World Bank in Turkey Focuses on Protecting People and Firms, while Improving Climate Resilience in Fiscal Year 2021

As Turkey continued to battle the health, economic and social impacts of COVID-19, the World Bank extended financing worth $1.5 billion for five critical development projects, during Fiscal Year 2021, which ended on June 30.

The financial support, together with technical and policy advice and analytical work, contribute to the implementation of Turkey’s 11th National Development Plan, as laid out in the World Bank Group’s Country Partnership Framework (FY17-23). With the new lending approvals in 2021, the active lending portfolio in Turkey has reached just over $7 billion covering 23 projects.

“Given the ongoing challenges from the COVID-19 crisis, the World Bank is supporting Turkey to limit the harm from the pandemic, while advancing progress on long-term development needs. Our programs, during the fiscal year that just ended, help to preserve jobs, maintain the private sector, improve resilience to climate change and other development priorities,” said Auguste Kouame, World Bank Country Director for Turkey.

Highlights of financing support during FY21 are:

Supporting Turkey’s Response to the COVID-19 Response

After delivering two pandemic response projects in FY20 for health, education and access to finance for export firms, the Bank delivered in FY21 two additional critical projects to help preserve jobs and viable small and medium size firms:

  • The $500 million Turkey Emergency Firm Support Project aimed at ensuring access to finance for small and medium enterprises (SMEs) affected by – or adapting to – the economic impacts of COVID-19. The project is being implemented through sub-loans managed by VakifBank and the Development Bank of Turkey (TKYB).
  • The $300 million Rapid Support for Micro and Small Enterprises during the COVID-19 Crisis Project, implemented by KOSGEB, aims at averting the closure of viable micro and small enterprises (MSEs) affected by the pandemic and maintain their employment levels. The project supports people and firms by providing reimbursable financing for manufacturing firms and other innovative young firms focusing on manufacturing, scientific research and development, and computer programming.

Maintaining a Focus on the Long-term Development Agenda

The Bank’s emergency COVID-19 operations did not derail the focus on long-term development challenges or its strategy to support Turkey’s climate change mitigation, adaptation and resilience efforts. In line with the Country Partnership Framework (CPF), the Bank’s regular program of support continued to focus on inclusive and sustainable growth with a renewed focus on the climate change agenda:

  • A $300 million Organized Industrial Zones (OIZ) Project for Turkey, implemented by the Ministry of Industry and Technology (MoIT), with the objective to support investments in basic infrastructure – such as new roads, water and gas pipelines, power lines, and logistics facilities – as well as in “green” infrastructure – including improved energy and water efficiency facilities, advanced wastewater treatment plants, and energy-efficient buildings in industrial zones.
  • A $135 million Turkey Resilient Landscape Integration Project (TULIP) aimed at improving livelihoods and resilient infrastructure services for rural communities in the Bolaman River Basin, located in the eastern Black Sea Region, and Cekerek River Basin in central Anatolia Region. The project will support investments in resilient landscape integration in targeted areas and restore and maintain green infrastructure and promote sustainable livelihoods.
  • A $265 million loan to Turkey’s Seismic Resilience and Energy Efficiency in Public Buildings Project to strengthen the safety of public buildings against the dangers of earthquakes while also improving energy efficiency to reduce energy bills and harmful carbon emissions. The project aims at better insulating, strengthening or reconstructing more than 140 schools, dormitories, hospitals, and government buildings, directly benefiting about 26,000 people who live, work or use these buildings, including school children and employees. More broadly, the benefits will accrue to more than 6 million citizens reliant on the public services provided by the targeted buildings.

Development Challenges Related to the Syrian Refugee Crisis

The Bank also contributed to Government efforts in managing the refugee crisis which has been exacerbated by the COVID-19 pandemic and requires stronger efforts to protect those most at risk, including women. As part of the program of support to regions and municipalities hosting refugees, the Bank continued to implement and prepare new projects that benefit from the EU Facility for Refugees in Turkey (FRIT) financing.

Building on the success of projects managed by the World Bank under FRIT-1, the Bank signed Administrative Agreements for five new Recipient Executed Trust Funds (RETFs) from the second batch of FRIT Funds also known as FRIT-2. The five projects, worth € 392 million, are:

  • Municipal Services Improvement Project in Refugee Affected Areas;
  • Formal Employment Creation for Refugees and Turkish Citizens;
  • Employment Support and Activation of Work-Able People under Protection and Turkish Citizens Project;
  • Agricultural Employment Support for Refugees and Turkish Citizens through Enhanced Market Linkages;
  • Social Entrepreneurship, Empowerment and Cohesion in Refugee and Host Communities.

Sharing Knowledge for Better Policies

The World Bank delivered policy-oriented research and analytical work that has informed Government policy and programs, facilitated the preparation of many WBG-funded projects, and underpinned investments from other development partners. In FY21, areas of focus for the World Bank’s Advisory Services and Analytics (ASA) included the bi-annual Turkey Economic Monitoring (TEM) reports; Policy dialogue on the digital economy in Turkey; Women’s Access to Economic Opportunities in Turkey; Leveraging Global Value Chains for Growth in Turkey; Buildings Resilience in Turkey; Improved Equity and Social Services; Impact of Syrian Refugee Crisis; Turkey Business Environment; Advisory Support for Turkey on Smart Grid Options, Generation Planning and Commercial Financing; Enhancing the Impact of the Turkish Court of Accounts on Good Public Governance; Review of National Planning, Policy Formulation and Public Financial Management Institutions and Performance; Building Institutional Capacity for Risk Informed Decision Making and Urban Resilience in Turkey.

Looking Ahead

“We are very pleased to have had a productive fiscal year 2021 working closely with the Government as well as many stakeholders and development partners in Turkey to support the people of Turkey in the face of COVID-19 and the refugee crisis while contributing to Turkey’s long-term development ambitions and its strong climate change agenda. We look forward to building on this success as we start a new fiscal year yea,” added Mr. Kouame.

Projects under preparation for the new Fiscal Year include: Geothermal Development Project Additional Financing; Urban Resilience Project; Integrated Water Conservation Project; Climate Smart and Competitive Growth in Agrifood Value Chains; Scaling-up Distributed Solar PVs in Turkey; and Izmir Post-Earthquake Green, Resilient and Inclusive Emergency Reconstruction Project. For these projects, no lending agreement has been signed yet. Finalization of the preparation of these projects and their submission for internal approval are subject to the confirmation of continued interest from all involved borrowing and pre-identified implementing institutions.

Analytical work underway includes: Climate Change and Development Report (CCDR); Sustainable Recovery and Green Growth Analytical and Advisory Program including a Low-Carbon Options Paper; Emissions Trading Scheme (ETS) Technical Assistance; Impact of the proposed Carbon Border Adjustment Mechanism; Public Expenditures and Fiscal tools to support green transformation; Private Investment for Climate Adaptation; Regional Disparities and Development; Human Capital Review and Education Quality; Social Development; Energy Transition and E-Mobility; Pandemics Preparedness; Institutional Development for High Income Status; Options for Enabling Long Term Finance in Turkey.

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