. But transfers need to be timely, targeted and timebound. Going forward, addressing revenue and expenditure efficiency challenges will be critical to support medium-term growth objectives and sustain fiscal policy as an important anchor of economic stability in Turkey. 19. The CPF had highlighted macroeconomic risks which ultimately materialized, but the extent of the ensuing economic shock was greater than expected. This has had three important implications. Firstly, fiscal policy has been more expansionary, and therefore government borrowing requirements have been higher than expected at the time of the CPF. Secondly, access to external financial markets has been more costly, particularly for banks due to increased risk premia and tightening global monetary policy until more recently. Thirdly, the Government has had the dual challenge of sustaining a short-term recovery with a challenging external environment and firms weighed down by debt, while needing to address priority structural reforms to accelerate productivity growth. All these had important implications for the CPF period to date. New Development Plan 20. The CPF was fully aligned with Turkey’s overarching development goals as outlined in its 10th Development Plan (DP for 2014-2018). The DP diagnosed the key challenges that Turkey needed to overcome to escape the “middle income trap” and succeed in becoming a high-income country. The 10th DP was built on four high level objectives: (1) Innovative Production, Stable, and High Growth; (2) Qualified Individuals and Strong Society; (3) Livable Places and Sustainable Environment; and (4) International Cooperation for Development. The first three of these objectives included a set of 25 Transformation Programs that outlined in more detail the reforms to be pursued and the types of investments to be made. 6 21. In July 2019, Turkey launched its 11th DP for the 2019-2023 period, which sets out the longer- term structural reforms to be pursued to address the country’s development challenges. The objectives of the plan were defined within the framework of a stable export-oriented growth model that focuses on efficiency with the industrial sector playing a dominant role. The focus areas are generally the same as the previous DP, although the fourth pillar of the 10th DP; “International Cooperation For Development” has been replaced by a new pillar; “State of Law, Democratization, and Good Governance”. The consistency in strategic approach between the 10th and 11th DPs confirms that the three focus areas under the CPF remain valid. As part of the Government’s DP, the Government also launched its New Economic Program for 2019-2021 in September 2018 which sets out the economic policy responses to restore stability and the longer-term structural reform to strengthen Turkey’s economic performance. III. SUMMARY OF PROGRAM IMPLEMENTATION Lending and Investments 22. During the CPF period to date, the planned IBRD lending pipeline has been fully delivered (Annex 55). IBRD lending delivery totaled $3.85 billion including investment operations in energy, access to finance, municipal development, disaster and clima te resilience, and water sectors. The average annual IBRD lending delivery for FY17-18-19 at US$1.3 billion was aligned with that envisaged in the CPF annual lending targets of between US$1–1.5 billion. 23. The CPF implementation followed through on its promise to IBRD Lending Composition to Turkey (million USD)* bring in a greater mix of lending instruments into the program, with Current CPF 3,000 six new investment project financing (IPFs), one development policy 2,500 lending (DPL) on Resilience Growth 2,000 and Inclusion (RIG, FY18), and one 1,500 credit line operation. In parallel, 1,000 more investment financing was 500 mobilized through the FRiT in the human development areas where 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* demand for IBRD lending had been low. Perhaps most notable has been IPF CL DPL the delivery of two IPFs—Disaster Risk Management in Safe Schools and Irrigation Modernization—that allowed the WBG to follow up its long-standing analytical and policy dialogue in these critical areas with important IBRD investments and mobilization of other resources (GEF to Irrigation, Clean Technology Fund for the Public Buildings Energy Efficiency, the EU FRiT to Safe Schools). The program also included the Partnership for Market Readiness (PMR) Program (trust fund of $3 million) which is an important initiative in preparing the grounds for Turkey to potentially participate in international carbon markets. The CPF had noted the lesson learnt from the previous CPS about the need for a selective, persistent and supportive engagement and this was realized with the delivery of these operations, which built on the trust established with the Government over long-term dialogue and brought the full value-added of the WBG with technical and financial 5 The previous CPS covered the FY12-16 period and the current CPFcovers the FY18-21 period. The FY17 program was technically not covered by either the CPS or the CPF. However, because the CPF proposed a lending envelope that covered a five year period FY17-21, we include FY17 lending in this assessment. 7 resources. The volatility in the overall macroeconomic framework did not provide a conducive framework for further DPL support beyond the RIG in FY18 and preparation work of a follow-up DPL was put on hold during FY19 pending stronger macroeconomic performance. 24. The performance of the IBRD portfolio in Turkey also strengthened in a sustained way. There are now 16 IBRD operations, two GEF-financed projects and six trust-funded (recipient-executed trust funds, RETFs) projects in the portfolio for a combined total of $4.88 billion. Portfolio indicators were consistently strong with a low-level of risk, record high disbursements, and satisfactory closing of seven lending operations (including RETFs). A stand-out operation for swift implementation was the Trans- Anatolian Pipeline project ($400 million) that was approved before the CPF in December 2016 and fully disbursed by end of FY18. 25. Overall IFC delivered on its program expectations with large investment programs in FY17 and FY18, and a significantly smaller program in FY19 reflecting heightened risks and a focus on portfolio management. The CPF expected IFC’s own-account investment program to be $600-800 million p.a. which was met on average with some variability for a cumulative delivery total of US$3,250 m (FY17: $1,348m, FY18: $1,127m, FY19: $275m, FY20 to date: $500m). IFC also committed US$938 million to Turkish banks under its short-term Global Trade Finance Program (GTFP) in FY18, broadening access to finance for companies. However, FY19 saw a significantly reduced program of $275 million, reflecting elevated financial risks, increased focus on portfolio management, reduced demand from clients and increased global risk aversion. As a result, in FY19, IFC’s committed portfolio in Turkey decreased by close to 25% reflecting a sharp reduction in the GTFP program due to import compression and lower demand for import finance. Portfolio risk deteriorated with Non-Performing Loans (NPLs) contained to a few assets while debt risk-adjusted return remained among the highest in IFC’s global portfolio. 26. Turkey continued to be MIGA’s largest gross exposure by country, representing about 13 percent of MIGA’s portfolio. As of end FY19, MIGA’s gross exposure totaled about US$3 billion across 15 projects: five in the infrastructure sector, where MIGA supported urban transport projects via its non- honoring sub-sovereign guarantees to the municipalities of Istanbul and Izmir; four in the financial sector, concentrated in three operations in support of Turk Exim, where MIGA deployed its non-honoring SOE product; and six in the services sector, where MIGA provided Political Risk Insurance guarantees in the context of the Health PPP program for the construction and operations of new hospital facilities In the period of the CPF, in FY18/19, MIGA underwrote new guarantees of US$618 million in the financial sector. Partnerships, Leveraging and WBG Synergies 27. The volume and number of Trust-funded projects in the Bank’s Turkey portfolio increased, mainly driven by the EU Facility for Refugees in Turkey (FRiT) engagement. The partnership established with the EU around the FRiT has had a significant impact on the WBG’s portfolio: as part of the first tranche of FRiT funding, the Bank was successful in securing three critical projects – one in Education for $153 million and two in Social Protection and Jobs for a combined $55.5 million. This allowed it to re-engage with investments in the human development areas for the first time in many years in Turkey to support refugees and Turkish citizens equally. The successful experience to date of designing and administering these three FRiT-funded projects meant that the Bank secured a further €713 million for five projects from the second tranche of FRiT (to be delivered in FY20) and mobilized a further €320 million in IBRD as co- financing for two of these projects. Equally important is that the engagement with the Ministries on these projects has facilitated sector-wide dialogue to strengthen, opening potential new opportunities for the WBG going forward. The Bank has also stepped up coordination with UN agencies and key bilateral 8 institutions on the human development and inclusion agenda, notably on education disaster risk management (with KfW), social entrepreneurship community of practice (with EBRD and UN agencies) and active labor market programs (with UN agencies). 28. The WBG continued to mobilize cofinancing from development partners. Building on the successful cofinancing of the TANAP project (FY17) with the Asian Infrastructure Investment Bank (AIIB), the WBG team worked closely with AIIB to mobilize its cofinancing of the Gas Storage Expansion project (FY18). The EU provided €25 million in cofinancing to the Sustainable Cities series of projects (FY17, FY19). As noted above, the project proposals prepared by the WBG team for financing under the second tranche of the FRiT were able to secure not just FRiT financing, but also created demand for IBRD financing. 29. Turkey continued to champion Maximizing Finance for Development. The Sustainable Cities Series of Projects (SCP), which was established as part of a joint implementation plan, continues to serve as a means for the World Bank and IFC to regularly dialogue on ‘upstream’ TA and to ensure IBRD lending does not displace commercial financing. The Bank and IFC continue to work closely on opportunities to build the enabling environment for private sector involvement, for example under the Bank implemented work on municipal finance self-assessments, capital investment planning, and PPP pipeline development financed by Public-Private Infrastructure Advisory Facility (PPIAF). The Bank and IFC teams recently conducted a city solutions workshop for Izmir, a key IFC client for over a decade, at the Barcelona Smart City Summit in November 2019, which helps the city in scoping out its smart city strategy. Progress Towards Corporate Commitments 30. In the CPF implementation to date, all projects approved have been fully compliant with the Citizen Engagement (CE) corporate requirements for citizen-oriented design and beneficiary feedback indicators. The Quality of CE as measured by the ECA CE Quality Index has improved over the period with a number of projects incorporating promising citizen engagement (DRM, Irrigation). However, there is much to be done, especially in the urban and finance sectors, to ensure citizen engagement feeds into quality at design stage and supports implementation through the capacity building of PIUs (Annex 4 provides more details on how CE is being implemented and what support is being planned to strengthen this going forward). 31. Similarly, gender has been mainstreamed across the CPF implementation to date in three ways. First, most projects and ASA have incorporated gender-sensitive monitoring to identify barriers related to women’s access and participation to finance, jobs and services (such as the Turkey Jobs Diagnostic). Second, the RIG DPL has supported the adoption of specific policies to improve gender outcomes, notably the introduction of tax incentives for private nursery schools and reform to the labor law making labor market programs more flexible for women. These reforms, while modestly implemented to date, have helped open the dialogue for broader improvements needed. Third, under the CPF Growth and Inclusion Pillars, dedicated project investments to increasing women’s access to finance and employment are under implementation, such as the Equitable Access to Finance Project, the Employment Support Project, and the newly-designed Social Entrepreneurship and Cohesion Project (to be approved in FY20). Despite these initial steps, more support to policy implementation and investments at the sectoral level will be needed to significantly impact gender outcomes, especially in regions to the South and East as well as those with high refugee populations, where gender outcomes lag even further behind. 32. IFC has supported the enhancement of women’s participation in Turkey’s economy. IFC worked with Turkish banks to provide financing for women entrepreneurs under its Banking on Women program, 9 launched a program to support women in supply chains, and engaged in efforts to increase the number of women on company boards. In particular, as part of IFC’s program in Turkey to boost financial inclusion for women entrepreneurs, in 2018 IFC invested $75 million in a private sector gender-linked bond dedicated to financing enterprises and companies owned or managed by women. This has been the first gender bond issued among private banks globally. The investment is in partnership with the Women Entrepreneurs Opportunity Facility (WEOF), launched by IFC through its Banking on Women Program, and Goldman Sachs’ 10,000 Women initiative. 33. The climate co-benefits of the portfolio averaged 40% of new commitments in FY17-18-19. In FY19, it was especially high at 76% due to the client’s focus on sustainable development operations in DRM, irrigation and sustainable cities. This was a significant improvement over the 8% recorded in FY18 and the 37% in FY17. Progress toward achieving CPF Objectives Focus Area 1: Growth CPF Objective 1: Increased Fiscal Space 34. Progress under this objective was impacted by economic developments. Though the share of direct tax revenues in total tax revenues increased from 29.2% in 2015 to 35.9% in 2019, with a target of 40% for 2021, this was not related to reform efforts. The RIG DPL, Tax Policy ASA, and the Fiscal Reform Program were designed to support the authorities’ efforts. Fiscal space enabled the Government to respond to the 2018-2019 economic downturn; but the medium-term fiscal strategy now needs to rebuild buffers for sustainability in the face of any future shocks. The Bank has substantially increased and deepened macro-fiscal analysis and TA over the CPF implementation period. However, progress on policy dialogue has been limited by recent reorganization and turnover in Government. More is needed to build a common understanding with the Government on the adequacy of the macroeconomic policy framework. There was progress on the other CPF indicator - establishment of a monitoring system for internal controls in public administration - whereby 70% of central Government institutions’ data is now included in the software. The RIG DPL, together with Programmatic Governance TA, supported this achievement through TA activities. CPF Objective 2: Enhanced Access to Finance to Underserved Segments 35. There has been progress under this objective, even in the face of macro-financial challenges which constrained growth and deepening of the financial sector. This CPF Objective is a core focus of both IBRD and IFC programs and all indicators with respect to supporting the extension of financial services to MSMEs and people are either on track or have already been surpassed. The engagement through IBRD-financed lines of credit and IFC’s menu of services and investments supported improvements in access to longer-term financing (including Islamic Financing) for MSMEs, export-oriented SMEs, large enterprises engaged in domestic supply chains and other underserved segments. However, Turkey also experienced a sustained credit boom in the run up to the mid-2018 economic shock, which has contributed to financial sector vulnerabilities. As planned in the CPF, the Bank supported post-FSAP TA to support financial stability. More is needed for financial sector deepening that is in line with Turkey’s development aspirations. There has been strong progress on the number of private pension members which the program supported under the RIG DPL. CPF Objective 3: Enhanced Competitiveness and Employment in Selected Industries 10 36. Despite the economic slowdown and increase in national unemployment, progress under this objective has been positive. This CPF has two result indicators– employment supported by IFC clients (and its gender disaggregated indicator with respect to female employment) and employment supported by IFC equity funds investees. IFC operations in the manufacturing sector were responsible for the generation of more than 50,000 jobs of which around 10,000 are female employment, reflecting satisfactory progress towards target values for the two indicators. In addition, progress on employment supported by IFC equity funds has been favorable with the generation of almost 17,000 jobs, very close to the CPF target value for this indicator. Supplementary indicators measuring IFC contribution under this objective include the number of students reached by IFC clients and its gender disaggregated indicator which have experienced solid progress. Focus Area 2: Inclusion CPF Objective 4: Increased Effectiveness of Social Assistance 37. Progress under this objective has been mixed, with a need to adjust the indicators to reflect the Bank’s actual engagement areas. Around the time of the start of the CPF, the Government had a “Social Assistance Vision 2023” reform in its agenda, which included the consolidation of demographically- targeted programs and the introduction of a poverty-targeted income-support program with higher benefit levels to better protect those in need. The Bank team was supporting this agenda through ASA. However, in the midst of the broader constitutional changes, the Government postponed the reform. As a result, the coverage of the poverty gap has increased only slightly from 9.9% to 10.6%, falling short of the 20% target. Progress has been made on the availability of five new indicators of monetary and non- monetary welfare and inclusion, which is directly attributable to the Bank’s continued engagement on poverty analytics, the suite of tools for social assistance program, and monitoring. The Bank has started dialogue on new risk-sharing models6 for bridging the non-contributory and contributory social protection (social security) schemes, linked to productivity and welfare among vulnerable, informal workers. The Bank has also been assessing the impact of minimum wages on employment outcomes, employment subsidy programs, and severance pay. As such, the links between social assistance, employment and social insurance schemes will be increasingly important moving forward. CPF Objective 5: Increased Labor Force Participation of Women and Vulnerable Groups 38. Progress under this objective has been mixed. An important improvement in female labor force participation was achieved (it reached 34.2 percent in 2018, up from 31.5 percent in 2015), which is particularly noteworthy given the overall difficult economic environment of Turkey and growing unemployment. On the contrary there was a worsening of the NEET rate despite many incentive schemes to increase youth participation in labor markets and in vocational training. The continued influx of refugees has also had an impact on this indicator and on overall labor market dynamics. During the CPF period, the Bank`s support evolved from TA and non-lending operations into investment operations financed by the FRiT and new demand for IBRD financing. This evolution was expected at CPF time, although the scale of the Bank’s work under the FRiT was not clear at that time because the second tranche of FRiT funding had not yet been released. The partnership between the WBG-EU around the FRiT has allowed the WBG to play a greater role in responding to the refugee crisis, particularly through the FRiT-financed projects on active labor market programs and entrepreneurship pilot support, both striving for increasing female participation. Combined with the policy reforms supported by the RIG DPL 6 Global workshop on Changing Nature of Work held in Ankara, November 2019, with support and involvement from Turkey Social Security Institution (SGK). 11 and analytic support mentioned above, the Bank’s engagement in female and youth inclusion increasingly reflects a combination of targeted investments and longer-term policy changes. 39. Due to economic developments, slow progress has been observed on the IFC support to the generation of direct employment in the manufacturing sector in the less developed regions of the country. The economic activity slowdown reached all areas of the country, negatively affecting the credit demand for private sector investments in the less developed regions. In addition, more conservative IFC portfolio management in a context of strong macroeconomic volatility and the need for greater selectivity have been reflected in a lower than planned increase of the IFC portfolio in less developed regions, which has been reflected in jobs generated by IFC clients in these regions, far from the target values defined in the CPF. However, the recently committed large facility for financing MSMEs and women entrepreneurs in the 22 provinces most affected by the SuTP influx should contribute to achieving this objective. The project aims at enabling local MSMEs, SuTPs and Turkish citizens to grow their businesses and have better access to opportunities and markets. CPF Objective 6: Strengthened Performance of the Education and Health Sectors 40. There was mixed progress under this objective with improvements on the education indicator but modest progress made on the health indicators by IBRD and IFC. The indicator on increasing the percentage of school enrolment of SuTP children is firmly on track although the WBG’s program was only a relatively small part in the overall Government and donor response to the refugee crisis and hence the attribution to the WBG’s program calls for this indicator to be revised. After a long-term engagement on DRM issues through ASA and trust funds, the Bank delivered the DRM in Schools Project (FY19, $300m) and administered the FRiT-financed Education Infrastructure for Resilience Project (FY17, $153m), both of which are ensuring safe learning environments for children that are resilient to earthquake and climate disasters, energy efficient, disability and gender inclusive. Alongside both projects, community outreach has remained a priority. The Bank’s Health sector project has helped boost access to Healthy Living Centers, a notable innovation combining community-based services with preventative care. However, other components under the project have faced implementation challenges which resulted in the project’s restructuring in late 2019. As such, the indicators related to health will be adjusted to more accurately capture results. The performance of the IFC portfolio in healthcare through Public Private Partnerships (PPPs) has been modest as the focus has shifted from the increase of PPP projects in the sector to the assessment of the existing investments. Patients attended by hospitals under PPP agreements in 2018 reached 2.4 million, far from the target value of 14 million envisaged in the CPF. Focus Area 3: Sustainability CPF Objective 7: Improved Reliability of Energy Supply and Generation of Green Energy 41. The progress under this CPF objective has been satisfactory: four of the five indicators are either achieved or on track. This has been supported by a long-term engagement and a concentrated WBG program in the energy sector, especially through (i) investments in the areas of energy security (TANAP and Gas Storage Expansion projects), (ii) operations in renewable energy (Geothermal Development and Renewable Energy Integration projects) and energy efficiency (SME Energy Efficiency, Energy Efficiency in Public Buildings), (iii) ASA activities in all areas; and (iv) IFC renewable energy portfolio and power generated and distributed. The key milestones such as installed renewable energy capacity and renewable energy generated through IBRD financed projects are almost fully achieved. The gas trading platform has been established and is up-and-running although the number of players in the gas market is small. Due 12 to the recent financial challenges among corporates in Turkey, out of the US$47 billion of outstanding debt held by Turkey’s electricity generation and distribution companies, approximately US$5 billion needs to be restructured (preliminary agreements are in place for $2.5 billion of this debt). This had an impact on the indicators that were decided at the time of the CPF preparation, such as “generation and distribution clients reached”, causing it to be off-track. CPF Objective 8: Improved Sustainability and Resilience of Cities 42. This objective is also showing good progress. One of the best performing projects in the portfolio is the Land Registry Project which has already surpassed its target indicator (set for 2021), achieving a 98% service satisfaction rate. The long-term investment in dialogue and analytics around sustainable cities came to fruition with the delivery of the Sustainable Cities Program (SCP) which to date includes two operations (FY17 and FY18) and an additional financing (FY19). The joint IFC-WB implementation plan for the SCP has been critical to help the Government modernize the municipal framework for financing and investment, including through PPPs. This is a core aspect of the MFD framework at the country and sector level with mechanisms for coordinating and sequencing WBG activities in support of private sector-oriented reform and investment programs (see para 28). The resilience of cities and public schools was also supported through the IBRD financed DRM in Safe Schools project and the FRiT-financed Education Resilience project. The Global Facility for Disaster Reduction and Recovery (GFDRR, in place at the time of the CPF, has enabled the Government to assess disaster and climate risks to critical infrastructure and organized industrial zones, and will enable the Ministry of Environment and Urbanization (MoEU) to assess gaps and build capacity in the assessment and management of urban resilience. IFC’s program evolved favorably as investments in urban transport (metro and rail) increased the number of passengers and reduced average travel time. However, due to financial stress faced by IFC clients, projects on urban solid waste management had a modest performance CPF Objective 9: Increased Sustainability of Infrastructure Assets and Natural Capital 43. This objective was the least well-defined at the time of the CPF, given that dialogue was nascent in some areas covered here and the direction of the program was unknown. The energy savings were a notable success, supported through the WBG’s broad program in energy (as noted under CPF Objective 7 above). The engagement in the Agriculture sector was supported by two critical pieces of ASA – one on producers’ organizations and another on food price inflation – as well as dialogue that continued to focus on ways for Turkey to narrow the urban-rural divide which is critical to poverty, unemployment and lack of competitiveness. The update to the Forest Sector Review underpinned a growing dialogue around natural resources management, that has resulted in a request for a new investment project (FY21) for integrated landscape management in the Bolaman region. The CPF had left open the option of considering indicators for this objective at the time of the PLR and this is now detailed in Section V below. IV. EMERGING LESSONS 44. To date, most of the envisaged risks in the CPF have materialized, but the flexible design of the program allowed it to adapt to respond, whereby most of the CPF objectives have remained on track. The WBG’s comparative advantage contributed to sustaining a robust engagement and dialogue with the Government, even under a significantly changed country context. As the CPF design is based on the SCD and Turkey’s Development Plans, most of its objectives remain relevant. The program continued to balance its intended strategic focus on the long-term development plans of Turkey with a flexible approach to respond to emerging needs. At times that balance was tilted more towards the flexible side, 13 when the reform program lost momentum and focus, thus rendering it difficult to deliver broader sector- wide strategic lending that had been hoped for in areas such as education. The recent macroeconomic developments and their impact on IFC’s portfolio have made evident the need for integrating macroeconomic and market risk assessment into the IFC program. In some cases, the CPF objective indicators faced attribution issues given the very small scale of the WBG program in a country the size of Turkey, which points to the need for addressing this issue going forward. 45. The significant time and efforts that were deployed during the previous CPS period to diversify the WBG’s program came to fruition in this CPF, with the WBG’s lending program moving into supporting DRM and sustainable cities, areas where lending had not been focused in the recent past but where ASA and dialogue had been sustained over a long time-frame. This followed the recommendation of the CLR of the previous CPS that the WBG program focus on sectors where relationships already exist, programming has been successful and expressed client demand is high. The lesson learnt is for the program to ensure continuity in these areas going forward given that the relationships in these areas have already been built and there is clear commitment from the client (this also underpins the rationale for continuing with most of the CPF Objectives). IFC portfolio diversification in terms of clients, sectors and instruments lessened risks associated with macroeconomic volatility and GDP growth slowdown. 46. Diverse use of WBG instruments helped the program to be engaged in critically important development areas although there are challenges that come in parallel with this diversification. As the CPF was implemented, the lesson emerged that diversifying the menu of instruments in Turkey could be successful in selected areas where there was clear commitment from the client. For the first time, the WBG mobilized a successful RAS to engage on the Business Environment Reform agenda, with notable results for Turkey’s ranking in the Doing Business index. Use of other RETFs helped to engage in Climate Change and Disaster Risk Management and provided much-needed analytic and technical support to Government programs in these areas. Mobilization of CTF and GEF resources complimented engagement in the geo-thermal and irrigation projects. The dialogue and global analytics prepared in the context of the Human Capital Project also served to nurture the relationship in the health and education sectors. The use of the credit line instrument has become more targeted to vulnerable groups, with the Inclusive Access to Finance Project (May 2018) focusing on female-owned firms and less developed regions impacted by the refugee influx. However, these instruments (as well as the FRiT, described in the next paragraph) have posed challenges in implementation because of the time needed to develop an understanding of WBG procedures in counterpart institutions that are not used to dealing with the WBG. This, in turn, imposed high costs of supervision on the Bank’s team and carries the risk of slower disbursement in earlier years of projects’ implementation periods. 47. The WBG team showed pro-activity in engaging with the Government and the EU on the refugee agenda through the FRiT, but under-estimated the burden placed on the program by the new FRiT- financed projects. Because the Government took the decision not to borrow from IFIs to respond to the refugee influx, the Bank’s team adapted to that context and pursued the opportunity presented by the FRiT instrument to design and administer investment projects in support of Government efforts. With three FRiT-financed projects already underway and five more to be approved in FY20, the experience has provided the lesson that the WBG can add value and play a role if it is agile and maximizes partnerships. This is especially important in the critical refugee agenda that has a significant global public good. The lesson also emerged of the importance of bringing a development approach that targets Turkish citizens equally with the SuTPs and refugees, to enhance social cohesion and assure greater sustainability. The FRiT opportunity also served to strengthen further the WBG-EU relationship both in Turkey and in the ECA 14 region. However, in the project preparation phase, the Bank’s teams are stretched because the funds provided as part of the Trust Fund framework for administering the FRiT do not flow until after project approval, meaning that internal Bank resources must be used to prepare these projects; this has placed a heavy burden on teams to do more with existing fixed resources. 48. The impact of the ASA program was not as significant as expected. As planned in the CPF, the WBG continued to deliver a broad program of ASA with the goal of responding to clear client demand and focused on areas that underpinned WBG’s financing engagement. Good efforts were made in this regard. However, overall there is room for improvement to increase the impact of ASA. The lessons learnt are to assure client ownership of ASA sufficiently up-front and to agree on the dissemination beyond Government to other partners and beneficiaries. 49. Relationship building with stakeholders and beneficiaries also contributed towards impact although much more needs to be done on citizen engagement. The relationships established with the Turkey Union of Chambers (TOBB) helped in tackling the Business Reform agenda for the private sector. This new form of RAS business, jointly implemented by semi-private TOBB and the Government, emerged as an innovative and effective approach to create impact IFC also signed a MOU with the Turkish Industry and Business Association (TUSIAD) focusing on knowledge sharing and sustainability. The TANAP project received an international award for “Leadership in Community Service and Corporate Social Responsibility” given in recognition of its role in benefiting communities in project areas. The program, however, lagged significantly in citizen engagement in the first couple of years of implementation although this is now improving in FY20 with more focus on the design of mechanisms that engage project beneficiaries proactively and on the capacity building of PIUs. V. ADJUSTMENTS TO THE COUNTRY PARTNERSHIP FRAMEWORK 50. As reaffirmed by the 11th DP, the CPF’s three focus areas – 1) Growth, 2) Inclusion and 3) Sustainability remain relevant given their strong alignment with the Government’s priorities and the progress being made so far. However, adjustments to two CPF objectives and revision of indicators are needed to reflect the changed country context and development challenges. Under the Growth focus area, the emphasis on stronger macro-economic management has become more important given the economic volatility experienced by Turkey in the past couple of years: CPF Objective 1 is thus proposed for revision to reflect better how the program has evolved. Another evolution during CPF implementation has been Turkey’s recent strong commitment to scale up its actions on addressing climate change, for which it has requested WBG and international support; this necessitates a revision of CPF Objective 9, which was loosely defined at CPF time, in order to capture how the WBG program will deepen its engagement in this critical area. The institutional weaknesses identified in the SCD/CPF, call for a renewed focus on institutional strengthening, particularly as part of the IBRD graduation process. 51. Turkey’s GNI per capita is above the IBRD Graduation Discussion Income (GDI) threshold. The program in the PLR accordingly focuses on two important aspects: (1) establishing key institutions for economic and social development; and (2) enhancing domestic economic and financial markets to allow for more stable and predictable access to international credit markets. The SCD had identified Turkey’s institutions as a priority challenge. The CPF program going forward describes how activities can focus on institutional strengthening under each of the CPF objectives that (i) address key institutional challenges to shared prosperity (Inclusion Focus Area); (ii) deliver global public goods (climate change covered under the Sustainability Focus Area and refugee agenda covered under the Inclusion Focus Area), and (iii) help build resilience and create the conditions for increased private sector financing of the economy and 15 scaled-up IFC engagement when conditions permit (Growth Focus Area). In parallel to financing, a key aspect of the program will be to become more selective in delivering good quality ASA that informs effective government policies and underpins reform dialogue where possible. 52. Continued improvements in Turkey’s policies and institutions will be required to lower the cost of accessing credit markets. Market perceptions of risk have remained high in Turkey since mid-2018, contributing to low investor sentiment and higher costs of borrowing on capital markets7. Credit rating agencies rate Turkish sovereign debt a couple of notches below investment grade, with the most recent downgrades in July 2019, citing policy and institutional weaknesses. This provides a strong rationale for continued WBG involvement given that market access for private sector financing can’t yet play a bigger role due to high risk perceptions and financial sector institutions that are not able to cover all segments. Focus Area 1 – Growth CPF Objective 1: Revised from “Increased Fiscal Space” to “Contribute to Strengthened Policies that Boost Economic Stability” 53. Turkey is prone to pronounced volatility in economic growth, which calls for policy reforms that support economic stability and resilience. The Bank has significantly increased and deepened short-term economic monitoring including advice on appropriate economic policy responses that reduce volatility and build resilience to future shocks. Activities include a new series of Turkey Economic Monitors, more regular dialogue with key institutions of economic governance, post-FSAP TA, Fiscal TA, targeted analysis of household employment and welfare, and a review of institutional changes. This work has been shared with the Government, private sector and other stakeholders, which has promoted debate. The program intends to follow up on the outcome of this analytical work to build policy dialogue on more systematic reforms and strengthen capacity within macroeconomic and financial institutions. A live policy matrix is being developed to capture both short and medium-term actions to help track progress on priority reforms and identify entry points for support. Revised result indicators reflect the areas the Bank proposes to engage with respect to institutional building measures. CPF Objective 2: Enhanced Access to Finance to Underserved Segments (unchanged from CPF) 54. Turkey’s financial sector remains critical to growth, even more important since the mid-2018 downturn, and the WBG program here continues to deliver coordinated support. Deepening and diversifying the financial sector, achieving financial stability, increasing financial inclusion, access to long- term finance, and stronger financial institutions are all important drivers for sustainable growth and remain the objectives of the ongoing ASA and Financial Sector operations currently under implementation in the WB-IFC portfolios. In addition, the Bank is developing innovative instruments to support access to finance for exporters, with a planned Long Term Export Finance Guarantee operation (FY20) that seeks to address market failures in that segment. IFC has a solid portfolio for MSMEs and exporters which is expected to expand as soon as economic and credit market conditions improve. The strengthening of financial sector institutions will take the form of a set of ASA that includes TA on municipal bond markets, TA on financial stability, and continued ASA on Financial Inclusion. 7Credit Default Swap (CDS) rates have declined from a peak of around 500 basis points (month average) in May 2018 but remain high at around 300 basis points in late 2019. More recently, short-term bond yields have started to decline from a peak of 24-25 percent in August 2018 and June 2019 to around 15 percent in late 2019. CDS further dropped to 238 basis points in February 2020. 16 CPF Objective 3: Enhanced Competitiveness and Employment in Selected Industries (unchanged from CPF) 55. Turkey’s experience of declines in productivity growth and competitiveness since the Global Financial Crisis remains a key issue and it now faces the dual challenge of sustaining its short-term recovery whilst accelerating potential output through more investments, innovation, and productivity. The Bank’s and IFC’s respective programs continue to address this challenge as outlined in the CPF, through a focus on policy reforms, institutional strengthening and selective investments. The Bank’s Country Economic Memorandum on Productivity identifies a range of potential policy reforms and a new flagship report on Turkey’s participation in Global Value Chains and Trade aims to promote international competitiveness of Turkish firms and deepen economic integration. IFC’s program aims at helping to increase Turkey’s competitiveness and trade integration through improvements in critical logistical transportation infrastructure (ports) and investments in the manufacturing, agriculture and services sectors to increase productivity and innovation. The Bank and IFC are working jointly with the Government on a key institutional reform bolstering capacity to implement reforms in the area of business regulations, as part of IFC’s regular Advisory Services and through the first successful Bank RAS in Turkey for support to Doing Business reforms. As proposed in the CPF, the Bank is preparing a Green Organized Industrial Zones project (OIZ, planned for FY21) to promote OIZ efficiency and productivity and strengthen the Ministry of Industry and Technology’s capacity to lead on the green industry agenda. IFC targets improvements in critical logistical transportation infrastructure (ports) and investments in the manufacturing sector to increase productivity. Some revisions to the results matrix reflect the more advanced stage of these engagements. Focus Area 2 – Inclusion CPF Objective 4: Increased Effectiveness of Social Assistance (unchanged from CPF) 56. The focus here remains on strengthening the evidence-base for policies that ensure greater inclusion and on improving efficiency and effectiveness in social assistance. Some adjustment to the program is needed because progress on the poverty gap (which was the CPF indicator) was greatly challenged by Turkey’s strained economic context and by the postponement of a poverty targeted income-support program which limited the scope of Bank support. The ASA is shifting to take into account this changed policy context and to address institutional strengthening issues. The focus is now on TA, knowledge sharing and capacity building for Government institutions involved in social assistance and employment services to strengthen the links between the two , so as to enhance the possibilities of social assistance beneficiaries to find income generation opportunities and thus promote sustainable exits from poverty and from the need to receive social aid. Second, to increase efficiency, there is a need to strengthen institutional capacity for developing the evidence base for social assistance programming, thereby improving its performance in protecting the poor and vulnerable. New indicators reflect ongoing work, focusing on social assistance being managed based on evidence (in terms of targeting and information systems), and on ensuring mechanisms to refer eligible social assistance beneficiaries to employment agency are operating. CPF Objective 5: Increased Labor Force Participation of Women and Vulnerable Groups (unchanged from CPF) 57. This objective seeks to bring more women, youth and vulnerable groups into the labor market, as outlined in the CPF, with amendments proposed to indicators to better capture results attributable to the WBG program. Ongoing and planned labor market projects financed through WBG and EU FRiT 17 financing will support this area, benefiting Turkish citizens, refugees and other vulnerable groups such as women and youth. The Bank will continue the support planned in the CPF to the public institution for employment services (ISKUR) to strengthen its capacity and effectiveness in helping job seekers. The program will also consider an expanded ASA to develop a more robust evidence base on how to promote social cohesion outcomes in the communities where SuTPs reside, such as through the FRiT Social Entrepreneurship and Social Cohesion Project. Given the lesson learnt on attribution issues, the indicator of increased female labor force participation is being dropped and replaced by indicators that can be more closely linked to the WBG’s actual program. CPF Objective 6: Strengthened Performance of the Education and Health Sectors (unchanged from CPF) 58. This objective remains relevant but indicators are being adjusted to capture the Bank’s engagement more accurately. As noted earlier, the engagement in this CPF Objective area evolved differently from what was originally envisaged and, therefore, adjustments are needed to better capture WBG support. The Bank’s DRM in Schools Project, and the FRiT-financed Education Infrastructure for Resilience Project are building or retrofitting schools to ensure seismic resilience and safe learning environments for children. The health indicator is also adjusted to reflect the revised focus of the Bank- financed Health project that was restructured in FY20. Scaling up the Bank’s support to education and health remain important given the increasing attention paid to the global Human Capital Index (HCI) as Turkey’s initial ranking on the HCI lags most OECD countries (the PISA results on education that were released in December 2019 will help increase this ranking because Turkey showed a significant improvement in its PISA scores). The strengthened relationships with counterparts in these sectors have been the result of strong analytic and policy support during the first phase of the CPF. In health, a robust ASA and IBRD project provide a strong foundation for further engagement. In education, policy dialogue and analytics on the quality of education are being scaled up, and new lending and/or TA here could be possible to support the Ministry of National Education’s capacity for implementing its Education Vision 2023 that focuses on early childhood education, vocational and technical training, school-based management and competitive skills. Prospects for expanding IFC healthcare PPP projects are expected to be limited due to the Government’s review of hospital PPPs suggesting the need to downward adjust the target for the indicator on number of patients attended by hospitals functioning under PPP contracts. Focus Area 3 – Sustainability CPF Objective 7: Improved Reliability of Energy Supply & Generation of Green Energy (unchanged) 59. This objective remains relevant with satisfactory progress achieved to date on many of the indicators due to the continued strong IBRD lending and implementation performance. The program outlined at the time of the CPF will be continued and most of the indicators are on track and therefore remain relevant, although some minor adjustments are needed. The indicator from CPF Objective 9 on energy savings is moved to this objective, thus regrouping all energy related impacts together. The WBG engagement in the energy sector is supporting the capacity of the Ministry of Energy and other energy institutions to prioritize and select more sustainable and green energy with further IBRD investments planned in FY20/21 through an Additional Finance for the Renewable Energy Integration Project, Rooftop Solar Project, and Additional Finance for Geothermal Development. Opportunities for expanding IFC portfolio on renewable energy will depend on the country’s economic prospects and demand projections for the next years as well as government reforms including the establishment of support mechanisms for renewable energy, enhancements in regulatory framework and pricing and the resolution of the debt overhang in the sector. IFC will continue to finance energy efficiency investments through financial 18 institutions and in its investments in the manufacturing sector. In the outer years of the CPF period, WBG engagement could be considered in municipal energy efficiency, energy efficiency in generation, clean production and resource efficiency, demand side response and smart energy systems, waste to energy and offshore wind. CPF Objective 8: Improved Sustainability and Resilience of Cities (unchanged from CPF) 60. This objective remains relevant and indicators are on track due to the strong delivery of IBRD and IFC financing. The joint IBRD and IFC Sustainable Cities platform has been critical for the MFD approach in Turkey; it is an important institution building effort helping the Government modernize the municipal framework for financing and investment, including through PPPs. A Municipal Services Improvement Project in Refugee Affected Areas – to be jointly financed by IBRD and FRiT – will be delivered in FY20 and will specifically support select municipalities which are hosting sizeable numbers of refugees. In line with the Joint Implementation Plan (JIP) cascade approach, IFC intends to continue its selective focus on municipalities that have stronger balance sheets and the capacity to raise funds independently from the Government. This objective is also dependent upon institutional reforms and the broadening of financing tools available to municipalities. The WBG program will continue to focus on institutional strengthening, through TA supported by the Sustainable Cities EU IPA funds (administered by the Bank and implemented by Ilbank) and through PPIAF, the capacity of municipalities to identify bankable projects, creditworthiness to access capital markets, develop financing, and secure international resources for urban infrastructure that benefits residents. 61. Urban Resilience will continue to be a central element of the WBG program. A Programmatic ASA was approved in 2018, with a total funding of $1 million (from GFDRR and the Japanese Government) to support the capacity of institutions (such as Iller Bank, the municipal development bank) that are charged with the mandate for building urban resilience at both national and municipal levels. Building on this TA, the Government has requested an Urban Resilience Project which would establish a long-term framework and platform for investments in climate and disaster resilient urban services and protective infrastructure, housing, public buildings and public spaces, as well as urban development planning that considers long term disaster and climate risk. This Project will support the Government to identify options for sustainable financing given the scale of disaster and climate risks, including options for private sector funding and potential collaboration with IFC and other IFIs. CPF Objective 9: Revised from “Increasing Efficiency of Infrastructure Assets and Natural Resources” to “Strengthened Results Under Climate Action Agenda” 62. The program will take advantage of the flexibility of the CPF to propose a stepped-up engagement based on the recent request by Government for greater partnership with the WBG and other partners on addressing climate change. Two specific avenues of engagement under this objective are proposed: (1) the Government has requested IBRD investments in operations that have a strong climate focus, such as Public Buildings Energy Efficiency FY20, Renewable Energy Integration Project Additional Finance FY20, Rail Connectivity FY20, Geothermal Development (FY21), Rooftop Solar FY21, and Integrated Landscape Project FY21. All these operations include components supporting institutional strengthening of Ministries and other agencies in the energy, agricultural and forestry sectors; and (2) the CPF can consider expanding into other new lending engagements, which would be based on the WBG’s ASA and ongoing dialogue and assessed as clear priorities (Climate Smart Agriculture, renewable energy such as hydropower, urban and coastal resilience, water resource management). Because these projects 19 are either under preparation or proposed for later years of the CPF, it is premature now to formulate a specific results indicator. Greater Focus on Cross-Cutting Issues 63. Citizen Engagement (CE): The Turkey program still has some way to go to enhance the quality of CE in ongoing and new operations especially through building capacity in PIUs to strengthen monitoring of CE. This fits with the 11th DP which includes a focus on democratization in all institutions and organizations and reinforcing participation, transparency and accountability in public administration at all levels. Annex 4 sets out a detailed roadmap planned for the rest of the CPF that includes (a) developing sector-specific strategies in the urban and financial sectors, (b) seeking a greater focus on cohesion and participation at the community level that engages poor, marginalized and vulnerable populations and builds capacity of relevant local institutions for participatory development, and (c) developing a more comprehensive approach for the FRiT-funded projects. To emphasize the importance of CE in the program, a new indicator has been added to the results framework. 64. The new WBG ESF: The new ESF came into play in Turkey during the CPF implementation and the focus has been on ensuring sufficient client capacity for implementing the new ESF requirements. While progress on introducing the new ESF has been acceptable, the capacity of counterparts to implement the ESF needs to be enhanced. There is a need for more emphasis on building capacity in the areas of labor and Occupational and Health Standards (OHS), community health and safety, and addressing the needs of vulnerable groups. In particular, OHS has proved challenging both in the WBG’s program and more generally in Turkey. The WBG’s supervision teams have been vigilant in this regard and action plans are being rolled out to address OHS deficiencies, especially as regards the safety of workers on construction components of IPFs. The new ESF brings more opportunities to enhance the country’s environmental and social frameworks both at policy and institutional levels. Strengthening institutional practices can include assisting counterparts to build and enhance Environmental and Social Management Systems, and trainings on specific topics for project units at the portfolio level. 65. Consolidating ASA for greater impact. As noted in the Lessons Learnt section above, during the CPF to date, the Turkey program has significantly streamlined its ASA to ensure sharper focus on a few select areas that focus on institution building and solidify business development through analytics that underpin the financing program. However, assessing impact of the ASA program has been difficult (ref. para 47). In order to address this, the outreach associated with the ASA will go beyond traditional dissemination of reports and will entail direct engagement and purposeful policy dialogue with relevant counterparts and policy-makers in order to better leverage the policy implications of ASAs. During the preparation of ASA, the WBG teams will engage regularly with client counterparts to ensure ownership and collaboration. Selection of ASA topics will be guided by areas where the WBG can add value and influence select policies and institutions which would have development impact. The economic and institutional analysis in the ASA will be used as input for the future Systematic Country Diagnostic (SCD) Implementation Period and Lending Envelope 66. The PLR proposes extending the CPF by two years to encompass FY22 and FY23. As noted in the Introduction section above, results still need to be achieved in some areas that would be facilitated by a longer implementation period. The challenges that Turkey has faced during the CPF implementation to date are likely to persist as regards facing continued economic headwinds and difficulties for the private sector to expand and thrive (which naturally has an impact on IFC’s program): extending by 2 years will 20 allow the WBG program to respond better to these challenges. Turkey has also requested stepped up support within this CPF for addressing climate change and additional time is needed to be able to deliver on this, especially because support will be delivered in coordination with other development partners. Greater alignment with Turkey’s own development plan would also be possible with an extension because the 11th DP covers the 2019-2023 period. It would be beneficial to have more time to implement the ongoing program and strengthen Turkey’s institutions, as well as allow for sufficient time to prepare a new CPF that is based on a well-articulated SCD that will, in turn, be informed by an in-depth institutional and governance assessment. 67. The program going forward would maintain the same scale of ambition as outlined in the CPF with annual financial commitments of between $1.0 and $1.5 billion. This means that the full CPF program for the FY 17-23 period will be between $7 billion and $10.5 billion although actual lending volumes will depend on client demand, choice of instrument, overall performance of the CPF, IBRD’s financial capacity and demand from other IBRD borrowing countries. VI. RISKS TO CPF PROGRAM 68. At the time of CPF preparation, the overall risk to achieve the CPF objectives was assessed as moderate and this PLR proposes to maintain the same risk rating. The assessment at the time of the CPF already reflected the complicated political and governance context, both domestically and regionally, as well as increased risks from macroeconomic vulnerabilities, including in the financial sector. In the CPF implementation to date, most of the envisaged risks materialized. As an overall Risk-Mitigation strategy, the CPF put a strong emphasis on a flexible program that could be adapted to respond to the country context and that regularly assesses implementation progress. IBRD adopted the risk mitigating measure to adapt the program to focus on areas of strength in the ongoing portfolio which involved delivering operations where dialogue and analytics were already well advanced (Sustainable Cities, DRM, Irrigation) or where engagement was building on an existing portfolio of operations (energy sector). In addition, a DPL series beyond the Resilience, Inclusion and Growth DPL (FY18) was not delivered because the overall macroeconomic environment wasn’t sufficiently robust. IFC’s program has evolved in the face of these risks and high volatility: its investment program was significantly reduced in FY19 while recovering in Q1 and Q2 FY20. MIGA’s program remained flexible and adapted to the evolving macroeconomic conditions and political context. Given that Turkey represents MIGA’s largest country exposure, MIGA has been selective in its engagement with the Government and private sector partners to ensure strong additionality and development impact for projects. The same flexible approach will be continued for the remainder of the CPF period. 69. The political and governance context in Turkey changed significantly with broad governmental and institutional changes introduced including the adoption of a new Constitution outlining a Presidential system and a major reorganization in Government. Now that these changes are in place, it is expected that Government’s attention can be redirected to carrying out its planned reform program articulated in the 11th DP and NEP and that greater consistency in policies will become gradually the norm again. Nevertheless, there is still room for improvement in the political decision making process and in coordination across Government. In parallel, the geopolitical environment of the subregion continues to pose challenges, particularly as regards recent military developments in Syria and the volatility of Turkey’s relationships with the EU, US, and Russia. Despite this context, Turkey has shown itself to be remarkably resilient in the face of these challenges. The overall risk rating for political and governance risks is maintained as Substantial. Risk Mitigation: The WBG will continue to monitor these risks closely and ensure the program responds accordingly. Already, the ASA program is stepping up in the areas of 21 institutional strengthening including PFM reforms. Any future DPL engagement will be carefully considered and calibrated to the circumstances, both in volume and in policy content. Expectations in this regard will remain modest, given the overall concern regarding the challenges that Turkey’s institutions have encountered over the last few years. The next SCD, to be prepared in advance of the future CPF, would include a comprehensive institutional and governance assessment. Risk categories Rating 1. Political and governance Substantial 2. Macroeconomic Substantial 3. Sector strategies and policies Moderate 4. Technical design of project or program Low 5. Institutional capacity for implementation and sustainability Substantial 6. Fiduciary Low 7. Environment and social Moderate 8. Stakeholders Moderate Overall Moderate 70. Though Turkey has restored near-term macroeconomic stability, the economic outlook remains subject to high degrees of uncertainty. The pace and sustainability of recovery will depend on reducing uncertainty and restoring investor confidence. A big part of this will be determined by the adequacy of Turkey’s macro policy framework and broader institutional reforms, which in the near term should help rebuild external buffers, support bank and corporate deleveraging, and promote an effective fiscal policy stimulus. Domestic policy aside, there is high uncertainty and fragility in the global economic outlook, which will also impact on Turkey given the important role of external finance in the economy. The overall macroeconomic risk is therefore maintained as Substantial. Risk Mitigation: The WBG intends to further intensify economic policy monitoring, analysis and dialogue with the intent of supporting clarity, credibility and communication of the policy and institutional framework that is central to reducing uncertainty and risk premia. The scaling up of short-term economic analysis has contributed to increased exchanges with key institutions of economic governance and the private sector. As noted earlier, the Bank is developing a live policy matrix as a regular basis for dialogue with the authorities and a means for establishing a common understanding on economic policy priorities. 71. Institutional capacity in Turkey has been negatively affected by the changes in the country context and this risk rating is now elevated to Substantial and the risk on sector strategies and policies is also elevated to Moderate. The new Government structure in Turkey has only recently been put in place and is not yet operating smoothly. Moreover, the new 11th DP was launched only in summer 2019 and implementation is still not yet in full swing. Lack of progress in sectoral reforms has resulted in the risk on sector strategies and policies being increased from Low to Moderate. Risk Mitigation: The CPF program will focus on those areas where there is a sufficient level of capacity and commitment, usually meaning areas where the WBG team has built the engagement gradually through ASA and policy dialogue. Greater supervision support to operations is already being delivered to respond to capacity constraints. In areas where the more ambitious sectoral reforms are either not fully clear or have stalled – such as the financial and energy sectors – the program will both leverage the support provided by ongoing and planned investment projects and will tailor ASA to remain engaged in policy dialogue at a sector-wide higher level. IFC will continue to exercise selectivity and diversify its portfolio in terms of clients, sectors and instruments to lessen risks. 22 VII. ANNEXES Annex 1. Updated CPF Results Matrix (basis for Completion & Learning Review self-evaluation) FOCUS AREA 1: GROWTH CPF Objective 1: Contribute to Strengthened Policies that Boost Economic Stability CPF Objective Indicators Supplementary Progress Indicators WBG Program Total number of bank loans to corporates restructured under New corporate debt restructuring framework established to deal Planned IBRD Lending: the new financial restructuring framework8 with problem assets in the banking system Long-Term Export Guarantee (FY20) Baseline: 0 (2018) Baseline: No (2017) DPL (FY22, FY23) Target: 200 (2023) Target: Yes (2020) Institutional Efficiency (FY22) The Bank`s recommendations on tax expenditures backed by Approved IBRD Lending: technical analyses published in Public Finance Review Resilience, Inclusion and Growth DPL Baseline: No (2017) Target: Yes (results discussed with Gov’t and published, 2021) Planned ASA: Improved transparency of public sector for contractual Institutional Governance Review commitments Program budgeting initial implementation is started following the Programmatic Public Finance Review Baseline: There is no integrated financial management completion of background study for the facilitation of the move to system that completely captures contractual commitments program budgeting. Ongoing/Delivered ASA: from public procurements (2018) Baseline: No program budgeting / No manual for program Turkey Economic Monitor (Ongoing) Target: The Integrated Financial Management System is fully classification, costing and evaluation (2019) Fiscal Reform Program (Ongoing) operational and accessible by Central Government Target: Draft manual for program classification, costing and Financial Sector TA – FSAP follow up (Ongoing) institutions to capture the contractual commitments from evaluation (2021) Central Government Budget Law proposal Turkey Micro-Monitoring (Ongoing) public procurements (2022) prepared in line with program budgeting structure (2022) Policy Formulation and PFM ASA (Ongoing) Turkish Court of Accounts TA (Ongoing) Background study completed for the facilitation of the monitoring ECA PFM TF (Completed) and reporting of government contractual commitments Internal Audit SAFE TF (Completed) Baseline: None (2017) Target: Roadmap for the monitoring of public procurement commitments (2020) 8The debt restructuring framework includes debt processed under the Framework Agreement and ad hoc restructurings carried out directly by banks. This indicator only covers restructuring under the Framework Agreement, which restructures SME loans (less than TL 25 million) and large enterprise loans (above TL 25 million). 23 CPF Objective 2: Enhanced Access to Finance to Underserved Segments CPF Objective Indicators Supplementary Progress Indicators WBG Program People, MSMEs and exporters reached with IFC financial Volume of outstanding MSME loan portfolio of IFC clients Planned IBRD Lending: services9 IFC Baseline: $30.5 billion (2015) Long-Term Export Guarantee (FY20) Baseline: 2.2 million people (2015) IFC Target: $55 billion (2023) Green OIZ (FY21) Target: 3,6 million (2023) Of which women owned MSMEs Capital Markets/LT Finance/Pension Reform (FY23) Of which women owned SMEs reached (number) Baseline: $130 million (2015) Baseline: 27,000 (2015) Target: $215 million (2023) Approved IBRD Lending: Target: 100,000 (2023) SME III Long Term Export Finance MSMEs and exporters served by banks benefiting from IBRD Volume of outstanding MSME and export loan portfolio of IBRD Inclusive Access to Finance financial intermediary loans Clients MSME & LESCF Baseline: 116,000 (2016) IBRD Baseline: $ 49.5 billion (2019) Resilience, Inclusion and Growth DPL Target: 480,000 (2023) IBRD Target: $53 billion (2023) Planned ASA: Number of women-inclusive10 enterprises financed under CEMs IBRD lines of credit Programmatic Public Finance Review Baseline: 0 (2017) Financial Inclusion TA Target: 80 (2023) Ongoing / Delivered ASA: CEM on Trade and Global Value Chains (Ongoing) Financial sector deepening TA (Ongoing) Doing Business RAS (Ongoing) Management quality, innovation and trade in services TA (Ongoing) Trade Policy TA (Ongoing) Financial Inclusion TA (Ongoing) Procurement Reform TA (Ongoing) CEM on productivity (Completed) Manufacturing-led Services Growth TA (Ongoing) Competitiveness TA (Ongoing) IFC Committed Lending: IFC long term funding to banks to be on-lent to MSMEs and Women Owned SMEs: 9The indicator is defined in the WBG Corporate Scorecard (2015). 10Women-inclusive enterprises, defined as: (i) owned by women (i.e., with at least one female shareholder with properly documented representative and managing powers); or (ii) managed by women (i.e., with at least one female C-level manager or with at least 25% female representation in mid-level management); or (iii) employing a ratio of women that is higher than the average ratio observed in the respective sector. 24 (a) Senior and subordinated loans to top tier as well as second tier banks; (b) Local currency SME covered bonds with banks; (c) private equity funds that invests equity in high-growth SMEs and mid-cap companies; (d) GTFP program, which aims at enhancing the country’s competitiveness by supporting export-oriented sectors; (e) Supply chain finance IFC Advisory: Business environment and FDI-local firm linkages TA (Ongoing) Green Organized Industrial Zones (Green OIZ) advisory project (Ongoing) MIGA: Guarantee of non-honoring of a financial obligation of a state-owned enterprise (NHFO-SOE) for Turkish Eximbank CPF Objective 3: Enhanced Competitiveness and Employment in Selected Industries CPF Objective Indicators Supplementary Progress Indicators WBG Program Employment supported by IFC clients (manufacturing, Students reached by IFC clients: Planned IBRD Lending and EU FRiT Grants: telecom, technology, agribusiness) Baseline: 11,500 (2015) Formal Employment Creation for Refugees and Turkish Baseline: 39,400 (2015) Target: 15,000 (2023) Citizens (W/FRiT) (FY20) Target: 60,000 (2023) o/w Female Students reached Green OIZ (FY21) o/w Female Employment supported Baseline: 6,200 (2015) DPL (FY22, FY23) Baseline: 7,860 (2015) Target: 7,500 (2023) Target: 14,000 (2023) Approved IBRD Lending Innovative Access to Finance Employment supported by IFC equity funds investees Resilience, Inclusion and Growth DPL Baseline: 15,000 (2015) Target: 20,000 (2021) Planned ASA: Regional Disparities ASA Improvement in Composite Doing Business Score Subnational Governance ASA Baseline: 69.1 (2015) Technology and Knowledge for Export Target: > 78 (2021) Digital Economy Assessment Ongoing / Delivered ASA: Regulatory environment and job opportunities in SuTP- affected regions (Ongoing) Fiscal Instruments for Regional Imbalances (Ongoing) 25 Poverty & Inequality Impacts of Fiscal Policy ASA (Ongoing) Response to Refugee Crisis ASA (Ongoing) Social Assistance ASA (Ongoing) At-Risk Youth ASA (Ongoing) IFC Committed Investments: Investments in manufacturing, telecom & IT, and agribusiness sectors. Major industrial conglomerates and large Tier I corporates Tier II corporates and local market leaders with close links to exports or investments in product and process innovation Investments in private equity funds and other collective investment vehicles focused on high-growth, high value- added sectors. Trade finance. FOCUS AREA 2: INCLUSION CPF Objective 4: Increased Effectiveness of Social Assistance CPF Objective Indicators Supplementary Progress Indicators WBG Program Number of social assistance beneficiaries referred to Social Assistance Assessment is publicly disseminated Planned IBRD Lending: employment services. Baseline: No (2019) DPL (Sustainable and Inclusive Growth Series) (FY21) Baseline: 0 (2017) Target: Yes (2020) Target: 800,000 (2022) Approved IBRD Lending Resilience, Inclusion and Growth DPL Social protection performance indicators related to benefit levels, equity and coverage included in MOFLSS M&E system Ongoing / Delivered ASA: for evidence-based program management. Poverty Reduction Strategy and Social Assistance Reform Baseline: No (2017) TA on Multi-dimensional poverty and inequality Target: Yes (2022) indicators Disability and aging study CPF Objective 5: Increased Labor Force Participation of Women & Vulnerable Groups CPF Objective Indicators Supplementary Progress Indicators WBG Program Increased number of women placed in jobs by ISKUR Increased number of women benefiting from active labor market Planned IBRD Lending and EU FRiT Grants: Baseline: 435,317 in 2018 programs 26 Target: 900,000 by 2023 Baseline: 202,439 in 2015 Formal Employment Creation for Refugees and Turkish Target: 600,000 by 2023 Citizens (W/FRiT) (FY20) EU FRiT Agriculture Employment Support Project (FY20) Increased number of Vulnerable Groups registered in ISKUR with the EU FRiT Social Entrepreneurship Project (FY20) support of IBRD operations EU FRiT ISKUR+ (FY20) Baseline: 0 in 2016 Human Capital Project (FY22) Target: 20,000 in 2021 Approved IBRD Lending or EU FRiT grant financing: (Vulnerable groups refers to SuTPs, refugees and Turkish citizens) Resilience, Inclusion and Growth DPL Improved work permit IT system fully operational for Vulnerable EU FRIT Employment Support Project Groups in regions/provinces with high presence of refugees EU FRIT Education Resilience Project Baseline: No (2016) EU FRIT Small Grants Project Target: Yes (2021) Planned ASA: Increased number of youth placed in jobs by ISKUR Increased number of youth in ALMPs Modernizing SPL Systems Baseline: 161,035 male; 81,492 female youth in 2015 Baseline: 74,748 male and 76,172 female (15-24) in ALMPs (2015) Skills for 21st Century 258,796 male; 171,817 female youth in 2018 Target: 150,000 male and 200,000 female (15-24) in ALMPs (2023) Jobs, Welfare and Informality Target: 450,000 male; 400,000 female youth by 2023 Productive Ageing Ongoing / Delivered ASA: Jobs Trust Fund SIDA TF Direct employment supported by IFC clients in less developed Poverty and Equity lens on labor markets, including regions Regional disparities Baseline: 38,000 (2015) Migration management for education Target: 45,000 (2023) Syrian refugee crisis response (Gender disaggregated data being collected) NEET study Pilot of SE Skills and Evaluation Quality of Jobs: Minimum Wage and Informality Jobs Analytics for TA and Labor Market Monitoring IFC Committed Lending: Turkey Bank Facility for SuTP affected regions IFC Gender Program Financing women-owned companies Financing private sector companies which have footprints in lagging regions. CPF Objective 6: Strengthened Performance of the Education and Health Sectors CPF Objective Indicators Supplementary Progress Indicators WBG Program Number of students, teachers and staff having access to Planned IBRD Lending: schools constructed or retrofitted by IBRD operations Human Capital Project (FY22) Baseline: 0 (2017) Target: 320,000 (2023) Approved IBRD Lending: 27 Health Sector project (on-going) Percent of households that receive from health workers EU FRIT Education Resilience Project counselling or education related to healthy living Percent of users of Health Living Centers satisfied with ease of access Baseline: 10% in 2015 to Healthy Living Centers and/or responsiveness of services to users' Planned ASA: Target: 50% in 2022 (at end of IBRD project) individual needs Equitable and Efficient Health Systems Baseline: 50% in 2016 Learning Quality Road Map: ECE, TVET, 21st Century Skills Target: 80% in 2022 and School Management Number of Patients Served through IFC health sector clients Baseline: 0 (2015) Ongoing / Delivered ASA: Target: 3.0 million (2023) Turkey obesity case study (Gender disaggregated data being collected) Documenting Turkish experience in tobacco use control Poverty and Equity lens on nutrition and education, including Regional Disparities SABER- Education Management Information System Assessment IFC Committed Investments: Investments in PPPs in health sectors (4 hospitals) Health Project Bonds Supporting private sector healthcare companies, especially in specialized health services FOCUS AREA 3: SUSTAINABILITY CPF Objective 7: Improved Reliability of Energy Supply and Generation of Green Energy CPF Objective Indicators Supplementary Progress Indicators WBG Program Renewable electricity generation as percentage of total Installed renewable energy capacity financed through IBRD Projects Planned IBRD Lending: generation (%). (MW) and generated through IBRD (MWh) Rooftop solar (FY21) Baseline: 31.5% in 2015 Baseline: 0 in 2016 Geothermal Add. Finance (FY21) Target: 35% in 2022 Target: 250 MW in 2023 and 1,500,000 MWh in 2023 Energy Efficiency in Public Buildings Add. Finance (FY23) Wind energy generated from plants connected to substations funded Approved IBRD Lending: under REIP (MWh/year) Gas Sector Dev. Project Baseline: 0 in 2016 Renewable Energy Int. Project Target: 1,980 in 2022 SME Energy Eff. Project Priv. Sector Renewable Energy & Energy Eff. Project Total power generation and distribution clients reached (IFC) Power generated (GWh) through IFC financial services TANAP (millions) Baseline: 16,700 (2015) Geothermal Development project Baseline: 4.33 (2015) Target: 35,000 (2023) Gas Storage Expansion Project Target: 7.0 (2023) Public Building Energy Efficiency Improved transparency of wholesale gas trading through the Renewable Energy Add. Finance Increased capacity of gas storage (bcm). establishment of Gas Trading Platform 28 Baseline: 2.8 bcm in 2016 Baseline: No in 2016 Planned ASA: Target: 3.8 bcm in 2021 Target: Yes in 2023 Energy Sector Transition (comprehensive review for the Turkey energy transition (FY22) Gas imports through TANAP (bcm/annum). Enactment of the amendment to the Natural Gas Market Law for EE assessment for hydro power, battery storage Baseline: 0 in 2016 improved legal and regulatory framework assessment, gas distribution EE, energy planning and Target: 5 in 2022 Baseline: No in 2016 modelling, EE & RE campaigns (FY20) Target: Yes in 2023 Planning and R&D for transmission, and capacity building for BOTAS, TEIAS and EMRA (FY24) Off-shore wind site preparation (FY24) Cumulative energy savings achieved through WBG-financed Energy audits of public buildings, development of energy sector projects (MWh). program procedures, gender gaps analysis and action Baseline: 1,116,000 in 2016 plan (FY20) Target: 11,500,000 in 2022 Geothermal declining CO2 emissions assessment (FY20) Rooftop solar- financing mechanisms (FY20) Off-Shore wind roadmap (FY21) Generation planning, smart grid and commercial financing (FY20) Coal transition (FY21/22) Ongoing / Delivered ASA: Rooftop Solar PV Assessment Discoms analysis EU/IPA Energy Sector Technical Assistance Program IFC Committed Investments: Financing for distribution, and gas infrastructure such as import terminals, storage, and distribution. Local currency financing and currency swaps to mitigate currency risk Commercializing Sustainable Energy Financing Program (CSEF) to boost energy efficiency for SMEs thorough leasing companies and Green Buildings Green Mortgage/Green Building IFC Advisory: Joint IBRD/IFC advisory program disseminated IFC’s EDGE certification tool 29 CPF Objective 8: Improved Sustainability and Resilience of Cities CPF Objective Indicators Supplementary Progress Indicators WBG Program Improved service delivery and expanded access to digital land Pilots of mass property valuation completed, and new property Planned IBRD Lending and EU FRiT Grants: registry and cadaster information valuation policy Informed Municipal Services Project (FY20, IBRD and FRiT) Increased customer satisfaction at national level Baseline: No (2016) Improving Rail Connectivity (FY20) Baseline: 85% in 2016 Target: Yes (2021) Urban Resilience (FY21) Target: 95% in 2022 Approved IBRD Lending: Number of additional people benefitting from improved Improve planning capacity of and access to targeted municipal Land Registry Project urban infrastructure through IBRD and IFC financing (number services through adoption of sectoral, spatial and capital investment Sustainable Cities 1, 2, AF projects in millions) plans in four municipalities Disaster Risk Management in Schools Baseline: 0 (2017) Baseline: 0 in 2016 DRM in Schools Target: 1.3 (2023) Target: 10 sectoral plans adopted in at least 8 municipalities by 2023 (Gender disaggregated data to be collected) Planned ASA: Sustainable urban transport planning adopted in selected Urban mobility, intelligent transport system and Increased resilience of cities through number of disaster cities/municipalities promotion of multi-model transport system (FY21) resilient public buildings retrofitted, reconstructed, or newly Baseline: 0 (2018) Sustainable urban transport planning (FY22/23) constructed through IBRD operations. Target: 2 cities/municipalities (2021) Intelligent highways (FY21/22) Baseline: 0 (2019) Target: 300 (2023) Average travel time (min) in urban public transportation (tramway Ongoing / Delivered ASA: and metro) (IFC) Housing study Percentage improvement in the quality of CE as measured Baseline: 45 (2015) TA under the DRM GFDRR Grant through the CE Quality Index Target: 25 (2021) EU/IPA Grant for Sustainable Cities Baseline: 33% (in FY19) Target: 60% of projects approved for the remainder of the Urban waste water treated by IFC clients (Mm3) IFC Committed Lending: CPF are of high quality. (Average of FY20-FY21-FY22) Baseline: 0 (2015) Municipal infrastructure investments in metropolitan Target: 3,000,000 (2023) cities including Istanbul and Izmir. Turkey Disaster Management Strategy and Turkey Risk Reduction IFC Advisory: Plan adopted Cities platform (ongoing) Baseline: No (2016) Target: Yes (2023) Percentage of concrete actions from the CE Country Roadmap completed Baseline: 0 (2019) Target: 5 (2022) 30 CPF Objective 9: Strengthened Results Under Climate Action Agenda CPF Objective Indicators Supplementary Progress Indicators WBG Program Annual GHG emissions either reduced or avoided through the The National Intelligent Transport Systems (ITS) strategy Planned IBRD Lending: WBG program (tonnes/year) operationalized Integrated Landscape Mgmt (Bolaman Basin) (FY21) Baseline: 40,000 in 2016 Baseline: No (2017) Green Organized Industrial Zones (FY21) Target: 1,000,000 IBRD reduced, 350,000 reduced IFC, Target: Yes (2022) Climate Smart Agriculture (FY22) 750,000 avoided at country-level through adopting GB Water Conservation (FY22) standards (2023) Length of modernized irrigation network (Kilometers, Custom) Integrated Landscape Mgmt 2 (Black Sea Basins) (FY23) Baseline: 0 (2019) Target: 1520 km (2023) Approved IBRD Lending: Renewable Energy Int. Project Area provided with new/improved irrigation or drainage Water users provided with improved irrigation service SME Energy Eff. Project services (Ha) Baseline: 0 (2019) EU/IPA Energy Project Baseline: 0 (2019) Target: 15,000 (2023) Irrigation Rehabilitation Project Target: 50,000 ha (2023) Public Building Energy Eff. Project Number of projects incorporating or adapting to engage citizens in climate change Planned ASA: Baseline: 0 (2019) Green Growth Target: 3 (2022) Climate Smart Agricultural Practices Ongoing / Delivered ASA: Forestry Study CEM on Productivity IFC Committed Investments: IFC financing to support resource efficiency projects IFC provision of long term loans to financial intermediaries to support RE/EE projects IFC investments and advisory in modern, energy efficient municipal infrastructure (public transportation, water, waste water, street lighting, energy efficient buildings etc) IFC Advisory: Green buildings and industrial zones (ongoing) 31 Annex 2. Changes to the Original CPF Results Matrix FOCUS AREA 1: GROWTH Objective in the Original CPF Matrix Revised Objective Description of the Changes Objective is revised to align with the changes in the CPF Objective 1: Increased Fiscal Space CPF Objective 1: Contribute to Strengthened Policies that Boost economic and governance contexts. The revisions to the Economic Stability objectives aim to capture the WBG’s support to strengthening policies and institutions to boost economic stability. Indicator in the Original CPF Matrix Revised Indicators Description of the Changes Objective Indicators: Indicator is dropped because of lack of a direct Dropped attribution by the Bank operations in Turkey. New Share of direct tax revenues in total tax revenues. indicators are being added to accurately capture the Baseline: 29.2% in 2015 contribution of Bank`s support. Target: 40% in 2021 (Note: the baseline represents the share of tax on income Indicator is dropped because of lack of a direct and profit in total tax revenues.) Dropped attribution by the Bank operations in Turkey. New indicators are being added to accurately capture the Establishment of a monitoring system for internal controls in contribution of Bank`s support. public administration Baseline: No monitoring software populated with The Bank provides active support to Government in information (2016) New indicator: establishing the new financial restructuring framework Target: 70% of central government institutions data Total number of bank loans to corporates restructured under the through the technical assistance. The new indicator included in the monitoring software (2018) new financial restructuring framework11 captures the direct contribution of Bank`s support on this Baseline: 0 (2018) agenda. Target: 200 (2023) The Bank provides support to Government through the New indicator: Background study completed for the facilitation of the Improved transparency of public sector for contractual monitoring and reporting of government contractual commitments commitments. The new indicator captures the direct Baseline: There is no integrated financial management system contribution of Bank`s support on this agenda. that completely captures contractual commitments from public procurements (2018) 11The debt restructuring framework includes debt processed under the Framework Agreement and ad hoc restructurings carried out directly by banks. This indicator only covers restructuring under the Framework Agreement, which restructures SME loans (less than TL 25 million) and large enterprise loans (above TL 25 million). 32 Target: The Integrated Financial Management System is fully operational and accessible by Central Government institutions to capture the contractual commitments from public procurements (2022) Supplementary Progress Indicators: Indicator is dropped because of lack of a direct Improved income tax legislative framework through Dropped attribution by the Bank operations in Turkey. New enacting a new law, which combines corporate income tax indicators are being added to accurately capture the and personal income tax legislations and broadens the tax contribution of Bank`s support. base. Baseline: No (2016) Target: Yes (2017) Indicator is dropped because of lack of a direct Publication of a new risk management guideline for public Dropped attribution by the Bank operations in Turkey. New administration indicators are being added to accurately capture the Baseline: No (2016) contribution of Bank`s support. Target: Yes (2019) Indicator is dropped because of lack of a direct Publication of a new internal audit strategy paper 2017- Dropped attribution by the Bank operations in Turkey. New 2019 indicators are being added to accurately capture the Baseline: No (2016) contribution of Bank`s support. Target: Yes (2017) New indicator: The Bank provides technical assistance to Government in New corporate debt restructuring framework established to deal its efforts to establish the debt restarting framework. with problem assets in the banking system Baseline: No (2017) Target: Yes (2020) The new indicator aims to capture the contribution of New indicator: the Bank`s support in Turkey`s tax expenditure efficiency. The Bank`s recommendations on tax expenditures backed by technical analyses published in Public Finance Review Baseline: No (2017) Target: Yes (results discussed with authorities and published, The new indicator captures the updating of Objective 1 in 2021) line with the contribution of Bank`s support. New indicator: Program budgeting initial implementation is started following the completion of background study for the facilitation of the move to program budgeting. 33 Baseline: Work is ongoing for full implementation of program budgeting. A manual is published on program classification and performance information. Programs and sub-programs for central government institutions are constituted and published. The The background study will aim to inform policy makers to infrastructure of e-budget system has been revised substantially in establish an integrated financial management system to line with program budgeting approach and performance programs monitor the public procurement commitments. for 2020 are prepared. (2019) Target: Draft manual for costing and evaluation (2021) Central Government Budget Law proposal for 2021 prepared in line with program budgeting structure (2022) New indicator: Background study completed for the facilitation of the monitoring and reporting of government contractual commitments Baseline: None (2017) Target: Roadmap for the monitoring of public procurement commitments (2020) CPF Objective 2: Enhanced Access to Finance to Underserved Segments Indicator in the Original CPF Matrix Revised Indicators Description of the Changes Objective Indicators: People, MSMEs and exporters reached with IFC financial People, MSMEs and exporters reached with IFC financial services Indicator is revised to reflect more realistic target value services Baseline: 2.2 million people (2015) due to economic slowdown and financial sector in stress Baseline: 2.2 million people (2015) Target: 3.6 million (2023) resulted in credit crunch in 2019. Modest recovery is Target: 4.1 million (2019) Of which women owned MSMEs reached (number) expected for 2020 and the target year is adjusted in line Of which women owned MSMEs reached (number) Baseline: 27,000 (2015) with the CPF period. However, the targeted number of Baseline: 27,000 (2015) Target: 100,000 (2023) women owned MSMEs are achieved and surpassed. Target: 28,500 (2019) Therefore, the target value for women owned MSMEs is revised upwards. MSMEs and exporters served by banks benefiting from IBRD The wording of the indicator is revised to be clear that it MSMEs and exporters reached with IBRD financial services financial intermediary loans seeks to capture of all MSMEs and exporters served by IBRD Baseline: 116,000 (2016) Baseline: 116,000 (2016) IBRD client banks, not just those directly benefiting from IBRD Target: 232,000 (2020) Target: 480,000 (2023) Bank’s projects. Target year is aligned with the CPF period and the target value is revised upwards. Dropped Increase in number of private pension members Indicator is dropped because of lack of a direct Baseline: 2016: 6.6 million attribution by the Bank operations in Turkey. New Target: 2020: 7.5 million (2020) indicators are being added to accurately capture the New indicator: contribution of Bank`s support. 34 (Gender disaggregation data is being collected and will be Number of women-inclusive enterprises financed under IBRD lines provided at the PLR) of credit The new indicator captures the contribution of Bank`s Baseline: 0 (2017) support to women-inclusive firms to enhance Target: 80 (2023) competitiveness and employment. Supplementary Progress Indicators: Enhancing extended loan maturities to firms benefiting from Dropped Indicator is dropped as this has been considered as an IBRD financial sector credit lines output level contribution. . Baseline: N/A (indicator linked to WB financial sector credit lines starting implementation) Target: >1 Volume of outstanding MSME loan portfolio of IFC clients Volume of outstanding MSME loan portfolio of IFC clients Indicator is revised to reflect more realistic target value IFC Baseline: $30.5 billion (2015) IFC Baseline: $30.5 billion (2015) due to economic slowdown and financial sector in stress IFC Target: $60 billion (2019) IFC Target: $55 billion (2023) resulted in credit crunch in 2019. Modest recovery is Of which women owned MSMEs Of which women owned MSMEs expected for 2020 and the target year is adjusted in line Baseline: $130 million (2015) Baseline: $130 million (2015) with the CPF period. Target: $220 million (2019) Target: $215 million (2023) Volume of outstanding MSME loan portfolio and export loan portfolio of IBRD Clients Volume of outstanding MSME and export loan portfolio of IBRD The baseline and target years revised to align with the IBRD Baseline: $14.5 billion (January 2016) Clients CPF period. The values are revised accordingly. IBRD Target: $29 billion (2020) IBRD Baseline: $49.5 billion (2019) IBRD Target: $53 billion (2023) Increase in outstanding corporate debt securities portfolio (US$ billion) Dropped Indicator is dropped because of lack of a direct Baseline: 2016: US$58 billion attribution by the Bank operations in Turkey. Target: 2020: US$70 billion Increase in number of firms quoted in the stock exchange Baseline: 2016: 381 Dropped Indicator is dropped because of lack of a direct Target: 2020: 450 attribution by the Bank operations in Turkey.. Increase in portfolio size of institutional investors Baseline: 2016: TL 105 billion Target: 2020: TL 150 billion Dropped Indicator is dropped because of lack of a direct attribution by the Bank operations in Turkey. 35 CPF Objective 3: Enhanced Competitiveness and Employment in Selected Industries Indicator in the Original CPF Matrix Revised Indicators Description of the Changes Objective Indicators: Employment supported by IFC clients (manufacturing, Employment supported by IFC clients (manufacturing, telecom, The target year is adjusted in line with the CPF period telecom, technology, agribusiness) technology, agribusiness) and the value is revised accordingly. Baseline: 39,400 (2015) Baseline: 39,400 (2015) For the female employment, the baseline value is Target: 59,000 (2019) Target: 60,000 (2023) corrected to 7,860 as 2 projects exited from the portfolio o/w Female Employment supported o/w Female Employment supported in 2015. The target year is adjusted in line with the CPF Baseline: 11,000 (2015) Baseline: 7,860 (2015) period and the target value is revised upwards Target: 12,000 (2019) Target: 14,000 (2023) accordingly. Employment supported by IFC equity funds investees (#) Employment supported by IFC equity funds investees (#) The target year is adjusted in line with the CPF period Baseline: 15,000 (2015) Baseline: 15,000 (2015) and the target value revised upwards accordingly. Target:17,000 (2019) Target: 20,000 (2021) Supplementary Progress Indicators: Students reached by IFC clients: Students reached by IFC clients: The target year is adjusted in line with the CPF period. Baseline: 11,500 (2015) Baseline: 11,500 (2015) Target: 19,700 (2019) Target: 19,700 (2021) o/w Female Students reached o/w Female Students reached Baseline: 6,200 (2015) Baseline: 6,200 (2015) Target: 8,800 (2019) Target: 8,800 (2021) The indicator is Farmers reached by IFC agribusiness clients: Dropped dropped as the expected results have not been achieved Baseline: 5,400 (2015) and no substantial progress is expected in the CPF Target: 10,900 (2019) period. 36 FOCUS AREA 2: INCLUSION CPF Objective 4: Increased Effectiveness of Social Assistance Indicator in the Original CPF Matrix Revised Indicators Description of the Changes Objective Indicators: Increased impact of social assistance on the poverty gap. Dropped Indicator is dropped because of lack of a direct Baseline: 9.9% coverage of poverty gap attribution by the Bank operations in Turkey. A new Target: 20% coverage of poverty gap indicator is being added to accurately capture the contribution of Bank`s support. Increased availability of monetary and non-monetary indicators of welfare and inclusion Dropped Indicator is dropped because of lack of a direct Baseline: No indicator available attribution by the Bank operations in Turkey. A new Target: 10 different monetary/non-monetary indicators indicator is being added to accurately capture the available contribution of Bank`s support. New indicator is added to better reflect and capture the New indicator: Bank`s direct contribution in facilitating employment of Number of social assistance beneficiaries referred to employment the most vulnerable. (Vulnerable groups refers to SuTPs, services. refugees and Turkish citizens) Baseline: 0 (2017) Target: 800,000 (2022) New indicator: New indicator is added to better capture the Bank`s Social protection performance indicators related to benefit levels, direct contribution in increased effectiveness of social equity and coverage included in MOFLSS M&E system for evidence- protection. based program management. Baseline: No (2017) Target: Yes (2022) Supplementary Progress Indicators: New indicator: New indicator is added to better capture the ongoing Social Assistance Assessment is publicly disseminated technical assistance contribution to this objective. Baseline: No (2019) Target: Yes (2020) 37 CPF Objective 5: Increased Labor Force Participation of Women & Vulnerable Groups Indicator in the Original CPF Matrix Revised Indicators Description of the Changes Objective Indicators: Increased Female Labor Force Participation Dropped LFP is a broader level indicator nation-wide and the Baseline: 31.5% in 2015 indicator is dropped because of lack of a direct Target: 35% by 2018 (10th DP target), 41% by 2023 (National attribution by the Bank operations in Turkey. Employment Strategy target) New indicator: Increased number of women placed in jobs by ISKUR New indicator is intended to measure the achievements Baseline: 435,317 in 2018 in improving the employment of women in Turkey. This Target: 900,000 by 2023 indicator is directly attributable to Bank`s active and planned operations. Indicator is dropped because of lack of a direct Increased youth participation in labor force Dropped attribution by the Bank operations in Turkey. A new Baseline: Youth (15-19) Not In Education, Employment or indicator is being added to accurately capture the Training (NEET): Male 11.3%, Female 21.9% (2015) contribution of Bank`s support. Target: Reduce NEET by 10% New indicator is intended to measure the achievements in improving the employment of youth in Turkey. This indicator is directly attributable to Bank`s active and planned operations. New indicator: Increased rate for SuTP who have a work permit among Increased number of youth placed in jobs by ISKUR The baseline was subsequently revised to 5,000 and the eligible SuTPs of work-age population (gender Baseline: 161,035 male; 81,492 female youth in 2015 latest figure for work permits among SuTPs is 92,754 for disaggregated) 258,796 male; 171,817 female youth in 2018 end-2019. However, this Indicator is dropped due to an Baseline: 8,000 out of 900,000 (<1%) eligible SuTP work-age Target: 450,000 male; 400,000 female youth by 2023 increased number of SuTPs who are living in Turkey, thus population has a work permit (2016). changing the proportionality of the SuTPs holding a work Target: 5% increase (2021), o/w 25% are women permit compared to the total number of SuTPs. It was Dropped also necessary to capture more than just the SuTPs and include other refugees and Turkish citizens, in line with the Bank`s longer-term development focused approach to the refugee crisis. FRIT-2 approach has also shifted in that direction. The indicators under Objective 5 and Objective 6 (education) include refugees, SUTPs and Turkish citizens, by referring to them as `Vulnerable Direct employment supported by IFC manufacturing clients groups`. in southeast regions Baseline: 38,000 (2015) Indicator is revised to exclude the wording Target: 43,000 (2019) “manufacturing” to include employment by IFC services 38 (Gender disaggregated data being collected) clients and revised to capture less developed regions. Direct employment supported by IFC clients in less developed The target year is aligned with the CPF period and the regions target value is revised upwards accordingly. Baseline: 38,000 (2015) Target: 45,000 (2023) (Gender disaggregated data being collected) Supplementary Progress Indicators: Early childhood education and care enrolment rates Dropped Indicator is dropped due to difficulties in attributing to Baseline: 1.209.106 (National Education Statistics, Formal the WBG program. Education 2015/16) Target: Increase of 10% over baseline Number of youth in ALMPs Increased number of youth in ALMPs Indicator is revised to include target year and the value is Baseline: 74,748 male and 76,172 female (15-24) currently Baseline: 74,748 male and 76,172 female (15-24) in ALMPs (2015) represented as nominal rather than percent rate. in ALMPs (2015) Target: 150,000 male and 200,000 female (15-24) in ALMPs (2023) Target: Increase of 10% over baseline New indicator: Increased number of women benefiting from active labor market programs New indicator is intended to measure the achievements Baseline: 202,439 in 2015 in improving the employability of women in Turkey. This Target: 600,000 by 2023 indicator is directly attributable to Bank`s active and planned operations. New indicator is intended to measure the improvement New indicator: in coverage of ISKUR registry among the vulnerable Increased number of Vulnerable Groups registered in ISKUR with groups. The changes in the indicators were made to the support of IBRD operations cover the refugees, SuTPs and Turkish citizens, in line Baseline: 0 in 2016 with Bank`s development focused approach. FRIT-2 Target: 20,000 in 2021 approach has also shifted in that direction. The indicators under Objective 5 and Objective 6 (education) include refugees, SUTPs and Turkish citizens, by referring them as `Vulnerable groups` New indicator is intended to measure the Bank`s contribution in improving the work permit system New indicator: (including its IT infrastructure) to ensure improved Improved work permit IT system fully operational for Vulnerable system for vulnerable groups including refugees, SUTPs Groups in regions/provinces with high presence of refugees and Turkish citizens. Baseline: No (2016) Target: Yes (2021) 39 CPF Objective 6: Strengthened Performance of the Education and Health Sectors Indicator in the Original CPF Matrix Revised Indicators Description of the Changes Objective Indicators: Increased percentage of formal school enrolment of SuTP Dropped Indicator is dropped to cover broader range of children aged 6-15 beneficiaries. A new indicator is being added to Baseline: 469,495 children accessing education (149,439 in accurately capture the contribution of Bank`s support. formal education and 320,056 in temporary education The changes in the indicators were made to cover the centers: ratio is 32%) refugees, SuTPs and Turkish citizens, in line with Bank`s Target: 600,000 children accessing education (40% in formal development focused approach. FRIT-2 approach has education), 50-50 split of male-female children also shifted in that direction. The indicators under Objective 5 and Objective 6 (education) include refugees, SUTPs and Turkish citizens, by referring them as `Vulnerable groups` New indicator: New indicator is intended to measure the increased Number of students, teachers and staff having access to schools access to schooling, including vulnerable groups, through constructed or retrofitted by IBRD operations direct attribution of the Bank operations in Turkey. Baseline: 0 (2017) Target: 320,000 (2023) Since the coverage policy of healthy living center is changed, the target became irrelevant. This indicator is dropped from the Health System Strengthening and Improvement of primary and secondary prevention of non- Dropped Support Project (HSSSP – P152799) in the recent communicable diseases (NCDs) restructuring. Baseline (2015): 10% change of target population using services of Healthy Living Centers Target: 50% The baseline year is aligned with the project timeline and the target year is aligned with the CPF period. The target New indicator: was surpassed in 2018. Therefore, the target value is Percent of households that receive from health workers revised upwards. Indicator was dropped from the counselling or education related to healthy living supplementary progress indicator to convert it as a CPF Baseline: 10% in 2015 objective indicator. Target: 50% in 2022 (at end of IBRD project) Target value revised downward since there are some delays in the projects and the target year is aligned with the CPF period. Operations are expected to begin in 2020. Number of Patients Served through IFC health sector clients Number of Patients Served through IFC health sector clients Baseline: 0 (2015) Baseline: 0 (2015) 40 Target: 14.0 million (2019) Target: 3.0 million (2023) (Gender disaggregated data being collected) (Gender disaggregated data being collected) Supplementary Progress Indicators: Number of additional schools rehabilitated or constructed Dropped Indicator is moved under the objective 8. under EU FRiT-financed project Baseline: 0 (2016) Target: 56 (2020) Percent of households that receive from health workers Dropped Indicator is moved to Objective 6 as CPF indicator. counselling or education related to healthy living Baseline: 10% in 2016 Target: 11% in 2020 (at end of IBRD project) Percent of users of Health Living Centers satisfied with ease Percent of users of Health Living Centers satisfied with ease of The target was surpassed in 2019. Therefore, the target of access to Healthy Living Centers and/or responsiveness of access to Healthy Living Centers and/or responsiveness of services value is revised upwards and the target year is revised services to users’ individual needs to users’ individual needs according to project end year. Baseline: 50% in 2016 Baseline: 50% in 2016 Target: 70% in 2020 Target: 80% in 2022 FOCUS AREA 3: SUSTAINABILITY CPF Objective 7: Improved Reliability of Energy Supply and Generation of Green Energy Indicator in the Original CPF Matrix Revised Indicators Description of the Changes Objective Indicators: Renewable electricity generation as percentage of total Renewable electricity generation as percentage of total generation Target year revised to align with the CPF period. The generation (%). (%). value is revised upwards accordingly. Baseline: 31.5% in 2015 Baseline: 31.5% in 2015 Target: 33% in 2021 Target: 35% in 2022 Value of loans provided by IFC clients to renewable projects Dropped Indicator is dropped since it is considered as an output Baseline: $38m (2015) level indicator. Target: $66m (2019) Total power generation and distribution clients reached (IFC) (millions) Total power generation and distribution clients reached (IFC) Target value is revised upwards in line with extended CPF Baseline: 4.33 (2015) (millions) closiung date. 41 Target: 6.89 (2019) Baseline: 4.33 (2015) Target: 7.0 (2023) Increased capacity of gas storage (bcm) Baseline: 2.8 bcm in 2016 Target: 3.8 bcm in 2021 Unchanged Gas imports through TANAP (bcm/annum) Baseline: 0 in 2016 Target: 5 in 2021 Gas imports through TANAP (bcm/annum) Indicator revised to align with the CPF period. Baseline: 0 in 2016 Target: 5 in 2022 The indicator was originally listed under the objective 9. New indicator: Within the new Results Framework design, this is now Cumulative energy savings achieved through WBG-financed mapped under Objective 7 and the target year is aligned energy sector projects (MWh). with the CPF period. Target value is revised upwards Baseline: 1,116,000 in 2016 accordingly. Target: 11,500,000 in 2022 Supplementary Progress Indicators: Installed renewable energy capacity financed through IBRD Installed renewable energy capacity financed through IBRD Indicator is revised to include renewable energy Projects (MW) Projects (MW) and generated through IBRD (MWh) generated through IBRD. Target year revised to align Baseline: 0 in 2016 Baseline: 0 in 2016 with the CPF period. The value is revised upwards Target: 116 MW in 2021 Target: 250 MW in 2023 and 1,500,000 MWh in 2023 accordingly. Renewable energy generated through IBRD (MWh/year) Dropped Indicator is dropped to be merged with the previous Baseline: 0 in 2016 indicator. Target: 200,000 (2017) Wind energy generated from plants connected to substations funded under REIP (MWh/year) Wind energy generated from plants connected to substations Target year revised to align with the CPF period. The Baseline: 0 in 2016 funded under REIP (MWh/year) value is revised upwards accordingly. Target: 1.743 in 2018 Baseline: 0 in 2016 Target: 1,980 in 2022 Power generated (GWh) through IFC financial services Baseline: 16,700 (2015) Power generated (GWh) through IFC financial services The target value and date has been carried forward in Target: 34,600 (2019) Baseline: 16,700 (2015) line with the CPF end date. 42 Target: 35,000 (2023) Restructuring of BOTAS Baseline: No in 2016 Dropped This indicator is dropped due to lack of attribution to Target: Yes in 2021 WBG program. Improved and more transparent wholesale gas trading through the establishment of Gas Trading Platform Improved transparency of wholesale gas trading through the The wording of the indicator is revised to be clear and Baseline: No in 2016 establishment of Gas Trading Platform the target year is aligned with the CPF period. Target: Yes in 2021 Baseline: No in 2016 Target: Yes in 2023 Improved legal, regulatory and institutional environment in the Turkey gas market through the enactment of the Enactment of the amendment to the Natural Gas Market Law for The wording of the indicator is revised to be clear and amendment to the Natural Gas Market Law improved legal and regulatory framework the target year is aligned with the CPF period. Baseline: No in 2016 Baseline: No in 2016 Target: Yes in 2021 Target: Yes in 2023 CPF Objective 8: Improved Sustainability and Resilience of Cities Indicator in the Original CPF Matrix Revised Indicators Description of the Changes Objective Indicators: Improved service delivery and expanded access to digital Improved service delivery and expanded access to digital land The target year is adjusted in line with the CPF period. land registry and cadaster information registry and cadaster information Increased customer satisfaction at national level Increased customer satisfaction at national level Baseline: 85% in 2016 Baseline: 85% in 2016 Target: 95% in 2021 Target: 95% in 2022 The baseline and target values in the original result Number of additional people benefitting from improved Number of additional people benefitting from improved urban framework included the Municipal Services project urban infrastructure through IBRD and IFC financing infrastructure through IBRD and IFC financing (number in millions) baseline and target values. As the MSP project exited (number in millions) Baseline: 0 (2017) before the CPF approval, the actual values do only Baseline: 3.3 (2015) Target: 1.3 (2023) represent the actual values reached through the active Target: 4.7 (2019) (Gender disaggregated data to be collected) IFC/IBRD lending operations. Therefore, the baseline and (Gender disaggregated data to be collected) actual values are revised to include the IBRD SCP projects only in addition to IFC investments. Indicator revised to include newly approved IBRD Increased resilience of cities through number of disaster resilient operations. The target year is adjusted to the CPF period Increased resilience of cities through number of disaster public buildings retrofitted, reconstructed, or newly constructed and the value is revised upwards. resilient public buildings retrofitted, reconstructed, or newly through IBRD operations constructed through IBRD and FRIT financing Baseline: 0 (2019) Baseline: 0 Target: 300 (2023) Target: 110 by 2021 43 New indicator: New indicator is intended to measure the improved Percentage improvement in the quality of Citizen Engagement as quality of Citizen engagement of Bank`s operations in measured through the CE Quality Index Turkey. Baseline: 33% (in FY19) Target: 60% of projects approved for the remainder of the CPF are of high quality. (Average of FY20-FY21-FY22) Supplementary Progress Indicators: Pilots of mass property valuation completed, and new Pilots of mass property valuation completed, and new property The target year is adjusted in line with the CPF period. property valuation policy Informed valuation policy Informed Baseline: No (2016) Baseline: No (2016) Target: Yes (2020) Target: Yes (2021) The target year is adjusted in line with the CPF period Improve planning capacity of and access to targeted Improve planning capacity of and access to targeted municipal and the target value revised upwards accordingly. municipal services through adoption of sectoral, spatial and services through adoption of sectoral, spatial and capital capital investment plans in four municipalities investment plans in four municipalities Baseline: 0 in 2016 Baseline: 0 in 2016 Target: 10 sectoral plans adopted in at least 4 municipalities Target: 10 sectoral plans adopted in at least 8 municipalities by by 2021 2023 Indicator is revised to include baseline and target years. Sustainable urban transport planning adopted in selected cities/municipalities. Sustainable urban transport planning adopted in selected Baseline: 0. cities/municipalities Target: 2 cities/municipalities Baseline: 0 (2018) Target: 2 cities/municipalities (2021) The target year is aligned with the CPF period. Average travel time (min) in urban public transportation (tramway and metro) (IFC) Average travel time (min) in urban public transportation (tramway Baseline: 45 (2015) and metro) (IFC) Target value revised downward since there are some Target: 25 (2019) Baseline: 45 (2015) delays in the projects and the target year is adjusted in Target: 25 (2021) line with the CPF period. Urban waste water treated by IFC clients (Mm3) Baseline: 0 (2015) Urban waste water treated by IFC clients (Mm3) The indicator is dropped as the expected results have not Target: 4,470,000 (2019) Baseline: 0 (2015) been achieved and no substantial progress is expected in Target: 3,000,000 (2023) the CPF period. Urban solid waste treated by IFC clients (tons managed/year) Dropped Baseline: 0 (2015) Indicator is revised to include the target year that aligns Target: 133,000 (2019) with the CPF period. 44 Turkey Disaster Management Strategy and Turkey Risk Turkey Disaster Management Strategy and Turkey Risk Reduction Reduction Plan adopted Plan adopted Baseline: No in 2016 Baseline: No (2016) Target: Yes Target: Yes (2023) New indicator: New indicator is intended to measure the achievements Percentage of concrete actions from the CE Country Roadmap under the CE roadmap. completed Baseline: 0 (2019) Target: 5 (2022) Objective in the Original CPF Matrix Revised Objective Description of the Changes CPF Objective 9: Increased sustainability of infrastructure CPF Objective 9: Strengthened Results Under Climate Action CPF Objective 9 was noted in the original CPF as being assets and natural capital Agenda very much a tentative set of possible engagements to reflect where the program was in early stages. Therefore, the change to the objective was expected and this is now being more clearly defined. Indicator in the Original CPF Matrix Revised Indicators Description of the Changes Objective Indicators: Cumulative energy savings achieved through WBG-financed Moved The indicator is moved under Objective 7. energy sector projects (MWh). Baseline: 1,116,000 in 2016 Target: 6,000,000 in 2021 Annual GHG emissions either reduced or avoided through Annual GHG emissions either reduced or avoided through the WBG Indicator revised to align with the CPF period and the the WBG program (tonnes/year) program (tonnes/year) target values revised accordingly. Baseline: 40,000 in 2016 Baseline: 40,000 in 2016 Target: 844,400 IBRD reduced, 373,000 reduced IFC, Target: 1,000,000 IBRD reduced, 350,000 reduced IFC, 750,000 600,000 avoided at country-level through adopting GB avoided at country-level through adopting GB standards (2023) standards (2021) New indicator: Area provided with new/improved irrigation or drainage services (Ha) Baseline: 0 (2019) 45 Target: 50,000 ha (2023) New indicator is intended to measure the direct impact of Bank`s active lending operations in improvement of Turkey`s irrigation/drainage system. Supplementary Progress Indicators: Carbon market policy options delivered to and considered Dropped The indicator is dropped as the expected results have not by the Government been achieved and no substantial progress is expected in The following indicators – or other relevant ones - could be the CPF period. considered at the time of the CPF PLR if these areas are developed as part of the WBG program: The National Intelligent Transport Systems (ITS) strategy operationalized The National Intelligent Transport Systems (ITS) strategy Indicator is revised to include baseline and target years. Baseline: No operationalized Target: Yes. Baseline: No (2017) Target: Yes (2022) The indicator is dropped as the expected results have not Changes to the Forest Law, regulations or policies to been achieved and no substantial progress is expected in promote greater private sector investment participation in Dropped the CPF period. harvesting and development of plantations. Baseline: Minimal Target: 2 or more pilot areas covered New indicator: Length of modernized irrigation network (Kilometers, Custom) New indicator is intended to measure the modernized Baseline: 0 (2019) irrigation network in Turkey financed by the Bank. Target: 1520 km (2023) New indicator: Water users provided with improved irrigation service New indicator is intended to measure the increased Baseline: 0 (2019) number of beneficiary farmers through the IBRD lending. Target: 15,000 (2023) New indicator: New indicator is intended to measure the improved Number of projects incorporating or adapting to engage citizens in participation of citizens in climate change discussions. climate change Baseline: 0 (2019) Target: 3 (2022) 46 Annex 3. Progress on the Original CPF Results Matrix FOCUS AREA 1: GROWTH CPF Objective 1: Increased Fiscal Space CPF Objective Indicators Progress to Date Supplementary Progress Progress to Date WBG Program Indicators Share of direct tax revenues in On Track Improved income tax legislative Off Track Approved Lending: total tax revenues. 35.9% (2019H1) (12-month rolling) framework through enacting a new No measurable progress • Resilience, Inclusion and Growth Baseline: 29.2% in 2015 Although it is close to the target, law, which combines corporate (September 2019) DPL Target: 40% in 2021 the progress was not achieved in income tax and personal income tax (Note: the baseline represents the the proposed way. The main legislations and broadens the tax Completed ASA: share of tax on income and profit reason behind the increase in base. • Tax policy advice in total tax revenues.) share of direct tax revenues is the Baseline: No (2016) • Turkey - Programmatic reduced amount of indirect taxes Target: Yes (2017) Governance collected due to slowdown in economic activity rather than an increase in direct tax collection. Establishment of a monitoring On Track Publication of a new risk On Track Approved Lending: system for internal controls in Manuals are prepared, monitoring management guideline for public Guidelines are prepared, • Resilience, Inclusion and Growth public administration system is being developed administration publication is awaiting DPL Baseline: No monitoring software (September 2019) Baseline: No (2016) (September 2019) populated with information Target: Yes (2019) Completed ASA: (2016) • Tax policy advice Target: 70% of central • Turkey - Programmatic government institutions data Publication of a new internal audit Achieved Governance included in the monitoring strategy paper 2017-2019 The target has been publicized in • Public Financial Management software (2018) Baseline: No (2016) 2017. • Deepening the implementation of Target: Yes (2017) public sector internal audit reforms • ECA PFM TF • Internal audit SAFE TF CPF Objective 2: Enhanced Access to Finance to Underserved Segments CPF Objective Indicators Progress to Date Supplementary Progress Indicators Progress to Date WBG Program 47 People, MSMEs and exporters On Track Enhancing extended loan maturities On Track Approved Lending: reached with IFC financial services 3.2 million (2018)12 to firms benefiting from IBRD Average IBRD loan maturities are • Innovative Access to Finance Baseline: 2.2 million people financial sector credit lines longer than the average maturity • SME III (2015) Baseline: N/A (indicator linked to of the market loan. • Long Term Export Finance Target: 4.1 million (2019) WB financial sector credit lines (September 2019) • Inclusive Access to Finance starting implementation) • MSME & LESCF Target: >1 • Resilience, Inclusion and Growth DPL Of which women owned MSMEs reached (number) Achieved and Surpassed Volume of outstanding MSME loan On Track Completed ASA: Baseline: 27,000 (2015) 79,538 (2018) portfolio of IFC clients $48.2 billion (2018)13 • Financial sector deepening TA: Target: 28,500 (2019) IFC Baseline: $30.5 billion (2015) Focus on sukuk and alternative IFC Target: $60 billion (2019) capital markets instruments MSMEs and exporters reached Of which women owned MSMEs On Track Pension Supervision, Regulation with IBRD financial services Achieved and Surpassed Baseline: $130 million (2015) $190 million (2018)14 • Turkey FSAP Update IBRD Baseline: 116,000 (2016) 458,071 (2019) Target: $220 million (2019) IBRD Target: 232,000 (2020) IFC lending: Volume of outstanding MSME loan Achieved portfolio and export loan portfolio $49.5 billion (2019) • Capital market development - Increase in number of private of IBRD Clients investments in municipal, pension members Achieved and Surpassed IBRD Baseline: $14.5 billion eurobond and local currency bond Baseline: 2016: 6.6 million Voluntary participation members: (January 2016) markets. Target: 2020: 7.5 million (2020) 6.8 million (October 2019); IBRD Target: $29 billion (2020) • Securitization products to increase (Gender disaggregation data is Female: 2.8 million, Male: 4.0 depth and competition in the being collected and will be million Increase in outstanding corporate On Track banking sector. provided at the PLR) Auto-enrollment members: 5.3 debt securities portfolio (US$ US $ 63,2 billion (Source BIS) • Hedging instruments to mitigate million (October 2019); Female: billion) (October 2018) interest rate and currency risk. 1.8 million, Male: 3.5 million Baseline: 2016: US$58 billion Risk mitigation and capital relief (The data is disclosed separately Target: 2020: US$70 billion tools for domestic and for each item, and there might be international banks. overlaps. Total number of Increase in number of firms quoted Off Track • Long-term finance to banks and members are not disclosed) in the stock exchange 378 (Source: World Federation of NBFIs (leasing and factoring (Source: Pension Monitoring Baseline: 2016: 381 Exchanges) (May 2019) companies, and distressed asset Center) Target: 2020: 450 platforms) to expand financing to under-served segments Increase in portfolio size of Achieved • Supply chain finance solutions. institutional investors TL 166,7 billion (Source: TAKAS Baseline: 2016: TL 105 billion Bank) (2018) 12 The value includes the active and CPF period exited loans. 13 The value includes the active and CPF period exited loans. 14 The value includes the active and CPF period exited loans. 48 Target: 2020: TL 150 billion IFC Advisory: • Municipal bond market development (with IBRD) MIGA: • Guarantee of non-honoring of a financial obligation of a state- owned enterprise (NHFO-SOE) for Turkish Eximbank CPF Objective 3: Enhanced Competitiveness and Employment in Selected Industries CPF Objective Indicators Progress to Date Supplementary Progress Progress to Date WBG Program Indicators Employment supported by IFC On Track Students reached by IFC clients: On Track Approved Lending: clients (manufacturing, telecom, 52,441 (2018)16 Baseline: 11,500 (2015) 17,675 (2018)17 • Resilience, Inclusion and Growth technology, agribusiness) Target: 19,700 (2019) DPL Baseline: 39,400 (2015) Target: 59,000 (2019) o/w Female Students reached On Track Completed ASA: Baseline: 6,200 (2015) 8,390 (2018) • CEM on productivity o/w Female Employment On Track Target: 8,800 (2019) • Business environment and FDI- supported 9,938 (2018) local firm linkages Baseline: 7,86015 (2015) Farmers reached by IFC • Management quality, innovation Target: 12,000 (2019) agribusiness clients: Off Track and trade in Services Baseline: 5,400 (2015) 5,636 (2018)18 • Regulatory environment and job Employment supported by IFC On Track Target: 10,900 (2019) opportunities in SuTP-affected equity funds investees (#) 16,896 (2018) regions Baseline: 15,000 (2015) • Enhancing competitiveness and Target:17,000 (2019) greening OIZs • Services Trade and GVC analysis • Turkey Programmatic Trade Task • Turkey Productivity CEM • Business Environment and Innovation • Leveraging Producer Organizations to Improve the Efficiency of Agri- Food Value Chains in Turkey 15 Due to the completed operations in 2015, the baseline values are corrected. The correct baseline value would be 7,860. 16 The value includes the active and CPF period exited loans. 17 The value includes the active and CPF period exited loans. 18 No active operations since 2017. Numbers corresponds to projects ended in 2015 and 2016 49 • TA on Determinants of Food Price Inflation IFC Advisory: • IFC Corporate Governance advisory project IFC investments: • Investments in manufacturing, telecom & IT, and agribusiness sectors. • Support for vocational training. • Investments in private equity funds and other collective investment vehicles focused on high-growth, high value-added sectors. • Trade finance. FOCUS AREA 2: INCLUSION CPF Objective 4: Increased Effectiveness of Social Assistance CPF Objective Indicators Progress to Date Supplementary Progress Progress to Date WBG Program Indicators Increased impact of social Off Track Approved Lending: assistance on the poverty gap. 10.6% coverage of poverty gap • Resilience, Inclusion and Growth Baseline: 9.9% coverage of (2017) DPL poverty gap (2017) Target: 20% coverage of poverty Completed ASA: gap (2021) • Poverty Reduction Strategy and Social Assistance Reform • Disability and aging study Increased availability of monetary On Track • Determinants of Poverty and and non-monetary indicators of 5 indicators are available. Shared Prosperity Trends in Turkey welfare and inclusion 1. Monetary poverty • TA on Social Assistance, including Baseline: No indicator available 2. Inequality of opportunity to Refugee Populations (ESSN) (2017) 3. Incidence of taxes and transfers • Social Assistance to Refugees - Target: 10 different on poverty and inequality Assessing the rollout of the largest monetary/non-monetary 4. Multi-dimensional poverty humanitarian cash transfer indicators available (2021) 5. Human capital accumulation program in the world 50 • Turkey Social Assistance Review • National Poverty Reduction Strategy • Impact of Taxes and Transfers on Poverty and Inequality CPF Objective 5: Increased Labor Force Participation of Women & Vulnerable Groups CPF Objective Indicators Progress to Date Supplementary Progress Indicators Progress to Date WBG Program Increased Female Labor Force On Track Early childhood education and care On track Approved Lending: Participation 34.2% (2018), enrolment rates 1,564,813 (National Education • Resilience, Inclusion and Growth Baseline: 31.5% in 2015 11th Development Plan reduced Baseline: 1.209.106 (National Statistics, Formal Education DPL Target: 35% by 2018 (10th DP the 2023 target to 38.5%. Education Statistics, Formal 2018/19) • EU FRIT Small Grants Project target), 41% by 2023 (National Education 2015/16) • EU FRIT Employment Support Employment Strategy target) Target: Increase of 10% over Project baseline Increased youth participation in Completed ASA: labor force Off Track Number of youth in ALMPs Achieved • IPA for ISKUR, Jobs Trust Fund Baseline: Youth (15-19) Not In Male: 13.0% (2018), Female: Baseline: 74,748 male and 76,172 The increase in the number of SIDA TF Education, Employment or 22.2% (2018); Total: 17.4% (2018) female (15-24) currently in ALMPs male beneficiaries of ALMP aged • Poverty and Equity lens on labor Training (NEET): Male 11.3%, Although there are many incentive (2015) 15-24: 37.1% (2015-2018) markets Female 21.9% (2015) schemes to increase youth and Target: Increase of 10% over The increase in the number of • NEET study Target: Reduce NEET by 10% female participation in labor baseline female beneficiaries of ALMP • Pilot of SE Skills and Evaluation markets as well as in vocational aged 15-24: 49.5% (2015-2018) • Quality of Jobs: Minimum Wage education, NEET rates have been The increase in total number of and Informality increasing over the years. youth benefited from ALMPs : • Turkey Jobs Analytics & Dialogue 43.3% (2015-2018) • Minimum Wage Simulation Tool Increased rate for SuTP who have Achieved • Assessing the effects of the 2016 a work permit among eligible 92,754 (2019) Minimum Wage increase on SuTPs of work-age population Women disaggregated data not formal job creation in Turkey Baseline: 8,000 out of 900,000 disclosed (non-verified) and goal • SE Skills for Employability in eligible SuTP work-age population of 25% is considered high given Turkey has a work permit (2016) female SuTPs very low • Quality of Jobs: Better Labor Policy This baseline has subsequently participation rate in labor market and More Innovation been revised to 5,000 Target: 5% increase (2021), o/w • Helping Turkey Refugee Response 25% are women • Qualitative Assessment of Syrians’ Employment and Livelihood Direct employment supported by Opportunities and Challenges in IFC manufacturing clients in Turkey southeast regions • Policy Dialogue and Research on Baseline: 38,000 (2015) On Track Syrian Displacement in Turkey 51 Target: 43,000 (2019) 38,832 (2018)19; Female: 7,072 (Gender disaggregated data being (2018)20 IFC: collected) • IFC Gender Program • Financing women-owned companies • Financing private sector companies which have footprints in lagging regions. CPF Objective 6: Strengthened Performance of the Education and Health Sectors CPF Objective Indicators Progress to Date Supplementary Progress Progress to Date WBG Program Indicators Increased percentage of formal On Track Number of additional schools On Track Approved Lending: school enrolment of SuTP children 571,019 children accessing rehabilitated or constructed under 12 schools added to MoNE’s • Health Sector project (on-going) aged 6-15 education: EU FRiT-financed project inventory (October 2019) • Education Resilience Project (FRIT) Baseline: 469,495 children 531,416 in public schools, 24,474 Baseline: 0 (2016) • DRM in Schools accessing education (149,439 in in open education21 and 15,159 in Target: 56 (2020) formal education and 320,056 in temporary education centers: ratio Completed ASA: temporary education centers: is 97% • Turkey obesity case study ratio is 32%) Male: 51% and Female: 49% • Poverty and Equity lens on Target: 600,000 children accessing (October 2019) nutrition and education, including education (40% in formal Regional Disparities education), 50-50 split of male- • Disability and aging study female children • Health expenditure projection actuarial model TA Improvement of primary and Off Track Percent of households that receive Achieved and Surpassed • Political Economy of Health secondary prevention of non- Since the coverage policy of from health workers counselling or 40.5% (based on Household Reform and Assessment of the communicable diseases (NCDs) healthy living center is changed, education related to healthy living Health Survey conducted in Utilization of Primary Care Baseline (2015): 10% change of the target became irrelevant. This Baseline: 10% in 2016 2018). • Analysis of PISA-TIMSS target population using services of indicator has been dropped from Target: 11% in 2020 (at end of IBRD • Teacher training and primary Healthy Living Centers the Health System Strengthening project) education reform TA Target: 50% and Support Project in the 2019 • Turkey Higher Education restructuring. Percent of users of Health Living Achieved and Surpassed Modernization Technical Centers satisfied with ease of 84.1% (2019) Assistance Number of Patients Served Off Track access to Healthy Living Centers • Turkey Education Technical through IFC health sector clients 2.4 million (2018)22 Assistance 19 The value includes the active and CPF period exited loans. 20 The value includes the active and CPF period exited loans. 21 Open Education refers to middle school and high schools which correspond to the age group range 10- 17. 22 Value in 2018 corresponds to 3 out of the 7 projects. 4 hospitals are still not operating and are expected to begin operations in 2020. 52 Baseline: 0 (2015) (Gender disaggregated data not and/or responsiveness of services Target: 14.0 million (2019) disclosed) to users' individual needs IFC: Baseline: 50% in 2016 • Investments in innovative financial Target: 70% in 2020 structures such as health Project Bonds • Supporting private sector healthcare companies, especially in specialized health services FOCUS AREA 3: SUSTAINABILITY CPF Objective 7: Improved reliability of energy supply and generation of green energy CPF Objective Indicators Progress to Date Supplementary Progress Progress to Date WBG Program Indicators Renewable electricity generation On Track Installed renewable energy capacity Achieved Approved Lending: as percentage of total generation 32% (2018) financed through IBRD Projects 183 MW (2019) • Gas Sector Dev. Project Baseline: 31.5% in 2015 (MW) • Renewable Energy Int. Project Target: 33% in 2021 Baseline: 0 in 2016 • SME Energy Eff. Project Target 116 MW in 2021 • Priv. Sector Renewable Energy & Energy Eff. Project Value of loans provided by IFC On Track Renewable energy generated Achieved • TANAP clients to renewable projects $49 million (2018)23 through IBRD (MWh/year) 1,268,448 MWh/year (2019) • Geothermal Development project Baseline: $38m (2015) Baseline: 0 in 2016 • Gas Storage Expansion Project Target: $66m (2019) Target: 200,000 in FY2017 • Public Building Energy Efficiency Total power generation and On Track Wind energy generated from plants Achieved Completed ASA: distribution clients reached (IFC) 6.45 million (2018)24 connected to substations funded 1,890 MWh (2019) • Rooftop Solar PV Assessment (millions) under REIP (MWh/year) • DISCOM analysis Baseline: 4.33 (2015) Baseline: 0 in 2016 • EU/IPA Energy Sector Technical Target: 6.89 (2019) Target: 1,743 MWh in 2018 Assistance Program • Operational and Financial Increased capacity of gas storage On Track Power generated (GWh) through On Track Sustainability of Electricity (bcm) 2.8 (2019) IFC financial services 24,727 (2018)25 Distribution Companies in Turkey Baseline: 2.8 bcm in 2016 Baseline: 16,700 (2015) • Rooftop Solar PV Assessment Target: 3.8 bcm in 2021 Target: 34,600 (2019) IFC: 23 The value includes the active and CPF period exited loans. 24 The value includes the active and CPF period exited loans. 25 The value includes the active and CPF period exited loans. 53 Gas imports through TANAP On Track Restructuring of BOTAS No progress • IFC financing for distribution, and (bcm/annum) 2.5 (2019) Baseline: No in 2016 The restructuring has not been gas infrastructure such as import Baseline: 0 in 2016 Target: Yes in 2021 completed yet. (2019) terminals, storage, and Target: 5 in 2021 distribution. Improved and more transparent Achieved • IFC support for new financing wholesale gas trading through the IPA Phase II is directly working on instruments – local currency establishment of Gas Trading the issue, GTP has been financing and currency swaps to Platform (GTP) established in September 2018 mitigate currency risk Baseline: No in 2016 and operational. (2019) Target: Yes in 2021 Improved legal, regulatory and On Track institutional environment in the A draft has been prepared. Final Turkey gas market through the political decision is needed for enactment of the amendment to the enactment. (2019) the Natural Gas Market Law Baseline: No in 2016 Target: Yes in 2021 CPF Objective 8: Improved sustainability and resilience of cities CPF Objective Indicators Progress to Date Supplementary Progress Progress to Date WBG Program Indicators Improved service delivery and Achieved and Surpassed Pilots of mass property valuation Achieved Approved Lending: expanded access to digital land 98% (2019) completed, and new property Pilots of mass property valuation • Land Registry Project registry and cadaster information valuation policy Informed are completed. Draft regulations • Sustainable Cities 1, 2, AF projects Increased customer satisfaction at Baseline: No (2016) are prepared. (2019) • Disaster Risk Management in national level Target: Yes (2020) Schools Baseline: 85% in 2016 Target: 95% in 2021 Improve planning capacity of and On Track Completed ASA: access to targeted municipal Currently working under SCP1 to • Housing study Number of additional people On Track services through adoption of prepare 10 sector plans in 10 • EU/IPA Grant for Sustainable Cities benefitting from improved urban IFC: 0.8m (2018) / IBRD: 0 26 sectoral, spatial and capital municipalities (all Integrated • Resilient Urban Regeneration infrastructure through IBRD and Gender disaggregated data is not investment plans in four Urban Water Management • Turkey Land Sector - Improving IFC financing (number in millions) disclosed. municipalities Plans), 10 Capital Investment State Land Management and Baseline: 3.3 (2015) Baseline: 0 in 2016 Plans for municipalities and Assessing the Feasibility of TDRs Target: 4.7 (2019) Target: 10 sectoral plans adopted in utilities (SCP1) and 4 Capital • Key Agricultural Product Risk (Gender disaggregated data to be at least 4 municipalities by 2021 Investment Plans (PPIAF). (2019) Assessment collected) 26The baseline and target values in the original result framework included the Municipal Services project baseline and target values. As the MSP project exited before the CPF approval, the actual values do only represent the actual values reached through the active IFC/IBRD lending operations. 54 Sustainable urban transport • Lifeline Utilities Risk Assessment planning adopted in selected Achieved and Business Continuity Planning Increased resilience of cities cities/municipalities. Necessary capacity is developed in Tuzla Organized Zone through number of disaster Baseline: 0. for sustainable urban transport • High-level Critical Infrastructure resilient public buildings On Track Target: 2 cities/municipalities planning. Two cities; Izmir and Risk Assessment in the Region of retrofitted, reconstructed, or Operationalization of 12 schools Kocaeli have submitted proposals Çukurova newly constructed through IBRD have been officially completed. for SUMPs (2019) • Turkey: Housing the Bottom 40% and FRIT financing (October 2019) Average travel time (min) in urban • Sustainable Urban Water Supply Baseline: 0 public transportation (tramway and On Track and Sanitation - Phase 2 Target: 110 by 2021 metro) (IFC) 37 (2018) Baseline: 45 (2015) Target: 25 (2019) IFC: • Cities platform – advisory services Urban waste water treated by IFC • Municipal infrastructure clients (Mm3) Off Track investments in metropolitan cities Baseline: 0 (2015) 1,971,535 (2018)27 including Istanbul, Izmir, Antalya, Target: 4,470,000 (2019) Bursa and additional cities commensurate with their Urban solid waste treated by IFC creditworthiness clients (tons managed/year) Achieved Baseline: 0 (2015) 176,700 (2018) Target: 133,000 (2019) Turkey Disaster Management Strategy and Turkey Risk Reduction On Track Plan adopted Turkey Risk Reduction Plan Baseline: No in 2016 (TRRP) has already been Target: Yes informed by the World Bank ASA on Turkey Disaster Risk Management Strategy. TRRP is planned to be ratified in 2020 as it is endorsed in 11th Development Plan. CPF Objective 9: Increased sustainability of infrastructure assets and natural capital CPF Objective Indicators Progress to Date Supplementary Progress Progress to Date WBG Program Indicators 27 Project delayed. 55 Cumulative energy savings Achieved and Surpassed Carbon market policy options Off Track Approved Lending: achieved through WBG-financed 10,666,937 MWh (September delivered to and considered by the • Renewable Energy Int. Project energy sector projects (MWh). 2019) Government • SME Energy Eff. Project Baseline: 1,116,000 in 2016 • EU/IPA Energy Sector TA Project Target: 6,000,000 in 2021 The following indicators – or other • Irrigation Rehabilitation Project relevant ones - could be considered • Public Building Energy Eff. Project Annual GHG emissions either On Track at the time of the CPF PLR if these Completed ASA: reduced or avoided through the 396,608 tons of CO2/year (IBRD) areas are developed as part of the • Forestry Study WBG program (tonnes/year) (2019) WBG program: • Turkey: Analytical Support to Baseline: 40,000 in 2016 95,500 tons of CO2/year (IFC) Financing and Implementing Target: 844,400 IBRD reduced, (2018) The National Intelligent Transport Off Track ENRM-specific SDGs 373,000 reduced IFC, 600,000 Systems (ITS) strategy The ITS strategy has not been • Support to Air Quality avoided at country-level through operationalized finalized and adopted by the Management in Turkey adopting GB standards (2021) Baseline: No Ministry of Transport and • Support to updating forest sector Target: Yes. Infrastructure. (2019) review • Support Effective Logistics Services Changes to the Forest Law, Off Track through İmproved Connectivity in regulations or policies to promote Forest Sector Note delivered Turkey greater private sector investment including the relevant draft • Technical assistance to Turkey on participation in harvesting and regulations. However, there is no agriculture sector issues development of plantations. progress in the government side • Natural Capital Accounting Baseline: Minimal to process any legislative change • Environmental and Natural Target: 2 or more pilot areas into the existing law. (2019) Resources Management covered Programmatic TA Leveraging Producer Organizations to Improve the Efficiency of Agri-Food Value Chains in Turkey IFC: • IFC financing to support resource efficiency projects • IFC provision of long-term loans to financial intermediaries to support RE/EE projects • IFC investments and advisory in modern, energy efficient municipal infrastructure (public transportation, water, waste water, street lighting, energy efficient buildings etc) • IFC advisory on green buildings and industrial zones 56 Annex 4. Citizen Engagement In Turkey, citizen engagement corporate requirements are being implemented in a context where voice and accountability is considered to be declining. During the CPF period, Worldwide Governance Indicators for Voice and Accountability for Turkey show a decline in the percentile rank from 30 in 2016 to 25.1 in 2019.28 Despite the strength of Turkish civil society, the shift from a parliamentary to an executive presidency brought with it changes in the enabling environment. Presidential Decrees No.17 and 18 (2018) abolished the Department of Associations and established a Directorate General for Relations with Civil Society under the Ministry of Interior, and the proposed new mechanism for civil society participation, the Civil Society Consultation Council, has yet to be established. With an increasing number of NGOs supporting the refugee crisis as service providers, there is a change in the profile of support and function provided by the non-governmental sector, impacting on long-term capacity. In this context however, during this CPF period (FY18-20) efforts were stepped up to embed citizen engagement in all IPFs and improve citizen engagement quality in the Turkish portfolio. 100% (6) of FY18-19 projects were fully compliant with both citizen engagement requirements (citizen-oriented design and beneficiary feedback indicator), however Turkey is only 50 percent compliant for reporting credible progress for FY16 projects (cf. 97% for ECA Average). A PLR review of the quality of the citizen engagement at design measured four attributes of citizen engagement of the six projects approved in the CPF period29: 2 of the 6 (33%) projects meet, in full, the criteria for depth and frequency of engagement, are open to a range of feedback, and provide for multiple channels (cf. 48% ECA average). As such Turkey’s portfolio lags behind the countries in the region for the quality of citizen engagement (at design) with a CE quality score of 1.88 compared to ECA average 2.25 (16th out of 19 countries ranked). There is much room for improvement in the use of active engagement mechanisms that ensure an interface for dialogue between citizens/beneficiaries and service providers/government agencies. To ensure more pro-active implementation, earlier in projects, capacity building support will be prioritized in the remainder of the CPF. The Turkey Irrigation Modernization Project (P158418) prepared in FY18-19 includes promising citizen- oriented designs that could serve as a model for other sectors. The Project includes support to Water User Associations (WUAs) through (i) annual WUA consultations in which results are discussed feedback incorporated in the final design of schemes; (ii) a national program for WUA’s capacity-building for water management to enhance the effectiveness of WUAs, and (iii) taking forward current efforts to develop a web-based, participatory water use monitoring platform for WUAs to enhance participation and ownership of the beneficiary communities. The IA will also conduct beneficiary satisfaction surveys to measure performance on project outcomes (e.g. land consolidation, water availability, timeliness, etc.) designed to ensure that gender-disaggregated feedback is collected. A functional multi-level GRM is also managed and institutionalized by the implementing agency. 28 World Governance Indicator 2019 (https://info.worldbank.org/governance/wgi/Home/Reports) 29 (1) Openness (if feedback is unrestricted and allows citizens to engage on any issue); (2) Depth (if citizens are engaged in decision-making, or there is an interactive platform for dialogue); (3) Opportunity (if multiple CE channels are available for citizens to provide feedback and at least one encourages active participation); and (4) Frequency (how often citizens can engage). 57 Citizen Engagement Country Roadmap to address gaps 58 Annex 5. CPF IBRD Lending Approvals (Planned and Actual) IBRD IBRD CPS FY17-21 Planned CPS FY17-21 Actual US$m US$m Long Term Finance Long Term Export Finance 300 Education Infrastructure and Education (FRiT) 153.2 Resilience (FRiT) Delivered in FY18 as Employment Labor Market Integration (FRiT) FY17 FY17 Support Project for SUTPs (RETF) Geothermal Development Geothermal Development 250 Trans-Anatolian Natural Gas Trans-Anatolian Natural Gas Pipeline 400 Pipeline Project Project Sustainable Cities Series of Sustainable Cities Series of Projects 132.8 Projects (1) 1,000 - Sub-total IBRD Sub-total 1,082.8 1,500 Grant Sub total 153.2 Education: Youth-at-Risk (IPA) Dropped SuTPs Employment Support & SuTPs Employment Support & 53.4 Entrepreneurship (FRIT) Entrepreneurship (FRiT) Sustainable Cities Series of Sustainable Cities Series of Projects 91.1 Projects (2) FY18 Gas Storage Expansion Project FY18 Gas Storage Expansion Project 600 Turkey - Resilience, Inclusion and Turkey - Resilience, Inclusion and 400 Growth DPF Growth DPF Inclusive Access to Finance 400 1,000 - Sub-total IBRD Sub-total 1,492 1,500 Grant Sub total 53.4 Delivered in FY18 as Inclusive Access Financial Sector to Finance Social Inclusion Dropped National Disaster Risk Management Disaster Risk Mgmt. 300 Project – Safe Schools Turkey Irrigation Modernization 252 Irrigation Turkey Irrigation Modernization (GEF) 2 Energy Efficiency Pipelined for FY20 FY19 FY19 Development of Businesses and 2 Entrepreneurship for SUTPs (FRiT) Partnership for Market Readiness 2 2 Project (RETF) Sustainable Cities 2 AF 560 1,000 - Sub-total IBRD Sub-total 1,115 1,500 Grant Sub total 6 Total Actual (FY17-18-19) 3,689 59 IBRD IBRD Planned for Remaining Period of CPF US$m US$m Energy Efficiency in Public Buildings 150 Renewable Energy Integration 325 Additional Finance Municipal Services Improvement Project in Refugee Affected Areas IBRD 150 FRiT 155 FY20 FY20 Improving Rail Connectivity 350 Formal Employment Creation for Refugees and Turkish Citizens IBRD 343 FRiT 85 Long-term Export Finance Guarantee 250 1,000 - Sub-total IBRD Sub-total 1,568 1,500 Grant Sub total 240 Green Organized Industrial Zones Integrated Landscape Mgmt (Bolaman Basin) FY21 FY21 Geothermal Additional Finance Rooftop Solar Energy Urban Resilience DPL-1 1,000 - 1,000 - Sub-total Sub-total 1,500 1,500 Climate Smart Agriculture Institutional Efficiency FY22 Human Capital Project Water Conservation 1,000 - 1,000 - Sub-total Sub-total 1,500 1,500 Integrated Landscape Mgmt 2 (Black Sea Basins) Energy Efficiency in Public Buildings Add. Finance FY23 FY23 DPL-2 Capital Market/LT Finance/Pension Reform 1,000 - 1,000 - Sub-total Sub-total 1,500 1,500 4,000 - 7,000- Total Planned Total CPF Envelope 6,000 10,500 60 Annex 6. CPF ASA Deliveries (Actual) CPF Planned CPF Actual FY GROWTH Pension Supervision, Regulation FY17 Financial Sector Programmatic ASA including WBG- Turkey FSAP Update IMF Financial Sector Assessment (FSAP), pensions, Services Trade and GVC analysis capital markets FY18 Turkey Programmatic Trade Task Turkey Productivity CEM FY19 Turkey - Programmatic Governance FY18 Governance Programmatic TA Public Financial Management Deepening the implementation of public sector FY19 internal audit reforms Business Environment and Innovation Enterprise Survey and Implementation Business Environment and Innovation ASA and TA 26 Regional ICA Reports FY17 Turkey Investment Climate and Innovation Turkey Regional Investment Climate Assessment Reimbursable Advisory Service Justice Sector TA FY17-FY19 Tax Policy Advice FY17-FY19 Distributional Impacts of Fiscal Policy Turkey CEM Investment FY17 INCLUSION Education: (1) analysis of PISA and TIMS results; (2) Turkey Higher Education Modernization Technical FY17 teacher training and primary education reform Assistance support; (3) migration management Turkey Education Technical Assistance FY19 Determinants of Poverty and Shared Prosperity FY17 Poverty and equity lens on labor, education and Trends in Turkey nutrition TA on Social Assistance, including to Refugee Populations (ESSN) FY18 Turkey Programmatic Jobs-Activation Turkey Jobs Analytics & Dialogue Labor markets and skills: (1) quality of jobs, minimum Minimum Wage Simulation Tool FY18 wage and informality TA; (2) study on Not in Assessing the effects of the 2016 Minimum Wage Education Employment or Training (NEET); (3) Socio- increase on formal job creation in Turkey Emotional Skills SE Skills for Employability in Turkey Quality of Jobs: Better Labor Policy and More FY19 Innovation Helping Turkey Refugee Response FY17 Qualitative Assessment of Syrians’ Employment and Livelihood Opportunities and Challenges in FY17 Turkey Syrian Refugee Crisis Response: harmonization strategy, knowledge generation, impact studies Policy Dialogue and Research on Syrian FY18 Displacement in Turkey Social Assistance to Refugees - Assessing the rollout of the largest humanitarian cash transfer program in the world Turkey Social Assistance Review FY17 Poverty Reduction Strategy and Social Assistance National Poverty Reduction Strategy FY18 Reform TA Impact of Taxes and Transfers on Poverty and Inequality FY19 Obesity Study FY17 Health; (1) expenditure projection actuarial model Turkey Modeling of Public Health Expenditure FY18 TA; (2) health reform and assessment of the utilization of primary care; (3) obesity study Global and national practices of integrated care FY19 models report Disability and Aging Study 61 CPF Planned CPF Actual FY SUSTAINABILITY Operational and Financial Sustainability of Energy Programmatic ASA, including EU-financed IPA FY17 Electricity Distribution Companies in Turkey IBRD-IFC Joint Implementation Program for FY17 Sustainable Cities TA Sustainable Cities in Turkey Resilient Urban Regeneration FY19 Turkey: Analytical Support to Financing and FY18 Support to SDG Implementation Implementing ENRM-specific SDGs Support to Air Quality Management in Turkey FY19 Turkey Land Sector - Improving State Land FY19 Management and Assessing the Feasibility of TDRs Key Agricultural Product Risk Assessment FY19 Disaster Risk Management TA Lifeline Utilities Risk Assessment and Business FY19 Continuity Planning in Tuzla Organized Zone High-level Critical Infrastructure Risk Assessment FY19 in the Region of Çukurova Forest Sector Review Support to updating forest sector review FY17 Support Effective Logistics Services through Sustainable, Efficient and Safe Transport İmproved Connectivity in Turkey FY19 Turkey Private Public Partnership Diagnostic Study Rooftop Solar PV Assessment Rooftop Solar PV Assessment FY18 PPP Advisory and PPP RAS Dropped FY17-FY19 Housing Study Turkey: Housing the Bottom 40% FY17 Technical assistance to Turkey on agriculture sector issues Sustainable Urban Water Supply and Sanitation - FY17 Phase 2 Additional ASA Delivered (not planned in the CPF) Natural Capital Accounting Environmental and Natural Resources FY18 Management Programmatic TA Leveraging Producer Organizations to Improve the FY19 Efficiency of Agri-Food Value Chains in Turkey 62 Annex 7. Planned ASA30 GROWTH Institutional Governance Review Programmatic Public Finance Review CEMs Regional Disparities ASA Financial Inclusion TA Subnational Governance ASA Technology and Knowledge for Export INCLUSION Education Quality Review Skills for the 21st Century Gender and Female Labor Force Participation Modernizing SPL Systems Equitable and Efficient Health Systems Productive Ageing SUSTAINABILITY Climate Smart Agriculture Energy Sector Review and Energy Transition Green Growth and Climate Finance Urban Mobility Digital Economy Assessment SYSTEMATIC COUNTRY DIAGNOSTIC 30 Additional ASA can be considered when there’s a strong client demand and responsive 63 Annex 8. Statement of IFC's Committed and Outstanding Portfolio Investment Portfolio (IFC Own Account) (2015-2020) *Amounts in US$M; Data as of – Jan 31,2020 Industry Group Sector Committed Portfolio - Outstanding Portfolio - Client Name Level 1 IFC Own Account IFC Own Account Akbank TK Financial Markets 339.6 339.64 RSF SMBC ECA Financial Markets 250.0 203.49 Tourism, Retail, Construction Ronesans Holding & Real Estates (TRP) 215.0 215 Garanti Bankasi Financial Markets 213.4 213.37 Yapi Kredi Bank Trade Finance 143.9 143.95 TSKB Financial Markets 138.3 138.26 Gama Enerji Infrastructure 126.0 104.03 Alternatifbank Trade Finance 115.9 115.91 Unit Investment Infrastructure 112.7 112.65 ACWA Guc Infrastructure 107.6 107.63 Isbank Financial Markets 105.0 105 Alternatifbank Financial Markets 102.7 102.73 Akfen Energy Infrastructure 100.0 100 TUPRAS A-S Manufacturing 99.0 99 Health, Education, Life Etlik Health Sciences 97.5 76.49 Odea Bank Financial Markets 94.1 94.12 Yapi Kredi Bank Financial Markets 88.4 88.38 Antalya Muni Infrastructure 88.3 88.3 Health, Education, Life Elazig Health Sciences 86.5 86.49 Seker Bank Financial Markets 83.9 83.9 Mersin Port Infrastructure 79.5 79.74 AKCEZ Infrastructure 78.6 76.22 OEDAS Infrastructure 75.8 47.33 Tourism, Retail, Construction YM HoldCo & Real Estates (TRP) 73.4 73.42 Izmir Muni Infrastructure 64.9 64.87 Istanbul MMI Infrastructure 59.6 59.6 Enerjisa Infrastructure 50.9 50.94 Collective Investment Actera III Vehicles 50.0 0 Assan Aluminyum Manufacturing 49.5 49.5 Kremna Elektrik Infrastructure 45.7 43.59 64 Industry Group Sector Committed Portfolio - Outstanding Portfolio - Client Name Level 1 IFC Own Account IFC Own Account Asyaport Infrastructure 44.1 32.14 Health, Education, Life Adana Health Sciences 44.0 43.95 Fibabanka Financial Markets 42.9 42.86 Collective Investment Abraaj Turkey I Vehicles 39.8 26.59 Hexagon KA Infrastructure 38.4 35 Health, Education, Life Kayseri Health Sciences 37.2 35.73 Martur Manufacturing 31.9 31.92 Health, Education, Life MNT Sciences 29.1 29.15 Izsu Infrastructure 28.0 28.05 QNB Finansleasing Financial Markets 28.0 28.04 Soda Sanayii Manufacturing 24.9 24.87 Health, Education, Life NOBEL ILAC Sciences 23.6 23.61 Collective Investment Earlybird Vehicles 23.4 2.18 Burgan Turkey Financial Markets 22.2 22.22 Rotor Elektrik Infrastructure 20.5 20.52 Collective Investment Taxim Capital I Vehicles 18.5 8.79 Trakya Cam Manufacturing 17.3 17.33 Collective Investment Mediterra II Vehicles 16.6 6.13 Unitim Manufacturing 15.3 15.25 Hepsiburada.com Other CDF Sectors 15.0 15 Netafim Israel Agribusiness & Forestry 15.0 0 Yapi Kredi Lease Financial Markets 14.2 14.22 Cimko Cimento Manufacturing 9.8 9.85 Health, Education, Life Astra Dorms Sciences 8.8 8.84 Health, Education, Life OzU Sciences 7.7 7.73 Collective Investment Revo Capital Vehicles 6.0 4.76 Sise ve Cam Manufacturing 5.7 5.68 Health, Education, Life Recordati Ilac Sciences 5.5 5.49 Superfilm Manufacturing 3.5 3.46 Collective Investment Mediterra I Vehicles 3.2 2.21 65 Industry Group Sector Committed Portfolio - Outstanding Portfolio - Client Name Level 1 IFC Own Account IFC Own Account Telecom, Media, and EAS Solutions Technology 2.8 2.76 Sanko Tekstil Manufacturing 1.9 1.92 FIGO Financial Markets 1.3 0.35 Garanti Bankasi Trade Finance 0.5 0.49 Collective Investment Turkven I Vehicles 0.4 0.38 Collective Investment Turkven II Vehicles 0.0 0 FIT Solutions Financial Markets 0.0 0 NASCO Manufacturing 0.0 0 Fibabanka Trade Finance 0.0 0 Seker Bank Trade Finance 0.0 0 Total Committed Portfolio (IFC Own Account) 3,983.0 3,721 66 Annex 9. Selected Indicators of Bank Portfolio Performance and Management As of February 12, 2020 67 Annex 10. Operations Portfolio (IBRD/IDA and Grants) As of January31, 2020 Closed Projects 193 IBRD/IDA* Total Disbursed (Active) 2,291.31 of which has been repaid(1) 346.09 Total Disbursed (Closed) 32,697.92 of which has been repaid 23,512.58 Total Disbursed (Active + Closed) 34,989.24 of which has been repaid 23,858.67 Total Undisbursed (Active) 2,513.79 Total Undisbursed (Closed) 0.03 Total Undisbursed (Active + Closed) 2513.822639 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements ͣ ̷ Develop Implementation Fiscal Project ID Project Name IBRD IDA Grants Cancel. Undisb. Orig. Frm Rev'd ment Progress Year P157683 DRM in Schools S S 2019 300.0 0.0 0.0 300.0 16.7 0.7 P162762 Energy Efficiency in Public Buildings S S 2020 150.0 0.0 0.0 150.0 1.6 0.0 P093765 GAS SECT DEVT S MS 2006 725.0 0.0 0.0 79.7 -320.3 -320.3 P162727 Gas Storage Expansion Project S MS 2018 600.0 0.0 0.0 495.9 49.5 0.0 P167363 GEF Turkey Irrigation Modernization # S 2019 0.0 0.0 2.0 0.0 1.6 -0.3 0.0 P152799 Health System Strengthening & Support MS MU 2016 134.3 0.0 0.0 92.3 92.1 23.2 P163225 Inclusive Access to Finance MS MS 2018 400.0 0.0 0.0 274.0 -10.4 0.0 P106284 Land Regis & Cadastre Modernization Proj S S 2008 293.6 0.0 15.0 50.7 -2.1 38.3 P156252 Long Term Export Finance S S 2017 300.0 0.0 0.0 0.0 -43.3 0.0 P144534 Renewable Energy Integration MS MS 2014 300.0 0.0 0.0 29.5 126.9 650.2 P128605 Sustainable Cities MS MS 2017 132.8 0.0 0.0 110.5 29.7 0.0 P161915 Sustainable Cities Project 2 S MS 2018 652.1 0.0 0.0 625.6 -20.7 18.0 P151739 Turkey Geothermal Development Project S S 2017 250.0 0.0 0.0 52.0 -33.4 0.0 P158418 Turkey Irrigation Modernization S S 2019 252.0 0.0 0.0 251.9 7.4 0.0 Overall Result 4,489.8 0.0 2.0 15.0 2,513.8 -106.7 410.1 * Disbursement data is updated at the end of the first week of the month. a. Intended disbursements to date minus actual disbursements to date as projected at appraisal. 68