Turkey - Programmatic Public Sector Development Policy Loan Project

Page 1 PROGRAM INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB2361 Operation Name Programmatic Public Sector Development Policy Loan (PPDPL) Region EUROPE AND CENTRAL ASIA Sector General public administration sector (40%);Compulsory pension and unemployment insurance (30%);Compulsory health finance (30%) Project ID P071052 Borrower(s) GOVT. OF TURKEY Implementing Agency Undersecretariat of Treasury Date PID Prepared May 5, 2006 Date of Appraisal Authorization May 12, 2006 Date of Board Approval June 29, 2006 1. Country and Sector Background: Turkey is well into a new stage of public sector reform aimed at addressing the second generation challenges imposed by the economic crises of 2000 and 2001. In reaction to these crises, there has been a strong fiscal adjustment with significant primary surpluses in each year thereafter. The fiscal adjustment has been accompanied by ongoing implementation of a comprehensive long term government program to modernize the institutions and procedures of public sector management. Nonetheless, the quality of fiscal adjustment needs to be improved and there is a need to address additional public sector reform challenge, most notably in social security, governance and decentralization. Consequently, the authorities have designed and adopted a program of sustained medium-term legal, institutional, and structural developments aimed at promoting growth and improving social conditions. The PPDPL will support policy actions within the overall program in four connected areas, namely: (a) sustaining the current enabling macroeconomic framework; (b) reforming the country