Turkey - Economic Reform Loan Project

Document of The World Bank Report No: 31606 IMPLEMENTATION COMPLETION REPORT (SCL-45490) ON A LOAN IN THE AMOUNT OF US$759.6 MILLION TO THE REPUBLIC OF TURKEY FOR AN Economic Reform Loan February 16, 2005  CURRENCY EQUIVALENTS (Exchange Rate Effective February 7, 2005) Currency Unit = YTL 1YTL = US$ 0.7638 US$ 1 = YTL1.3093 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS ARIP Agric. Reform Implementation Project ASCU Agriculture Sales Cooperatives CEM Country Economic Memorandum CPI Consumer Price Index DIS Direct Income Support EMRA Energy Regulatory Authority ERL Economic Reform Loan ES Civil Servants Pension Scheme GNP Gross National Product PA Privatization Administration SEE State Economic Enterprises SSK Employee Pension Scheme TEAS Electricity Generation Company TEDAS Electricity Distribution Company TA Telecommunications Authority VAT Value Added Tax Vice President: Shigeo Katsu Country Director: Andrew N. Vorkink Sector Director: Cheryl Gray Task Team Leader: Ismail Arslan  TURKEY Economic Reform Loan CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 3 5. Major Factors Affecting Implementation and Outcome 12 6. Sustainability 13 7. Bank and Borrower Performance 13 8. Lessons Learned 14 9. Partner Comments 15 10. Additional Information 17 Annex 1. Key Performance Indicators/Log Frame Matrix 26 Annex 2. Project Costs and Financing 27 Annex 3. Economic Costs and Benefits 28 Annex 4. Bank Inputs 29 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 31 Annex 6. Ratings of Bank and Borrower Performance 32 Annex 7. List of Supporting Documents 33  Project ID: P068792 Project Name: Economic Reform Loan Team Leader: Ismail Arslan TL Unit: OEDCR ICR Type: Core ICR Report Date: February 16, 2005 1. Project Data Name: Economic Reform Loan L/C/TF Number: SCL-45490 Country/Department: TURKEY Region: Europe and Central Asia Region Sector/subsector: General agriculture, fishing and forestry sector (30%); Central government administration (20%); Telecommunications (20%); General energy sector (20%); Other social services (10%) Theme: State enterprise/bank restructuring and privatization (P); Social risk reduction (P); Regulation and competition policy (P); Tax policy and administration (S); Other financial and private sector development (S) KEY DATES Original Revised/Actual PCD: 11/30/1999 Effective: 04/24/2000 06/27/2000 Appraisal: 01/19/2000 MTR: Approval: 05/18/2000 Closing: 09/30/2001 03/31/2003 Borrower/Implementing Agency: GOVERNMENT OF TURKEY/UNDERSECRETARIAT OF TREASURY Other Partners: STAFF Current At Appraisal Vice President: Shigeo Katsu Johannes Linn Country Director: Andrew N. Vorkink Ajay Chibber Sector Director: Cheryl W. Gray Pradeep Mitra Team Leader at ICR: Ismail Arslan James Parks ICR Primary Author: Elliott Hurwitz (Consultant) 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S S Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The objective of the Economic Reform Loan (ERL) was to assist Turkey to implement its economic reform program by providing quick disbursing financing for the balance of payments and the budget. A key aspect was to ensure that core structural components of the reform program were implemented effectively to ensure the sustainability of the disinflation program and create the basis for restored growth. The reform program was expected to have a major impact in improving macroeconomic stability, strengthening public sector governance, increasing living standards, and reducing economic vulnerability. Technical advice and dialogue in conjunction with the project was expected to help shape specific reform measures with the benefit of international best practice, and support from the Bank was expected to provide an important signal to international financial markets and other official creditors. The objective was highly relevant to the obstacles in the path of Turkey's economic development. ERL provided an additional incentive to continue the dismantling of the statist policies in each of the areas described below; reform progress, which had been inconsistent over the past few decades, showed promise to accelerate. And continued progress toward fiscal responsibility and macroeconomic stability was and is crucial to the acceleration of growth. 3.2 Revised Objective: The objectives were not revised. 3.3 Original Components: The project components consisted of: 1. Macroeconomic performance 2. Fiscal Reform and Adjustment 3. Social Security Reform 4. Agricultural Reform 5. Telecommunications Reform 6. Energy Reform 7. Enterprise Privatization. The loan was designed in two tranches; the first of US$384.6 million was released upon effectiveness (and fulfillment of specified conditions). The second tranche of US$375 million was released upon fulfillment of further conditions and satisfactory progress in the reform program. The second tranche was originally intended to be released within 1