Document of The World Bank Group FOR OFFICIAL USE ONLY Report Number. CPF0000004 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP FRAMEWORK FOR THE REPUBLIC OF TÜRKIYE FOR THE PERIOD FY24-FY28 March 12, 2024 Türkiye Country Management Unit Europe and Central Asia International Finance Corporation Middle East, Central Asia, Türkiye, Afghanistan, and Pakistan 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. CURRENCY EQUIVALENTS US$ 1.00 = 30.35 TRY (as of 01/31/2024) FISCAL YEAR January 1 – December 31 ABBREVIATIONS ASA Advisory and Analytical Services IFI International Financial Institutions CBAM Carbon Border Adjustment IPF Investment Project Financing Mechanism CCDR Country Climate and Development MIGA Multilateral Investment Guarantee Report Agency CLR Completion and Learning Review MOU Memorandum of Understanding COVID-19 Coronavirus Disease 2019 MSMEs Micro, Small and Medium Enterprises CPF Country Partnership Framework NCD Non-Communicable Disease CPSD Country Private Sector Diagnostics NEET Not in Education, Employment or Training ECA Europe and Central Asia Region NDC Nationally Determined Contribution e-GP e-Government Procurement OIZ Organized Industrial Zones ESF Environmental and Social Framework PASA Programmatic Advisory Services and Analytics ESMS Environmental and Social PCM Private Capital Mobilization Management Systems EU European Union PFM Public Financial Management FY Fiscal Year PforR Program for Results GDP Gross Domestic Product PIU Project Implementation Unit GVC Global Value Chain PLR Performance and Learning Review Ha Hectare PPP Purchasing Power Parity or Public Private Partnership HCI Human Capital Index SCD Systematic Country Diagnostic HLO High-Level Outcomes SDG Sustainable Development Goal IBRD International Bank for SuTPs Syrians under Temporary Protection Reconstruction and Development IFC International Finance Corporation TRY Turkish lira IBRD IFC MIGA Vice President: Antonella Bassani Hela Cheikhrouhou Ethiopis Tafara Director: J. Humberto Lopez Wiebke Schloemer Moritz Nebe Task Team Leader: Shomikho Raha Kiryl Haiduk Bexi Jimenez Mota Table Of Contents I. INTRODUCTION ..........................................................................................................................1 II. COUNTRY CONTEXT AND DEVELOPMENT AGENDA ......................................................................2 A. Social, Economic and Political Context ............................................................................................. 2 B. Recent Economic Developments ...................................................................................................... 4 C. Poverty Profile, Shared Prosperity, and Livable Planet .................................................................... 5 D. Development agenda ........................................................................................................................ 7 III. WORLD BANK GROUP PARTNERSHIP FRAMEWORK .................................................................7 A. Government Program and Medium-term Strategy .......................................................................... 7 B. Lessons incorporated from previous World Bank Group Country Partnership Framework ............ 7 C. Proposed World Bank Group Country Partnership Framework ....................................................... 8 D. Implementing the CPF..................................................................................................................... 22 IV. MANAGING RISKS TO THE CPF PROGRAM .................................................................................... 25 Annex 1: Additional figures on economic progress and risks .............................................................. 27 Annex 2: CPF Results Matrix ............................................................................................................. 28 Annex 3: Completion and Learning Report ........................................................................................ 45 Annex 4: Selected Indicators of Bank Portfolio Performance and Management ................................. 94 Annex 5: Operations Portfolio (IBRD/IDA and Grants) ....................................................................... 95 Annex 6: Statement of IFC’s Held and Disbursed Portfolio ................................................................. 97 Annex 7: MIGA’s Guarantee Portfolio ............................................................................................. 101 TABLES Table 1: Türkiye: Key Economic Indicators……………………………………………………………………………………………...4 Table 2: Risk Ratings Matrix…………………………………………………………………………………………………………………..25 FIGURES Figure 1: Alignment of CPF with National Priorities and WBG Global Challenges……………………………………11 I. INTRODUCTION 1. Türkiye’s development achievements over the past two decades have been remarkable. Real gross domestic product (GDP) growth averaged 5.4 percent between 2002 and 2022 resulting in income per capita (in real terms) more than doubling over the same period. Growth was accompanied by rapid poverty reduction; the poverty rate ($6.85 2017 purchasing power parity -PPP) decreased by more than half from above 20 percent in 2007 to 7.6 percent in 2021. On the sustainability front, the country has managed to relatively decouple growth from greenhouse (GHG) emissions and maintain per capita emissions below the Organization for Economic Co-operation and Development (OECD) and European Union (EU) averages (Annex 1, Figures 1-4). The country ratified the Paris Agreement in 2021 and has been committed to net zero emissions by 2053. 2. Yet, to ensure that these positive trends continue and are sustained over time, Türkiye will need to address several emerging challenges on the growth, poverty and inclusion, and sustainability fronts. First, the combination of a difficult macroeconomic situation in the aftermath of the COVID pandemic and declining total factor productivity (TFP) since the mid-2010s1 raise questions about medium-term growth prospects. Second, the speed of poverty reduction has slowed since 2016, as increases in inequality have offset the poverty gains from continued strong growth. Third, Türkiye suffers from an emissions intensive industrial base, continued reliance on fossil fuels, carbon-intensive transport, and inefficient buildings. The country’s carbon intensive manufacturing sector exposes it to both risks and opportunities when the EU (which represents 41 percent of Turkish exports) starts implementing the Carbon Border Adjustment Mechanism (CBAM) in 2026. Fourth, its geographic, climatic, and socioeconomic conditions leave Türkiye particularly vulnerable to the impacts of climate change, making adaptation a high priority. 3. Türkiye is currently addressing the effects of the earthquakes that hit the country on February 6, 2023. With magnitudes of 7.8 and 7.5, the earthquakes were followed by thousands of aftershocks and another 6.7 magnitude earthquake on February 20. According to official statistics, they caused more than 50,000 casualties, injured 107,000 people, damaged or destroyed 1.9 million housing units, and displaced 3.3 million people, of whom 2 million needed shelter. An assessment2 conducted by the Government of Türkiye with support from the EU, the United Nations (UN), and the World Bank Group (WBG) estimated the recovery and reconstruction needs associated with the earthquakes at around $81.5 billion. Risks also remain high with about 70 percent of its population living in first- and second-degree seismic zones. 4. This Country Partnership Framework (CPF) presents the WBG strategy to deliver impactful solutions at greater scale and speed in Türkiye over FY24-FY28. The CPF is fully aligned with the WBG mission of ending extreme poverty and promoting shared prosperity on a livable planet and with the Government of Türkiye’s 12th National Development Plan (NDP) 2024-2028. It aims to accelerate progress towards the Sustainable Development Goals (SDGs) and support recovery and reconstruction from recent shocks. The CPF outlines how the WBG will further scale up impact in one of its largest country portfolios to meet priority country and global challenges. As of December 2023, Türkiye was in the top three International Bank for Reconstruction and Development (IBRD) countries by active portfolio size, the third largest country exposure for the International Finance Corporation (IFC), and the third largest country portfolio for the Multilateral Investment Guarantee Agency (MIGA). IBRD, IFC and MIGA plan to further scale up impact in Türkiye, working as One WBG through purposeful collaboration, coordination, and deployment of collective knowledge and instruments. 5. The CPF is consistent with the IBRD graduation policy. Türkiye is an Upper Middle-Income 1 According to staff calculations, factor productivity has been declining, a view consistent with the findings of the academic literature. However, estimates are sensitive to assumptions and data used in calculations and, admittedly, Government estimates differ from those presented here. 2 https://www.sbb.gov.tr/wp-content/uploads/2023/03/Turkiye-Recovery-and-Reconstruction-Assessment.pdf 1 Economy (GNI per capita of $10,490 in 2022, Atlas method), above the graduation discussion income (GDI) threshold. In this context, given the critically important role of global public goods, this CPF accompanies Türkiye in its efforts to address global challenges, notably climate change mitigation and adaptation, energy transition, and enabling digitalization. For example, to support Türkiye’s decarbonization and just transition agenda, the WBG program is active in areas such as green finance, the scaling up of renewable energy, and rail infrastructure investments. In turn, Türkiye continues to access external capital markets, although on costly terms. Sovereign Eurobond yields escalated from 4.2 percent in February 2020 to around 8.5 percent in November 2023, having reached 9.9 percent in November 2022. Similarly, Credit Default Swap (CDS) spreads are now around 300 bps, having peaked at 862 bps in July 2022. Against this background, the CPF will help the country mobilize private capital, and improve the investment climate through institutional reforms such as those included in the recently unveiled 57-point action plan of Türkiye’s Investment Environment Improvement Coordination Council. Moreover, in order to avoid the so-called middle-income trap, it will be important to strengthen institutions to correct existing divergences (with high income countries) in a set of institutional indicators. This aim is highlighted in the government’s medium-term development plan in areas such as regulatory quality and the need to strengthen digital government. The institutional improvements embedded across CPF objectives will improve the delivery of key public services (e.g., energy, rail transport, water, and sanitation), institutional capacity for job creation, and institutional enablers for green finance. 6. The CPF is analytically grounded in the FY24 Systematic Country Diagnostic (SCD) and the Country Climate and Development Report (CCDR) which in turn has informed the country’s NDP and National Energy Plan (NEP). It builds on the Completion and Learning Review (CLR) in Annex 3, which distills the lessons learned implementing the CPF for FY18-21 (Report No. 11096-TR). That CPF was extended by two years following a Performance and Learning Review (PLR) (Report No. 142353-TR). The extension provided additional time to achieve a critical mass of CPF results, deepen policy dialogue and engagement in important areas, and align the new CPF to the 12th NDP. II. COUNTRY CONTEXT AND DEVELOPMENT AGENDA A. Social, Economic and Political Context 7. Türkiye held presidential elections in May 2023, alongside parliamentary elections to elect the 600 members of the National Assembly. President Recep Tayyip Erdogan of the Justice and Development Party (AKP) won the presidential elections for a new 5-year term. In the Assembly, the People’s Alliance led by AKP won with a majority of 323 seats, followed by the Nation Alliance (212 seats) and the Labor and Freedom Alliance (65 seats). After the country holds municipal elections in March 2024, there will be a 4-year period when policy making is not expected to be affected by electoral considerations. 8. The country’s strategic geographic location as a door to the Black Sea and a bridge between Europe and Asia has elevated the profile of Türkiye in recent regional conflicts. Türkiye, because of its geographical and diplomatic position as well as its own socio-economic interests, has turned into a key interlocutor between Russia and Ukraine, helping secure global shipments of food through Turkish straits. Also, the conflict in Syria led to an inflow of Syrians under Temporary Protection (SuTPs) into Türkiye (3.2 million in 2024) and to an agreement with the EU to support SuTPs and their host communities while preventing irregular migration into the EU. Indeed, Türkiye’s efforts to support the SuTPs have been significant. The country is also a key stakeholder for the Middle Corridor which represents, an important Asia-Europe route for improved transport and trade connectivity. 9. The development of the private sector is key for Türkiye’s transition to high-income status. The private sector constitutes 98 percent of the country’s top 500 firms in terms of turnover and it accounts for 78 percent of investment. It is also the largest employer in the country, as about 85 percent of 2 employees work in private companies,3 with Small and Medium Enterprises (SMEs) employing 72 percent of the overall workforce. SMEs also generate more than 50 percent of gross value added.4 Türkiye’s ability to build a productive, sustainably growing economy depends on the capacity of SMEs to expand, adopt the latest technologies, innovate, and participate in global value chains. 10. Türkiye’s private sector –particularly SMEs– faces several critical challenges, which hinder firms’ ability to upgrades to higher value-added and high-technology activities. One important barrier is limited access to finance for SMEs, including for research and development investment, which is a driver of TFP growth. While Türkiye’s financial sector has grown significantly in recent years and real interest rates were negative, in 2019 access to finance was the top constraint reported by firms in the World Bank Enterprise Survey. Availability of an educated workforce was also among the top challenges reported by firms, which weakens their ability to innovate and absorb new technologies. Connectivity also needs attention to facilitate participation in global value chains, as Türkiye’s ranking on the World Bank’s Logistics Performance Index (LPI) fell from 27th in 2012 to 38th in 2023. Finally, micro, small and medium enterprises (MSMEs) and start-ups face high costs of doing business as they are treated as other corporations, inhibiting their ability to expand. 11. COVID-19 is still present in the policy agenda. Türkiye successfully mobilized to respond to the health and socio-economic effects of the pandemic, and quickly intensified infrastructure investments for COVID-19 screening and treatment. Indeed, it was among the first countries to launch its vaccination program, administering at its peak more than 1.5 million doses per day. The government’s policy response also helped cushion the blow for businesses and households, and Türkiye was among the few emerging- market economies that did not experience negative economic growth in 2020. Türkiye is working to build on the recent experience with enhanced pandemic preparedness in both monitoring and response. 12. Climate change is having a significant effect on Türkiye and impacting policy making. Türkiye has experienced a growing exposure to climate-related disaster risks. A serious drought occurred in the central and eastern regions of the country during the 2020/2021 agricultural season, whereas flooding in the Black Sea region in 2021 caused the loss of many lives, and significantly damaged or destroyed public and private infrastructure. Also in 2021, forest fires in the Mediterranean Region, considered amongst the worst in the country, burnt around 1,700 square kilometers of forest. The outbreak of sea mucilage in the Marmara Sea affected sea life, damaged the fishing industry, and threatened to impede the only shipping access to the Black Sea. Although carbon intensity and energy efficiency have improved in recent years, total emissions have increased, and Türkiye ranks 15th among countries in annual GHG emissions, up from 18th in 2019. The country is responding to these challenges with adaptation and mitigation interventions, such as the Water Efficiency Campaign initiated in January 2023. 13. Türkiye ratified the Paris Agreement in October 2021, committing to net zero emissions by 2053, and advancing plans for resilient decarbonization. In July 2021, the government released its Green Deal Action Plan5 to help transition towards a sustainable and resource efficient economy and prepare for the comprehensive changes envisaged by the European Green Deal. Local and global events have also led to increasing awareness of climate change impacts and the need for reduced emissions. In December 2022, the government issued the NEP with targets to massively scale-up renewables and flexibility resources by 2035. The 12th NDP lays out a comprehensive agenda to transform Türkiye’s economy in line with climate goals, with a focus on immediate actions until 2028. 3 European Commission, Türkiye 2020 Report, https://neighbourhood-enlargement.ec.europa.eu/system/files/2020- 10/turkey_report_2020.pdf. 4 OECD, SME Policy Index: Western Balkans and Türkiye, 2022. 5 https://ticaret.gov.tr/data/60f1200013b876eb28421b23/MUTABAKAT%20YE%C5%9E%C4%B0L.pdf. 3 B. Recent Economic Developments 14. Türkiye’s rapid growth in recent decades (4.1 percent in per capita terms on average over 2002- 22) made it the 25th fastest growing country in the world over that period. While the COVID-19 pandemic had a negative impact on growth, Türkiye still managed to have positive growth in 2020 (1.9 percent). This performance was largely due to the government’s economic response to the pandemic, focusing on loosening monetary policy and rapid credit expansion. Moreover, supported by domestic and external demand, Türkiye achieved double-digit GDP growth in 2021 (11.4 percent) and maintained significant momentum in 2022 (5.5 percent) and 2023 (4.5 percent). 15. However, the policy framework that ensured strong economic performance also heightened macroeconomic risks and created vulnerabilities in the economy, which have been compounded by the effects of other recent shocks. The country has been affected by persistently high inflation in recent months (67 percent in February 2024 after having peaked at 85.5 percent in October 2022) and the Turkish lira has depreciated sharply (192 percent against the dollar between January 2021 and February 2024). This was accompanied by a decline in Central Bank reserve buffers, which started to recover after the May 2023 elections. But even before the emergence of these challenges, there were concerns about growth prospects given: (i) declines in the contribution of total factor productivity to growth (down to 0.4 percentage points over 2016-2022 from 1.2 percentage points over 2004-2015); (ii) the trend and composition of investment, which since 2010 was mainly driven by residential and commercial property construction (i.e., a construction boom), despite a decline in recent years; and (iii) food price inflation diverging from global trends over the last ten years in Türkiye – also being higher than the overall inflation. Table 1. Türkiye: Key Economic Indicators 2020 2021 2022 2023 2024f 2025f 2026f Real GDP growth, at constant market prices 1.9 11.4 5.5 4.5 3.1 3.9 4.7 Private Consumption 3.2 15.4 18.9 12.8 1.7 3.4 4.1 Government Consumption 2.2 3.0 4.2 5.2 2.1 2.4 2.1 Gross Fixed Capital Formation 7.3 7.2 1.3 8.9 3.7 4.5 5.0 Exports -14.5 25.1 9.9 -2.7 5.4 5.8 6.4 Imports 6.8 1.7 8.6 8.7 2.4 6.4 5.5 Real GDP Growth, at constant factor prices 1.2 11.9 6.5 4.5 3.1 3.9 4.7 Agriculture 5.7 -2.9 0.6 -0.2 1.5 1.6 2.1 Industry 1.1 13.0 0.9 3.7 3.5 4.9 5.6 Services 0.8 13.1 9.7 4.7 3.1 3.6 4.7 Inflation (CPI), avg. 12.3 19.6 72.3 53.9 57.2 27.5 15.7 Current Account balance (% of GDP) -4.4 -0.9 -5.4 -4.2 -3.3 -2.6 -2.3 Net Foreign Direct Investment (% of GDP) 0.6 0.9 1.0 0.7 1.3 1.4 1.4 Fiscal Balance (% of GDP) -3.9 -2.6 -0.8 -5.4 -5.2 -3.8 -2.9 Debt (% of GDP) 39.4 40.4 30.8 29.7 29.9 31.5 32.7 Primary Balance (% of GDP) -1.1 0.0 1.4 -2.5 -1.7 0.0 0.5 Upper middle-income poverty rate (USD 6.85 in 2017 PPP) 9.8 7.6 7.8 7.8 7.9 7.8 7.8 Source: World Bank Macro Poverty Outlook for Türkiye, October 2023, and WB estimates. Notes: f = forecast. For inflation, realized value used for 2023. Poverty calculations based on SILC data from the TURKSTAT, actual data: 2020-2021, nowcast: 2022, forecasts are from 2023 to 2026. 16. The heterodox policies introduced before May 2023 to stabilize the lira, reduce dollarization, and direct credit to selected sectors also led to distortions in the financial sector. In that context, banks and corporations grew more sensitive to exchange rate volatility and liquidity risks because of their reduced, yet still considerable, amount of foreign exchange (FX) denominated liabilities. The introduction of extensive regulatory forbearance, including a relaxation of the nonperforming loan (NPL) classification criteria and the option for banks to apply a more favorable FX rate when calculating risk-weighted assets and capital adequacy ratio, has somewhat shielded the banking sector. But this added a layer of complexity to the policy adjustment efforts. 4 17. Following the May 2023 elections, the Government has taken steps towards normalizing the economy in a gradual way in order to manage risks associated with the adjustment process. This includes monetary policy tightening, with interest rates increasing from 8.5 percent in May to 45 percent in January 2024, the unwinding of distortive financial regulations, and fiscal revenue measures to curtail the fiscal deficit. Markets are reacting positively with 5-year CDSs declining from above 500 basis points (bps) in May 2023 to around 300bps in March 2024, two of the major rating agencies upgrading their outlook to positive recently, and one of them (Fitch) upgrading the credit rating (to B+) on March 8, 2024. The authorities are also contemplating how to complement these actions with structural reforms that may help with growth prospects going forward. These efforts will need to be sustained and supported in the coming months because the monetary, fiscal and macro-prudential challenges and associated economic vulnerabilities were of such magnitude that despite the significant progress, there is some road ahead. 18. The economy is expected to slow this year as it continues to adjust from the previous policy stance, followed by an expected acceleration in growth in outer years. After growing by 5.5 percent in 2022 and 4.5 percent in 2023, Türkiye’s economic growth is projected to initially slow to 3.1 percent in 2024 before recovering to 3.9 percent in 2025 and 4.7 percent in 2026. In response to the recent monetary tightening, inflation should decline gradually supporting higher investment and growth as well as further progress on poverty and inequality. Fiscal consolidation after 2024 (when the earthquakes recovery and reconstruction efforts will peak), macro-financial stabilization alongside lira depreciation, and policy support to exporters should also further narrow the current account deficit. Poverty is projected to stay at 7.8 percent in the next few years. 19. Future growth prospects will also be affected by developments associated with the global climate change agenda. The EU CBAM is perhaps the most tangible example. The EU will place a fee on the import of certain emissions intensive products to create a level playing field for domestic producers subject to the EU emissions trading system. The CBAM applies to a select group of the most emissions intensive and trade exposed sectors, although it is likely to expand to other sectors over time. It entered into application in its transitional phase in October 2023 and the permanent system will enter into force beginning in 2026. Türkiye is a large producer of emissions intensive products (5th largest cement producer and 8th largest steel producer), and the EU is Türkiye’s largest trading partner, absorbing 41 percent of Türkiye’s total goods exports. Initially, the iron and steel sector is of most concern: 39.6 percent of Türkiye’s likely covered exports in this sector are absorbed by the EU at a value of around $ 7.5 billion. Aluminum is also exposed with 58 percent of exports going to the EU. However, Türkiye could capitalize on progress in decarbonizing its power sector, its proximity to EU markets, and strong existing trade relationships to grow its exports to the EU if it decarbonizes its industrial base ahead of other countries. 20. Türkiye’s tourism industry, a major contributor to GDP and the most important source of export revenue, is being impacted by climate change. Regional distribution of tourism activity and investment is closely correlated with climate risk. For example, Antalya Province, accounting for almost half of the country’s tourism accommodation, suffers from the most frequent meteorological disasters of any province, with over 370 events recorded between 2010 and 2021. The hotel sector faces an especially acute decarbonization challenge due to the long asset-life of most hotel properties. This concentration of tourism infrastructure offers opportunities to invest collectively in climate adaptation and mitigation measures, sharing the costs and risks among a range of stakeholders. For policymakers and private actors, the challenge is to sustain the sector’s growth while reducing emissions, reinforcing climate resilience, and offering innovative value propositions for less carbon intensive, climate resilient tourism products. C. Poverty Profile, Shared Prosperity, and Livable Planet 21. The impressive growth record of Türkiye over the last two decades was accompanied by 5 significant gains in poverty reduction. According to the SCD, this was largely related to the performance of the labor market, which over the past 15 years generated more than 11 million jobs and was accompanied by real wage increases. As a result, the share of households living below the international poverty line of $6.85/day in PPP terms declined from 20 percent in 2007 to 7.6 percent in 2021. This was also accompanied by a similar reduction in chronic poverty. While 24.3 percent of households were poor every year between 2005 and 2008, only 10.7 percent were poor every year between 2016 and 2019. The fraction of vulnerable households also declined, albeit by a smaller margin: from 24.8 percent in 2007 to 18.1 percent in 2021. The poverty gap and poverty severity, calculated based on the $6.85/day poverty line, fell by approximately 67 percent during the same period. 22. However, increases in inequality since 2015 have offset the poverty gains from the high growth rate. The Gini coefficient in 2021 (0.46) exceeded the 2020 level (0.43). This was translated into the poverty dynamics: poverty and chronic poverty have remained largely stable since the mid-2010s despite the high growth rate as the increases in inequality have offset the poverty gains from growth. The evolution of shared prosperity is similar: between 2009 and 2016 growth in the incomes of the bottom 40 percent of the income distribution exceeded overall growth in incomes. However, the trend somewhat reversed between 2016 and 2020. 23. The observed increase in income inequality has taken place even though some indicators of inclusion improved in recent years. Indeed, while regional inequalities persist (several regions, including some of the provinces most affected by the February 2023 earthquake, have poverty rates that exceed the national average), they have been reduced in recent decades. Likewise, informal employment declined from close to 50 percent to below 30 percent over the past 15 years. Female labor force participation increased from 21 percent to 35 percent between 2005 and 2022, though it remained below the average participation rates in comparable countries such as upper-middle income countries (55 percent) and the Europe and Central Asia Region (50 percent). In this context, staff analysis for this CPF suggests that the increase in income inequality is related to the evolution of employment in the agriculture and construction sectors. Both agriculture and construction tend to employ low skill workers and hence employment growth in these sectors tends to reduce inequality. However, since 2015, when aggregate employment increased by 165.5 percent, employment in agriculture and construction declined by 9.2 and 3.74 percent respectively. More recently, high inflation is likely to have also played a role as it has disproportionally affected the lower deciles of the income distribution. 24. Türkiye’s geographic, climatic, and socioeconomic conditions make it highly vulnerable to the impacts of earthquakes, climate change, and other environmental hazards, making adaptation and resilience high priorities. The earthquakes in February 2023 were a tragic reminder of Türkiye’s high exposure and vulnerability to seismic hazards. Over 70 percent of the country’s population and 80 percent of its GDP are in seismic risk zones, including its largest metropolis and major economic hub Istanbul. Climate change is expected to aggravate the pressure exerted by extreme events posing multidimensional risks to welfare and livelihood security. Türkiye has started to lay a solid foundation for building resilience and addressing depletion of natural resources through planning and policy development, including institutional arrangements at various levels of government and in various sectors. In addition, incentives for earthquake resilient reconstruction of existing non-resilient building stock and long-term, affordable local currency financing to enable residential reconstruction are much needed. 25. The Turkish economy’s high carbon intensity provides both a challenge and an opportunity for its economic transformation and global impact. Türkiye’s transition to clean, renewable energy, while boosting energy efficiency and decreasing the share of fossil fuels in electricity generation, will require significant policy reform and investment, both public and private. At the same time, the country’s energy transition will be critical for Türkiye’s ability to maintain and enhance the competitiveness of its exports 6 since a rapid decarbonization of its power sector would allow it to out-compete more emissions-intensive producers while reducing harmful air pollution. D. Development agenda 26. In line with the previous discussion, the FY24 SCD considers policy options to (i) sustain productivity growth by enhancing competitiveness and macroeconomic sustainability; (ii) enhance inclusion by expanding access to quality jobs for vulnerable groups and providing more equitable access to quality social services; and (iii) improve resilience to natural hazards, promote environmental sustainability, and address climate change challenges. • The SCD emphasizes the need to restore macroeconomic sustainability including reducing inflation to increase allocative efficiency; developing domestic sources of long-term finance; addressing barriers to firm entry, exit, and competition to enhance firm productivity; and improving the quality of education to elevate the level of human capital. The SCD also highlights the productivity opportunities created by the need to transition towards environmentally sustainable and green growth. • The SCD also considers options that address both growth and inclusion and that aim to continue increasing the female labor force participation; expand the coverage and improve quality of vocational education and training opportunities; and introduce mechanisms for the formalization of employment and legal coverage of vulnerable groups (including SUTPs). • And, building on the CCDR, the SCD recommends the implementation of several actions aimed at improving water management and preservation; expanding the adoption of climate smart agricultural technologies; reducing carbon intensity by switching power generation towards renewables; and increasing energy efficiency in the transport and housing sectors. The SCD also recommends actions to increase the country’s resilience against earthquakes. 27. Progress on growth, inclusion and sustainability will be accelerated by further strengthening key institutions. The SCD concludes that one of the primary drivers of Türkiye’s rapid transition towards upper middle-income status in the first decade of the 21st century was the institutional changes introduced. Going ahead, as noted previously (para. 5), the country will need to continue pursuing a reform agenda of strengthening regulatory and other institutional effectiveness. III. WORLD BANK GROUP PARTNERSHIP FRAMEWORK A. Government Program and Medium-term Strategy 28. The 12th National Development Plan (NDP) 2024-28 was approved by parliament and became effective on November 1, 2023. The plan envisions “a stable, strong and prosperous Türkiye, that is environment-friendly, resilient to disasters, produces high value added based on advanced technology, shares income equitably in the century of Türkiye”. It is built around five pillars: (i) stable growth, strong economy; (ii) competitive production through green and digital transformation; (iii) skilled human, strong family, healthy society; (iv) disaster-resistant living spaces, sustainable environment; and (v) democratic good governance based on justice. 29. The NDP also identifies key global developments and trends that inform the strategy, several of which align closely with the WBG global challenges, demonstrating their relevance in the context of Türkiye. Of the global challenges in the NDP, the green transition, energy security, food security and efficient water use, and the digital transition align most closely with those that have been identified in the WBG Evolution Roadmap as the areas of focus over the next few years. B. Lessons incorporated from previous World Bank Group Country Partnership Framework 7 30. Lessons learned from implementing the previous CPF, included in the recently completed CLR, have been incorporated into this CPF. A significant lesson learned is the need to further improve implementation efficiency and effectiveness in WBG engagement, which is also an important focus of the Evolution Roadmap. Key areas include: • Improve implementation speed by enhancing replicability and scalability. The CLR highlighted the need to enhance the balance between delivery of new programs and implementation of the ongoing portfolio. This CPF will focus on designing scalable and programmatic approaches informed by the best country and global knowledge. With greater attention to replicability and scalability, new programs will help to place less strain on Project Implementation Unit (PIU) capacity. • Strengthen client implementation capabilities through capacity upgrading of skills and systems. Rapid expansion of the portfolio has placed increased demands on the capacity of PIUs. To support PIUs, extended training programs will be offered under the Türkiye PIU Academy at regular intervals. • Use greater selectivity when applying the emergency tag. Its overuse disrupted standard pipeline delivery and needlessly burdened essential central government institutions and WB teams such as environmental and social, procurement, and financial management. This CPF will make strategic, but selective, use of the crisis preparedness and response toolkit, to ensure Türkiye has greater access to rapid response support when crises occur, while minimizing disruptions to the portfolio. The emergency tag will be applied more selectively under this CPF. • Explore a more diverse array of instruments. Instrument choice is critical for establishing an agile, tailored-to-requirements, and outcome-driven interaction with an upper middle-income client. This CPF will seek to expand the diversity of instruments in use, e.g., results-based investment project financing (IPF), programs for results (PforRs), development policy financing, and guarantees. • Design a more realistic CPF results framework, factoring in the longer time horizons needed to address complex, interlinked challenges. The CPF results framework has undergone extensive consultation to ensure realistic targets and timelines, as well as alignment with the Corporate Scorecard indicators endorsed by the Board (aligned indicators are tagged in the CPF results framework). Some indicators aggregate results across multiple projects, including across IBRD, IFC and MIGA. Results are disaggregated wherever feasible by gender and SuTPs. • Deepen partnerships. The WBG has positioned itself as an effective convener and coordinator of international financial institutions (IFIs), especially in areas of climate change and earthquake recovery and reconstruction. The CPF will deepen partnerships with IFIs and other development partners, building on the successful experiences under the previous CPF. • Increase focus on private capital mobilization through a One WBG approach. This CPF articulates how IBRD, IFC and MIGA will leverage their respective instruments and comparative advantages to prioritize improving access to private capital and long-term finance, including green loans. C. Proposed World Bank Group Country Partnership Framework Selectivity 31. The WBG will engage selectively in Türkiye to ensure impact. Three selectivity filters will guide Türkiye’s engagement to ensure impact: (i) alignment with the Government strategic priorities of the 12th NDP; (ii) alignment with the development priorities identified in the SCD, CCDR, the draft Country Private Sector Diagnostic (CPSD), and analytical work undertaken under the previous CPF; and (iii) alignment with the WBG’s comparative advantage, including to address the strategic global challenges in the Evolution Roadmap. In certain sectors, the CPF also applies a spatial lens to support recovery from recent economic setbacks, notably the February 2023 earthquakes. The CPF’s design has been shaped by stakeholder consultations. In-country consultations validated the strategic directions of the CPF, including with civil society organizations, academia, development partners and the private sector. In addition to aligning with 8 the WBG’s comparative advantage, this CPF leverages partnerships through co-financing and parallel financing for critical investments (e.g., potential AIIB parallel financing for the Middle Corridor). 32. This CPF is also shaped by the existing portfolio. This CPF inherits a large operational portfolio, much of which will be completed in the first half of this CPF cycle. The PLR will offer an opportunity to revisit the selectivity of the CPF and –if feasible– reduce the number of CPF objectives. Moreover, the CPF is striving for greater selectivity at the objective and sectoral level. For instance, in transport the WBG focus will be on modernizing the logistics sector, but there are no plans to support road infrastructure investments given the CPF aim of decarbonizing the transport sector. Likewise, over the CPF period no additional financing in social assistance/social services delivery/preschool education is anticipated given that the Government is working on those with other development partners. Overview of the WBG Strategy 33. The CPF is structured around three high level outcomes (HLOs): (i) high and sustainable productivity growth; (ii) inclusive services and jobs; and (iii) strengthened resilience. The CPF is underpinned by the cross-cutting theme of accelerating digitalization, in line with Türkiye’s NDP vision of digitalization as an enabler for growth, enhanced service delivery, and strengthened resilience. The three HLOs, nine objectives, and cross-cutting theme are fully aligned with the 12th NDP and the WBG mission. 34. The CPF is aligned with the new strategic approach to country engagement in support of the WBG Evolution Roadmap, notably with respect to the following issues: driving impact and outcomes at scale; scaling support to address country-specific challenges while tackling global challenges; and enhancing private capital mobilization through greater collaboration as One WBG. 35. The CPF is driving impact and outcomes at scale while aligning with the Corporate Scorecard to ensure a unified focus on key outcomes across IBRD, IFC and MIGA, manage with evidence, and communicate results. Indicators in the results matrix are outcome oriented, with strong alignment with the Corporate Scorecard. The focus on impact at scale will be supported by a move towards a programmatic approach in the CPF implementation, by offering scalable and programmatic approaches informed by the best of country and global knowledge. Türkiye will be part of two separate regional MPAs in the energy sector (ECA Renewable Energy Scale-up -ECARES- MPA and the Energy Efficiency in ECA MPA) to help standardize energy efficiency project designs, accelerate renewable energy transition, define clear trajectories for further market development, and thus achieve scale and impact through private capital mobilization. Also, the Bank is taking a programmatic approach to climate adaptation and progressively covering complementary areas such as irrigation efficiency, climate smart agriculture, forest fires prevention, reuse of treated water, and flood and drought management. 36. By scaling up the WBG’s support to Türkiye’s engagement to address country-specific development constraints and challenges, this CPF is also contributing to tackling global challenges across the programs (Figure 1 shows the CPF alignment with the global challenges and the Results Framework with the corporate scorecard tagged). Climate change adaptation and mitigation and energy transition feature most prominently with relevance across all three HLOs, reflecting the country’s own priorities of the green transition (including transition risks) and energy security in Türkiye’s 12th NDP, driven by both economic and environmental imperatives. Enabling digitalization is addressed in this CPF through the cross-cutting theme of accelerating digitalization. Pandemic prevention and preparedness, access to safely managed water supply, and food and nutrition security are also covered in this CPF, with focused, selective engagement within one or two HLOs. Fragility and refugees are addressed by the support provided to the SUTPs and hosting communities through several ongoing or planned projects. 37. IBRD, IFC and MIGA have improved their private capital mobilization in recent years. As an example, only in FY24: (i) IBRD approved a €600 million Green Export guarantee, the $150 million Green 9 Finance project, and the $600 million Accelerating the Market Transition for Distributed Energy project, which aim to leverage additional private finance for investment in technology adoption, efficiency, and emission reduction; (ii) MIGA guarantees are seeking to mobilize up to $300 million of private finance; and (iii) the IFC target is to mobilize around $1 billion. Leveraging expertise and financial support in partnership with other development partners is also being pursued to increase the coverage and impact of planned development programs. 38. Going forward, the CPF will enhance the WBG’s focus on mobilizing private capital by (i) ensuring a better and more strategic coordination as One WBG within selective, key sectors; and (ii) the introduction of new instruments in the program. IBRD, IFC, and MIGA are aligned to deliver this CPF as One WBG, in accordance with maximizing finance for development (MFD) and ‘Cascade’ principles. This is the result of extensive consultation and collaboration throughout the development of this CPF. Four areas have been prioritized for maximizing synergies across these institutions in the next CPF period: (a) Türkiye’s exporters and green exports (Objective 1), (b) restoration and recovery of earthquake-affected private sector activities (Objective 2); (c) municipal infrastructure and services (Objective 6) including resilient green future cities; and (d) the energy transition at the heart of decarbonization (Objective 9) with a focus on scaling-up energy efficiency, enabling renewable energy with a modern grid, and e- mobility. They will include a strong focus on private capital mobilization and enabling, including through help to increase access to finance for private operators. 39. IBRD, IFC and MIGA are also introducing new instruments to mobilize private capital. As an example, IBRD recently approved an operation that will contribute to the creation of an equity fund that will attract private investment to build equity in firms trying to green their operations. Similarly, a guarantee provided to Eximbank will mobilize private capital to support firms adjusting to the requirements of the EU CBAM. In this context, IFC could provide advisory and financing to exporting firms adjusting to the requirements of the EU CBAM. Furthermore, IFC will (i) aim to expand its funding risk sharing coverage by adding new private banks to allow a greater number of exporting SMEs to match their trade-related working capital needs; (ii) explore with IBRD the use of sovereign loans to act as either first loss tranche or economic viability gap filler, to enhance the bankability of priority industries in Türkiye;(iii) aim to reduce borrowing costs in local currency for priority municipal investments, including with IBRD’s potential policy dialogue with the Government on ways to promote local currency borrowing at the municipal level; and (iv) continue to invest in and strengthen the venture capital and private equity space in Türkiye. MIGA is also looking to deploy new applications of its instruments in Türkiye. MIGA is seeking to support short-term liquidity needs of exporters and increasing availability of credit by extending its first Trade Finance guarantee in the country and potentially through its capital optimization product. In its turn, IFC can also leverage MIGA products more effectively to de-risk debt and equity capital market instruments of exporters. 40. The Bank will partner with Türkiye over the CPF period to strengthen institutions and development outcomes. IBRD is already engaged to institutionalize its Environmental and Social Management System (ESMS) with the Ministry of Environment, Urbanization and Climate Change therefore contributing to the sustainability of development outcomes. Indeed, the Bank’s ESMS has already been adopted by a key public agency (Ilbank) while others are considering taking the same step. With the Public Procurement Agency, the Bank is supporting the government’s plans to enhance the electronic Government Procurement system to improve the accountability of procurement across public institutions. The Bank is also responding to requests for technical assistance from the Ministry of Treasury and Finance to improve the transparency and efficiency of public finances through the institutionalization of enhanced integrated public financial management information system (IPFMIS) and of spending reviews. And with the regional administrations and with key central government departments tasked to 10 oversee regional development public investment projects, the Bank will further incentivize institutional effectiveness by deploying a results-driven programmatic approach to key investments. Figure 1. Alignment of CPF with National Priorities and WBG Global Challenges High Level Outcome 1: High and sustainable productivity growth 41. The need to rebalance the country’s growth model, which over the past two decades has mainly relied on factor accumulation, towards greater and sustainable reliance on productivity is at the core of the first HLO.6 The CPF includes three objectives under HLO1 to support this rebalancing: (i) boost competitiveness and enabling services, including by climate smarting agricultural practices and greening the country’s industrial firms; (ii) support post-earthquake economic recovery and spatial development; and (iii) promote logistics and connective infrastructure. Increased competitiveness also requires a skilled workforce as well as the provision of employment support, which are addressed under HLO2. CPF Objective 1: Boost competitiveness and enabling services, including by climate smarting agricultural practices and greening the country’s industrial firms. 42. Productivity improvements are needed in agriculture. Agriculture is an important sector of Türkiye’s economy (the country is one of the world’s top ten agricultural producers) but needs improvement relative to other middle-income countries. It is also being significantly affected by climate change and will dramatically benefit from the expansion of new climate-smart agronomic practices and improved water management systems. The 12th NDP highlights the interlinkages of strengthening food security with sustainable use of land and water resources, increasing productivity through the use of new technologies of inputs, and reducing the effects of climate change. 43. The greening of the Turkish industrial sector is also an opportunity to increase productivity and rebalance the country’s growth model. The CCDR highlights how climate action is critical for growth in Türkiye to be sustainable, both economically and environmentally, and how higher productivity and the fight against climate change can go hand in hand. Indeed, an acceleration in green transformation efforts will not only support Türkiye’s climate commitments but also help improve firm productivity, develop new 6Although in the long run growth will need to come increasingly from total factor productivity (TFP), growth dividends could also be achieved by making growth and job opportunities more inclusive, which is a focus of HLO2. 11 industries, and mitigate risks from the global transition to a low carbon future. Türkiye has a strategic geographic position at a time when global value chains are nearshoring but needs to urgently build on progress to decarbonize its power sector to maintain and enhance competitiveness, particularly in EU markets. One incentive in this regard is the EU’s CBAM which will be effective in 2026. Given that certain manufacturing sectors in Türkiye are more carbon intensive than the EU average, exports of affected sectors to the EU market could drop considerably if decarbonization efforts were delayed. On the upside, early investments in green technologies could give Turkish firms a lead to compete internationally and increase exports, especially in markets where firms already have a competitive advantage (e.g., solar energy) to further create jobs and potentially out-compete more emissions-intensive producers. 44. OIZs, which have played an important role in Türkiye’s strategy to accelerate productivity, can also support the greening of the industrial sector. The basic idea behind the country’s OIZ is to reduce logistics costs, operate as a “one-stop shop” resulting in less bureaucracy, and eliminate uncertainties on the investment environment (time and costs for licenses, permits, and supervisions). In 2018, 36.5 percent of Türkiye’s total exports were carried out by companies operating in OIZs – an indication of OIZs’ integration in global value chains and positive productivity dynamics. Significant gains are possible by transitioning to “Green OIZs” through green infrastructure investments. 45. In addition, access to affordable long-term finance is needed to undertake investments to innovate and adopt new technologies as well as to green the country’s firms. Long-term finance contributes to faster growth, greater welfare, and stability by: (i) reducing rollover risks for borrowers, lengthening the horizon of investments and improving performance; and (ii) allowing for long-term investments, which are needed particularly for the green transition, climate resilience, and job creation. 46. Within sectors and within firms, productivity may also be hindered by skill shortage and suboptimal allocation of talent across jobs and industries. Consequently, concerted actions aimed at increasing access and quality of education and labor market participation of currently excluded groups, which are covered under HLO2, will also help boost productivity growth. 47. The CPF will support efforts to strengthen the competitiveness and environmental sustainability of industry and agriculture. Working as one WBG, IBRD and IFC will step up their work on industrial zones. The existing IBRD and IFC (in terms of OIZs) portfolios will carry forward work to: (i) increase the efficiency, competitiveness and environmental sustainability of industrial firms and select OIZs; and (ii) strengthen capacity for sustainable and competitive agricultural growth and promote the use of climate‐smart agriculture in targeted regions. The planned IBRD pipeline and IFC creating markets pipeline will introduce new investments for the green transition with a focus on green exports and firms’ emissions reduction. In close coordination with IBRD and IFC, MIGA will seek to support private sector development and competitiveness by utilizing its political risk instruments to mobilize much needed foreign direct investments toward highly impactful projects that promote inclusive, sustainable growth. 48. The CPF will also prioritize improving access to private capital and longer-term finance, including sustainable financing instruments. IBRD projects will help expand climate financing in Türkiye’s capital markets, crowd in private capital for achieving its Updated First NDC targets, and improve access to longer-term finance, including long-term green loans, for enterprises. Specifically, the ongoing IBRD’s Green Finance Project and the IBRD Green Export Project will prioritize private capital mobilization for green objectives. IFC will continue providing direct and mobilized financing, including green and other climate-linked financings, introducing improvement in inclusivity of vulnerable groups where applicable, to competitive Turkish private entities. In addition, IFC will explore local currency funding options for logistics and energy distribution companies predominantly operating domestically, with an emphasis on agribusiness companies. IFC will also support the development of capital and private equity markets by utilizing its anchor investor position. MIGA will support increasing access to finance for export-oriented 12 firms in Türkiye. MIGA’s existing projects with Türk Eximbank have provided both medium and long-term funds to the Turkish export sector, with a focus on SMEs. Going forward, complementing IBRD and IFC interventions, MIGA will explore new opportunities to deploy its political risk guarantees for short-term trade finance facilities to support export-oriented SMEs, medium-high technology firms and women owned firms, as well as to provide broader access to finance to underserved segments. 49. IBRD, IFC and MIGA are working jointly to support Türkiye’s exporters and green exports from different angles. IBRD will support Eximbank’s long-term funding and exporter’s decarbonization through the Green Export Project. MIGA is identifying opportunities to support Eximbank’s short-term funding/trade finance to support green and high technology exports. IFC is looking into plastic and waste circularity and how to decarbonize related value chains. IFC is also exploring opportunities to finance exporters willing to decarbonize their operations (especially in light of the upcoming CBAM regulation) and to scale up trade finance solutions for private commercial banks. This combined strategy will support the public policy objectives of Türkiye’s transition to a more sustainable, productivity-driven growth model, which heavily relies on increasing exports, helps correct Türkiye’s current account deficit, and contributes to the decarbonization of the economy. 50. The WBG’s knowledge work and policy dialogue will be critical for restoring and maintaining macroeconomic sustainability and mitigating the macroeconomic risks that could jeopardize the achievement of HLO1. It is imperative to maintain intensive monitoring of and dialogue on macro- financial conditions, while also analyzing structural challenges and opportunities. This mitigates risks to the program and individual operations. Core and extended analytics are critical in this regard, as is readiness to engage in dialogue and technical assistance when requested by the authorities. This CPF will support: (i) expenditure review to improve the efficiency of public spending and revenue collection; (ii) transparent, effective, and evidence-based policymaking through macro-financial monitoring; (iii) mitigation of macro, seismic, and climate risks to financial stability; and (iv) analysis of the costs and benefits of modernizing Türkiye/EU Customs Union to increase trade and investment flows. CPF Objective 2: Support post-earthquake economic recovery and spatial development 51. Beyond the tragic human cost, the February 2023 earthquakes caused significant damage to productive capacity and disrupted economic activity. In addition to damaged infrastructure and basic services, labor shortages restrain the pickup in business activities in the earthquake-affected areas, notably manufacturing of final and intermediate goods for Türkiye’s consumption and exports. In the short-term, MSMEs need increased access to finance to overcome the consequences of recent shocks, averting the closure of otherwise viable MSMEs. An estimated 132,092 MSMEs (approx. 28 percent of all MSMEs in the earthquake affected areas) have either suffered damages and/or loss of income, and these damaged MSMEs employed 346,000 workers. The earthquakes also damaged or destroyed the buildings and other real estate of approximately 27 small industrial estates, which employed approximately 22,000 workers. The earthquakes affected area accounted for nearly one eighth of Türkiye's total agricultural exports (approx. $35.2 billion in 2023) and hosted around 14 percent of the national farm holdings. The impacts risk reversing the gains made by Türkiye on regional spatial development and convergence. Opportunities remain to leverage existing public investment programs in rural areas on small-scale irrigation systems, improved market access for agricultural and livestock producers, and the tourism potential to deliver regional development outcomes of growth and employment. 52. The CPF will carry forward the ongoing work to support economic recovery in earthquake- affected areas and to support the wider objective of spatial development. IBRD’s program will continue to: (i) provide short-term working capital and investment support to affected firms through private commercial banks; (ii) support the reconstruction of damaged productive assets including small industrial estates; (iii) enhance agri-food productive capacity and supply chain flows; and (iv) improve institutional 13 capacity of regional administrations to manage more effective and resilient rural infrastructure investments and to harness economic development growth potential. 53. IBRD and IFC teams have been coordinating their response to the February 2023 earthquakes to support the restoration and recovery of affected private sector activities. IBRD and IFC worked together to formulate a response plan which started with joint analytics (IFC supported IBRD on the assessment of damages led by the Government of Türkiye). IBRD approved a $450 million project in June 2023 (Post Earthquake MSME Recovery project) to support the business continuity and sustainable growth of viable MSMEs that had suffered damages in the earthquake-affected provinces. The project provides reimbursable financing to cover operational expenses of affected MSMEs. In parallel, IFC approved a $600 million project in July 2023 (Türkiye Earthquake Response Banks) to provide unsecured loans to five private banks and a $150 million loan to a leading industrial group operating in Türkiye's earthquake-affected provinces to help creating jobs, increasing disaster resilience, and enhancing competitiveness. This will enable the Banks to meet immediate liquidity needs brought forth by the retail and MSME loan deferrals/restructurings in the aftermath of the earthquakes and to help them extend new loans to bankable MSMEs. Additionally, in April 2023, MIGA increased its guarantees to US$70 million in support of the expansion of the Gaziantep Hospital, which started operations in November 2023. 54. IFC will complement IBRD support by working on securing private sector funding for both early relief and long-term reconstruction efforts. IFC seeks to deploy approximately $1 billion over the next two years to support relief and reconstruction efforts and will channel funding through its longstanding private partners in the financial, manufacturing, and infrastructure sectors. In addition to the project approved in July 2023, IFC is also looking to support an important local manufacturer operating in the earthquake affected zone to create employment opportunities, enhance competitiveness, and improve sustainability practices. The IFC pipeline includes new projects for reconstruction of critical private sector infrastructure in the earthquake-impacted region, which will strengthen climate adaptation. 55. In coordination with IFC and IBRD, MIGA will seek opportunities to support sustainable economic recovery in the earthquake-affected areas. Since 2017, MIGA has supported the construction of a state-of-the-art hospital complex, which comprises seven different hospitals, with dedicated units for General, Intensive, Oncology, Children, and Psychiatric care. In addition to the April 2023 increase in its guarantees, going forward, MIGA will seek to use its political risk insurance and trade finance guarantees to de-risk investment projects in the earthquake-affected areas aiming to re-build better and promote sustainable economic activity. CPF Objective 3: Promote logistics and connective infrastructure 56. Better connectivity and logistical performance are essential to securing future economic competitiveness while decarbonizing. Türkiye’s position at the western terminus of the Middle Corridor transporting freight between East Asia, Central Asia, and Europe is significant to trade and growth prospects for both the country and the region, placing logistics at the forefront of its strategic goals. However, Türkiye’s logistics sector has significant room for improvement. Moreover, logistics in Türkiye are still highly dependent on trucking. Rail freight captures only about 4 percent of all ton-km transported, significantly less than in the US, EU, China, Brazil, or Mexico for example. Compounding the problem is the fact that only 16 out of 210 ports in Türkiye have railway connections at the “last mile.” For example, a railway connection to Istanbul’s Ambarlı container port complex, which handled 3.2 million TEUs in 2022 (26 percent of national port throughput), is yet to be completed. The 12th NDP prioritizes transportation investments focusing on freight transportation in order to transition to a railway-connected multi-modal system, reduce environmental impacts from transportation, and improve road traffic safety. It also highlights the need to clarify authorities and responsibilities among institutions, and to improve legislation, alongside developments in the physical infrastructure. 14 57. Improvements in transport services could significantly impact the final costs of inputs, products and services. Innovation in logistics–notably efficiency improvements and technological upgrading–is key for boosting competitiveness in industry and agriculture (link with CPF Objective 1). Further development of the ports sector to improve governance, last-mile and hinterland connectivity, efficiency, and readiness for low- and zero-carbon bunker fuels will be necessary to maintain Türkiye’s logistical performance and ability to serve its climate-conscious customers. There are significant climate risks to the road and rail networks, and at least two of Türkiye’s main airports and seaports are exposed to flooding risks. Studying the risks to the network would help increase resilience in mobility and logistics. 58. The CPF will accompany Türkiye to promote logistics and an efficient connective infrastructure while reducing transport costs and emissions. IBRD’s pipeline builds on ongoing support to improve the rail sector and its role in domestic and international logistics vs. the current dominant truck-based system. IFC will continue to invest in port and logistics projects aimed at boosting sector competitiveness and green transformation. IFC is well-aligned with IBRD on its strategic engagements in the transport sector, which include electrification of transport systems, creation of markets on rail freight and intermodal transport connectivity and decarbonization of shipping lines/port terminals. Similarly, MIGA projects with the municipalities of Izmir and Istanbul for sustainable mass transport support this CPF objective. High Level Outcome 2: Inclusive services and jobs 59. The second HLO focuses on income dynamics which have been exacerbated by recent shocks (e.g., February 6th earthquakes) impacting disproportionately poor and vulnerable populations. Investments in human capital utilization have also proven to contribute to increased productivity and economic growth (HLO1). In this regard, the CPF includes three objectives aiming at this HLO: (i) improve jobs for women, youth, and vulnerable groups; (ii) reduce disparities in health and education access and quality; and (iii) support resilient municipal infrastructure and services. Objective 4: Improve jobs for women, youth, and vulnerable groups 60. Recent economic growth is yielding fewer higher-quality jobs and remains less inclusive for women, youth, and vulnerable groups, including SuTPs, members of host communities, and those under higher risk due to the green and digital transitions. As already noted, Türkiye’s female labor force participation increased significantly between 2005 and 2022 to 35 percent, but it remains well below the participation rate of comparable countries. Youth not in education, employment or training (NEET) aged 15 to 29 has been stagnant at 27 percent since 2015, with youth women representing three out of four youth NEET and a third of NEET living in the earthquake regions. While significant progress in receiving SuTPs has been made by Turkish institutions, bottlenecks persist, requiring further policy reforms and support for strengthening the inclusion and economic participation of SuTPs as well as members of and host communities. For those who are active, high levels of unemployment and informality remain, afflicting those who are already the most vulnerable. All of which is compounded by severe internal and external shocks (i.e., high inflation, climate change, pandemics, earthquakes), which make employment and livelihood promotion even more difficult. The 12th NDP anticipates the demand for low-skilled jobs to decrease sharply in the context of the green and digital transition, elevating the need for continuous education and skills development for a just transition. 61. The CPF will promote increased access to better employment and livelihoods opportunities for all, especially women, youth, and vulnerable groups, including SuTPs, through improved and strengthened systems, programs and services. IBRD will carry forward ongoing work and engage in additional support for: (i) improving employability, livelihood opportunities and formal employment conditions for women, youth, and SuTPs; (ii) carrying out knowledge work on skills for green jobs, and supporting the operationalization of labor market programs for the green and digital transition; (iii) 15 implementing activities to promote livelihoods through community driven and participatory programs; and (iv) strengthening institutional capacity to assess demand for skills, support job creation and entrepreneurship in selected localities with high incidence of SuTPs and evaluate results. For IFC and MIGA, job creation will continue to be a cross-cutting area in almost all its investments in the real and financial sector. In the financial sector, the focus is on sustainable and inclusive job creation through on- lending for MSME’s and women entrepreneurs. Objective 5: Reduce disparities in health and education access and quality 62. Over the past few decades, Türkiye developed robust systems for service delivery that have led to relatively strong human capital development. This is especially true in terms of access to schooling and primary health care as well as healthcare coverage and financial protection. In addition, according to the latest Program for International Student Assessment (PISA) results, although Europe experienced a decline from 2018, Türkiye managed to maintain the same performance in math and improved in science despite COVID-19 school closures, highlighting the positive impact of digital investments. Yet, challenges remain in terms of equity and quality of services. For example, there is low overall enrollment in Early Childhood Education (12 percent of 3-year-olds and 30 percent of 4-year-olds), affecting school learning, particularly for vulnerable children. Indeed, Türkiye is in the top 10 countries with the largest academic performance gaps across schools, with important inequalities across socio-economic status and geography (lagging learning outcomes in eastern region and in rural areas). Moreover, according to the latest PISA results, overall, students in Türkiye continue to score less than the OECD average in mathematics, reading and science. PISA results also revealed that a high percentage of students do not reach the minimum proficiency levels in these subjects. Finally, Türkiye’s health care model needs to shift its emphasis from curative to preventative care, and with an aging population, from communicable to non-communicable diseases (NCDs), while maintaining a focus on pandemic prevention and preparedness. For Türkiye to leapfrog and accelerate human capital, it will be essential to ensure increased equitable access to quality public services, particularly health and education. 63. The February 2023 earthquakes had a devastating impact on health and education services which need to be restored as a matter of urgency. About 31 percent of hospitals and many primary-level health care centers, public health laboratories, and vaccine warehouses in the affected areas sustained substantial damages; at the same time, demand for disability and mental health care increased drastically in the aftermath of the earthquakes. Similarly, over 900 education buildings in the affected areas were either destroyed or damaged and undamaged education buildings were temporarily repurposed as emergency shelters. 64. The CPF will support the restoration and improvement of education and health services with a focus on enhancing equity and quality for underserved communities. IBRD will carry forward ongoing work and engage further to: (i) restore services in earthquake-affected areas; (ii) improve primary and secondary prevention of selected NCDs and strengthen health systems capacity to provide geriatric care; (iii) enhance education system capacity to provide equitable access to quality education; and (iv) ensure the relevance of the education system and its ability to produce skills required in the current and future labor market. These measures are expected to contribute to poverty reduction. 65. MIGA will continue to support Türkiye’s health sector by providing guarantees to foreign investors in specialized health services, and through financial innovation to help create alternative market solutions for health infrastructure financing. At present, MIGA supports 6 hospitals in Türkiye in the provinces of Gaziantep, Elazig, Yozgat, Bursa, Adana and Istanbul. Jointly these projects have supported the construction of over 9,000 modern and specialized hospital beds. MIGA will remain open to support investments into Türkiye’s health public private partnership (PPP) program by providing political risk insurance guarantees for the construction and operation of new health facilities. 16 Objective 6: Support resilient municipal infrastructure and services 66. Türkiye’s urbanization has facilitated growth, job creation, and improved living standards. However, as the urban population has more than tripled from around 19 million in 1980 to over 65 million in 2022, cities have sprawled creating challenges for the environment and municipal and social services. Issues have also emerged around long-term financing for municipal infrastructure (water, sanitation, wastewater, stormwater/drainage, solid waste, urban transport, emergency/firefighting). Coverage of piped water and sewage networks is relatively high in Turkish municipalities, but more than 40 percent of water is distributed untreated. Moreover, a significant proportion of wastewater is discharged into the environment untreated, presenting risks to public health and damaging the environment. Air pollution from transport and residential energy use is also a growing problem, emerging as the largest environmental risk factor for human health, estimated to cause more than 41,000 premature deaths per year in Türkiye. Expansion of public transport systems will be required to increase access to jobs and services, boost productivity, accelerate transport electrification, avoid over-reliance on private vehicles, and stem congestion and other negative environmental and economic impacts from urban transport. Improved urban planning frameworks that combine urban design with various aspects of municipal planning such as sustainable mobility, energy efficiency, water and waste management are needed to ensure efficient use of land and other natural resources and deliver efficient and sustainable municipal infrastructure. In addition, the February 2023 earthquakes caused extensive damage to water supply and sanitation infrastructure. Critical emergency response facilities, such as municipal fire stations, suffered widespread collapse or severe damage which adversely affected disaster response and service provision. 67. The CPF will support restoring and expanding access to climate and disaster-resilient municipal infrastructure and services. IBRD will carry forward investments focused on: (i) improving integrated forward-looking urban and infrastructure planning in cities; (ii) restoring and expanding access to safely managed water supply, wastewater, and solid waste management services; (iii) restoring and strengthening municipal buildings and infrastructure, including emergency services; (iv) strengthening urban mobility planning and expanding high-quality public transport services; and (v) expanding stormwater management and sustainable urban drainage. IFC’s pipeline in municipal services seeks to enhance citizens’ access to public services, such as wastewater treatment and public transportation, and is exploring options for scaling the rollout of geothermal heat-pumps and developing surface geothermal for district heating and cooling. Collectively, IBRD, IFC and MIGA are working to improve urban mobility planning and sustainable transport services, including electric buses and other Electric Vehicles (EVs). 68. There is strategic alignment, complementarities, and synergies between IFC, MIGA and IBRD engagements in Türkiye’s urban and municipal sector in accordance with the MFD and ‘Cascade’ principles. IFC and MIGA’s focus has been on direct engagements to support sustainable infrastructure development with creditworthy municipalities (and municipal companies and utilities providers) that can borrow without the backing of a sovereign guarantee. IBRD primarily supports cities that are not yet able to borrow on commercial, non-sovereign backed terms via direct and indirect public lending and policy advice, technical assistance, and capacity building. A closely coordinated approach between IBRD and IFC in the municipal sector, enables the WBG to structure optimal interventions matching client needs.7 69. Best practice collaboration between IBRD and IFC in the municipal space will be continued in the new CPF period. In addition to the Cascade principles that have been followed over the past CPF periods in financing municipalities, IFC will explore possibilities in financing the private sector, directly or through Municipal PPPs, in the areas that will be identified with the Green and Future Cities (GFC) Project 7Following the earthquake and floods in Izmir in 2020-2021, IFC connected city officials with IBRD to explore needs to support the city’s recovery and rebuilding. Support is provided under the IBRD Türkiye Earthquake Floods and Wildfires Emergency Reconstruction Project approved in 2022. 17 of IBRD. A similar approach is also being planned for supporting the e-mobility development of cities in Türkiye (exploration of alternative PPP structures for e-buses rollout). IFC is exploring ways to encourage Turkish municipalities to convert their diesel buses to electric buses, which will require significant upfront investment. Following the IFC-supported pilot municipalities, IBRD is exploring the possibility of launching a sovereign-backed financing program and offering the necessary technical assistance to support the purchase of electric buses in other cities where private sector participation is unlikely. 70. Investments in municipal infrastructure need to be accompanied by support to strengthen the institutional capacity of municipalities and associated utilities to implement infrastructure works and adequately operate and maintain assets. The draft CPSD emphasized the necessity of greater operational coordination among central bodies to enable municipalities to pursue collectively determined objectives. While water, wastewater, and solid waste management services are provided by municipalities, achieving national and international goals requires translating policies proposed at central or supranational levels into feasible local strategies. IBRD dialogue to improve institutional capacity of regional administrations noted above could also support efforts on this front. High Level Outcome 3: Strengthened resilience 71. The high vulnerability of Türkiye to natural disasters and other shocks is reflected in HLO3, which seeks to strengthen the country’s resilience. Resilience is essential for economic stability and prosperity, and in Türkiye has several dimensions: earthquakes, climate change-related disasters, and public health emergencies and shocks. To help build resilience and preparedness to shocks, the CPF includes three objectives covering several dimensions: (i) enhance disaster resilience and preparedness; (ii) strengthen natural resources management; and (iii) support energy transition. Objective 7: Enhance disaster resilience and preparedness 72. Natural disasters, climate change, and pollution are having dramatic impacts on welfare, livelihoods, natural resources, biodiversity, and the sustainability of the country’s growth model. The country’s risk profile is dominated by seismic risk, as 70 percent of its population live in seismic zones , while it is increasingly exposed to hydrometeorological events. In addition, fueled by climate change, the frequency, intensity, and impact of extreme events have increased in recent years including flooding, extreme heat, wildfires, storms, and drought events. Climate models project this trend to continue, with more recurrent and intense heatwaves, wildfires, droughts, and floods, which along with sea-level rise, will be more acutely felt in urban areas. 73. Disasters and climate change adversely affect poverty and place additional burdens on the Turkish government’s budget, reducing the fiscal space available for development programs . Earthquakes and floods present the main fiscal risks related to disasters, which –taken together– could increase to $1.6 billion in annual average GDP losses in the long run. Although the overall magnitude of disaster impacts remains manageable for Türkiye’s economy over the long term, large-scale events generate short-term welfare costs and significant increases in transient poverty. Under the pillar of “disaster-resilient living spaces, sustainable environment,” the 12th NDP prioritizes efforts to strengthen the resilience of settlement areas and communities to disasters, protect the environment, improve quality of living in urban and rural areas and reduce regional development disparities. 74. The CCDR highlights that climate and geological risks affect households unequally. There is a strong spatial overlap between poverty, and natural disasters, and extreme climate events such as wildfires, which are expected to become more frequent as temperatures rise. Moreover, poorer families are most likely to live in buildings vulnerable to collapse or severe damage in an earthquake. Poverty density is also high in three of the country’s highest-risk areas—Istanbul, and the Van and Agri subregions in the east—which account for over 15 percent of the country’s poor people. Flood risk is widespread. 18 However, some regions, such as Antalya, Adana, and Hatay on the Mediterranean coast, and the more developed but highly populated Istanbul subregion, demonstrate relatively higher vulnerability. Along the Mediterranean coast, a 200-year flood could push 100,000 people into poverty. 75. The scale of the challenge is further compounded by limited financial protection and ex-ante actions to reduce risks, which are required to protect people, communities, and the economy and ensure rapid recovery. Türkiye’s insurance industry needs improvement to reach its potential. Mandatory earthquake insurance is not available for buildings not compliant with building codes. The seismic retrofitting and reconstruction of residential buildings in Türkiye that were constructed prior to 2000, when stronger seismic codes were introduced, is estimated to cost in the order of $400 to 600 billion. Lower and middle-income homeowners need increased access to finance the ex-ante structural strengthening (which can also be coupled with energy efficiency improvements) of their structurally unsafe residences. Sound planning of the built environment, centered on strengthening preparedness and response systems and mainstreaming risk reduction principles, is critical for creating resilient cities and avoiding costly impacts of disasters on lives, livelihoods, basic services, buildings, and infrastructure. 76. Türkiye also needs to ensure increased response and preparedness for future public health emergencies and pandemics. It will thus be important to strengthen emergency services that can provide immediate support to shock-affected populations, especially in lower income neighborhoods, in the provinces most impacted by the 2023 earthquakes, and in communities affected by the influx of SuTPs. For example, as a result of COVID-19 and the 2023 earthquakes, Türkiye lost approximately 1.25 years of schooling, which affected the poorest and most vulnerable students. 77. The CPF will support disaster resilience and preparedness, with a focus on natural disasters, climate change and public health emergencies and shocks. IBRD and IFC will continue to support resilient retrofitting and reconstruction of collapsed, damaged, and vulnerable housing, schools, public buildings, and other buildings alongside measures to improve energy efficiency, scale up of renewable energy, facilitate modernization (including for fire safety and sanitation), and support universal access. Specifically, IBRD will continue to: (i) strengthen capacities of municipalities and utilities to prepare for, and respond to, multi-hazard risks and climate change; (ii) support disaster insurance and risk transfer solutions and strengthen financial resilience against disaster risk; (iii) enhance flood and drought management; and (iv) improve the preparedness of the health sector to sustain access to services during public health emergencies and shocks. IFC will support the financial sector to increase its capacity to assess climate risk to enhance its ability to support its clients to address climate change and physical hazards. 78. In close coordination with IFC and IBRD, MIGA will utilize its political risk mitigation instruments to support projects that aim to rebuild better and to provide comprehensive solutions to market demand for preparedness efforts. In FY23, MIGA supported construction of the Gaziantep Hospital complex which is expected to reach full operations in July 2024. The 1,875-bed complex will consist of a general hospital, a women and children’s hospital, and a cardiovascular and oncology hospital. Up to 19,000 patients a day are expected to seek health services when the complex is operational. It will be a low-carbon and climate-resilient health care facility that includes modern seismic standards. These types of projects could be replicated in this CPF, subject to client demand and conducive market conditions. Objective 8: Strengthen natural resources management 79. Despite successful reforestation efforts, climatic and human-induced factors put pressure on land, soil, forests, and water resources. Pollution of air, water and land, particularly from growing urban agglomerations, degrade the natural capital that serves as input for economic growth and contribute to health problems that increase morbidity and lower labor productivity. The combination of geographical, topographic, climatic, and soil characteristics, combined with unsuitable farming practices, makes Türkiye 19 prone to erosion and landslides. Climate change is expected to exacerbate land degradation through soil erosion, fertility loss, biodiversity loss, and nutrient depletion, with negative impacts on agriculture and livestock productivity, forestry, and the soil’s capacity to serve as carbon sink. Türkiye needs to mainstream sustainable forest management to enhance carbon sinks and manage climate risks (especially wildfires), with investment in landscape restoration through reforestation, forest and grassland rehabilitation, cropland management, and wetland conservation. 80. Increasing water use, pollution and climate change pose significant risks to Türkiye’s water security. According to the CCDR, over two-thirds of the country’s 25 river basins face severe water scarcity. By 2023, Türkiye’s total water consumption will be 112 billion cubic meters, comprising 72 billion for irrigation, 18 billion for domestic use, and 22 billion for industry. Increasing drought severity has exacerbated groundwater depletion, with water levels dropping by more than two meters in river basins such as Konya, threatening the long-term sustainability of agriculture and contributing to the occurrence of massive sinkholes. The 2020/21 drought left several reservoirs around major cities with their lowest water storage levels in 15 years: Istanbul’s reservoir levels fell to less than 20 percent of capacity in early 2021, putting water supply services at high risk for the city’s 16 million customers and other users, including industry. Climate change-related warming of the Marmara Sea, combined with widespread pollution from the discharge of untreated industrial and domestic wastewater, fertilizers and pesticides has also contributed to the mucilage crisis that threatens aquatic life, tourism, and fisheries. 81. The CPF will support efforts to strengthen natural resources management, with a focus on water security and sustainable forests. IBRD will carry forward support for: (i) strengthening land administration and management; (ii) increasing resilience of forests and people to wildfires; (iii) improving efficiency, reliability, and inclusiveness of irrigation and wastewater services and reuse; (iv) promoting sustainable, competitive agricultural growth; (v) promoting city greening and nature-based solutions to reduce urban heat and flooding; and (vi) strengthening institutional capacity for integrated fire management, water circularity management, point source pollution reduction, and integrated flood and drought risk management. The IBRD pipeline will increase support for green cities and climate-smart agriculture through support for rebuilding Türkiye’s agri-food sector. IFC aims to work with private afforestation investments in Türkiye and with municipalities on water, wastewater, and waste circularity management. This work relates to three of the WBG global challenges: food and nutrition security; water security and access; and protecting biodiversity and nature. In these areas, MIGA will enhance collaboration with IFC and IBRD to scale up support, including through programmatic engagements to mobilize foreign private capital for green investments. Objective 9: Support energy transition 82. Transitioning to clean, renewable energy, while boosting energy efficiency and gradually retiring fossil fuels is critical to mitigating climate change, building resilience to volatile energy prices and lowering energy costs. Türkiye suffers from a large, emissions- intensive industrial base, high use of fossil fuels, carbon-intensive transport, and inefficient buildings. Achieving net-zero emissions by 2053 will require significant policy reform and investment but will generate considerable economic benefits and improve the country’s resilience. The energy transition will also be critical for Türkiye’s ability to maintain and enhance the competitiveness of its exports since a rapid decarbonization of its power sector would allow it to out-compete more emissions-intensive producers while reducing harmful air pollution, as described in Objective 1. The 12th NDP also highlights the importance of energy security that links to the global challenge of sustainable energy access, especially given regional conflict and uncertainty. 83. As the center of growth and agglomeration economies, cities are critical for emissions reductions in Türkiye. This is particularly the case for improving energy efficiency of the building stock and supporting a modal shift to low or zero emission public transit and smart green urban mobility as well 20 as integrating green solutions to municipal infrastructure management (links with HLO2). Sound planning of the built environment and land development is needed to avoid locking in high-emission urban growth. 84. During COP28 the Government announced an ambitious plan to expand solar PV and wind power capacity by 60GW by 2035. By putting downward pressure on electricity costs and mitigating exposure to fossil fuel price volatility, decarbonization of the power sector through renewables will further improve industrial competitiveness, exports, and growth in Türkiye (link with HLO1). According to Türkiye’s 2022 National Energy Plan, total coal-fired power capacity will increase to 24.3 GW by 2035 (assuming no carbon capture). However, deep decarbonization implies Türkiye has to retire most of its coal power plants by 2040, build no new coal plants, and replace the energy with cleaner, affordable, and reliable alternatives. WBG support will only cover a fraction of investment needs, and therefore needs to be highly strategic in its targeting to influence: (i) national policies, to incentivize private investments on a national scale and (ii) national investment programs that can be scaled up to drive change, such as, for example, on the transmission needs associated to the additional renewable generation capacity. 85. The CPF will support Türkiye’s energy transition, in alignment with the WBG global challenge of energy transition, efficiency and access. IBRD, IFC, and MIGA will step up their support to increase renewable energy generation, modernize transmission and distribution networks, and promote EV charging infrastructure networks, and methane emissions abatement. This includes ongoing IFC support for modernization of distribution networks and reconstruction of critical infrastructure in earthquake affected areas. To help Türkiye's energy transition, IFC is exploring ways to develop and finance surface geothermal rollout for district heating and cooling. Such projects would help Türkiye's energy transition and support its “just” transition by preserving quality jobs and converting them from fossil fuel to zero emission surface geothermal solutions. Similarly, IFC will explore the opportunity to abate methane emissions in Türkiye. IFC will also help mobilize funding for Toroslar Elektrik Dagitim AS to rebuild critical electricity network. MIGA will continue to support Uludağ Elektrik Dağıtım A.Ş. (UEDAS) and Limak Uludağ Elektrik Perakende Satış A.Ş. (UEPSAS) aimed at strengthening the quality of the electricity supply and its overall reliability in the southern Marmara region. IBRD will scale up support to: (i) enhance energy efficiency especially in the building stock; (ii) scale-up renewable energy including through distributed PV and battery energy storage, power grid enhancements to integrate renewables at transmission level, hydropower rehabilitation, and pumped hydropower storage systems; (iii) support development and implementation of city climate plans, and GHG reductions for municipal infrastructure and services such as through distributed energy solutions; (iv) support efforts aimed at greening the financial sector (banking and capital markets) and mobilizing private capital for clean energy; and (v) improve the policy environment for climate mitigation, including through the emissions trading system. 86. The CPF will also carry forward work to improve the policy environment for energy transition and more broadly climate mitigation through its knowledge and policy dialogue. Ongoing analytical work including on decarbonization of maritime transport, sustainable urban mobility, energy, plastic and waste circularity, and green growth are building a new foundation for further engagement in climate change mitigation. Work under the Green Growth PASA is helping to build the capacity of the government to undertake climate strategy planning, evidenced by the increased prominence of climate action in the 12th NDP. Ongoing work under the Financial Resilience PASA and by the financial sector regulators aim at greening the financial sector, which can help channel financing for climate mitigation purposes. Cross-cutting theme: Accelerate Digitalization 87. While digitalization in the economy and society continues to improve, the 2022 Digital Transformation Index Report for the country and the Government’s NDP call for investment for both business and government. Türkiye’s significant strides in improving Digital Government has led to an increase in the use of government digital services by the public; however, opportunities remain for fuller 21 automation in data exchange to facilitate private enterprise. Digital transformation can greatly increase productivity and global value chain participation for instance through process optimization; boosting workplace productivity; improving customer satisfaction; and bringing new business perspectives. 88. Similar to readying themselves for the EU green deal, Turkish firms need to anticipate the challenges and opportunities of the EU’s Digital Europe Program. Internet usage is on par with other EU countries and Turkish firms have been catching up with EU peers in the adoption of digital tools. However, firms’ adoption of productivity-enhancing digital technology, especially when it comes to cloud services and enterprise software, is still below EU averages. About 68 percent of adults use their financial institution accounts to make or receive digital payments, below the average in upper-middle-income economies. Usage of digital payments can be used as a proxy for the adoption of Fintech solutions. 89. Digitalization of government for improved effectiveness and efficiency is highlighted in the 12th NDP. The improvements of digital government are expected to range from improvements in public financial management (advance the IT infrastructure of revenue, expenditure, and accounting systems, and strengthen public procurement to further prioritize digitalization in line with international norms and standards) to improved digitalization for public service delivery and strengthening digital skills. 90. The following are a few examples of how the WBG will help accelerate digitalization across the CPF: (i) improve the digital business ecosystem, strengthen market competition, and promote the adoption of climate-smart agricultural technologies (HLO 1); (ii) support seismic and climate-resilient urban planning informed by spatial data (HLO 3); (iii) extend hybrid education opportunities to reach all schools and accessibility of telehealth consultations to improve learning and health outcomes (HLO 2); (iv) engage on financial inclusion and Fintech (HLO 1); (v) engage with venture capital funds to support investments in digital enterprises; (vi) support digital advancement in energy, transport, industry and buildings (HLO 1 and 3); and (vii) continue to support digitalization and modernization of the land cadaster nationwide (HLO 3). Eight indicators relevant to this cross-cutting theme of accelerating digitalization have been tagged with a dedicated marker in the CPF results framework. D. Implementing the CPF Financial Envelope and Core Principles informing CPF Implementation 91. The CPF will be implemented jointly by IBRD, IFC, and MIGA, building on a current portfolio of over $17 billion in active operations. IBRD’s active portfolio consists of 28 operations with net commitments of $10.9 billion (of which $8.3 billion undisbursed), placing Türkiye in the top three IBRD countries by active portfolio size. IFC committed exposure is around $5.3 billion, making Türkiye IFC’s third largest country exposure globally. With a total exposure of around $2 billion (as of December 2023), Türkiye is also MIGA’s third largest country portfolio, representing 7 percent of its total portfolio. 92. The indicative financing envelope for the first three years of the CPF (FY24-26) is $18 billion.8 This is expected to consist of $6 billion from IBRD, $9 billion from IFC contingent on market developments and client demand (combination of long term and short term financing and mix of funding from IFC’s own balance sheet with funds mobilized from other investors), and up to $3 billion to be mobilized from MIGA short-term guarantees. Thus, about two-thirds of the tentative program will support the private sector. 93. The CPF will continue fostering synergies between IBRD, IFC, and MIGA to leverage impact as One WBG. Coordination was particularly close among the three institutions in the emergency phase of the February 2023 earthquakes and during the design of the financial package for the first three years of CPF implementation. Looking ahead, coordination will be particularly relevant in sectors such as energy 8Actual volumes for FY24-28 depend on Türkiye’s borrowing needs, the IBRD/IFC/MIGA financial capacity, demand from other borrowers/clients, and global economic and financial developments. 22 (i.e., offshore wind, green hydrogen, geothermal solutions, including for heating and cooling, smart grids, and methane emissions abatement), transport (i.e., e-mobility, e-buses), green buildings, health, digital (i.e., whole sale broadband to enable further development of digital economy development of TowerCo business), OIZ and greening export value chains, municipal services, growth equity and venture capital funds, finance, climate change, and earthquake reconstruction and preparedness. In coordination with IBRD and IFC, MIGA will utilize its instruments to mobilize foreign direct investments, increase access to finance particularly for export-oriented firms; to enhance competitiveness and stimulate job creation, and support investments in energy, transport, and health. 94. The CPF will further harness existing partnerships and support new partnership frameworks. The WBG has worked with a set of development partners to increase the amount of finance available for climate change in Türkiye. In October 2021 a memorandum of understanding (MoU) was signed between Türkiye and IBRD, IFC, France, Germany, EBRD, and the UN to provide $3.15 billion in additional loans, including $2 billion in additional IBRD resources. In bringing together key development partners, the Climate MoU has facilitated coordination among parties as well climate action in Türkiye. Following the 2023 earthquakes, WBG partnered with EU and the UN to support the Government in assessing the damages and needs for reconstruction. For the Emergency Recovery and Reconstruction Project, IBRD worked closely with other IFIs that are providing or planning to provide parallel co-financing – including notably JICA, CEB (Bank of Council of Europe), IsDB, EIB, EBRD, and the OPEC fund–in the areas of health, municipal infrastructure, and housing. This CPF will continue these partnerships and explore additional engagement with AIIB (already present in the energy sector), build upon the MoU with the Islamic Bank, and further partnerships with other key bilateral development partners. 95. Reflecting lessons learned, a consolidated and robust program of ASA will be an essential part of the WBG program. This will contribute upstream to informing the Government’s thinking on national plans and policies in a wide variety of areas such as unemployment, clean energy transition and green growth, social inclusion, refugees, skills and entrepreneurship, and seismic, disaster and climate resilience. Ongoing core ASAs inform on the causes of high and increasing unemployment rate despite high growth and recent upward trends in poverty and inequality in Türkiye. In addition, extended core ASAs will provide an overarching framework for greening the recovery of Türkiye’s economy from the pandemic and earthquakes, and an assessment of labor policies that shape human capital utilization. Financial Management, Procurement, and Government Systems 96. The World Bank will proactively offer support to further strengthen the public procurement system. The Government through its Public Procurement Agency (PPA) has shown strong interest to further strengthen the public procurement system. During the next CPF period, the Bank will actively pursue opportunities for collaboration and support to the Government in procurement reform. Areas of possible engagement include: (i) conducting MAPS assessment of the public procurement system; (ii) assessment of the national e-Government Procurement (e-GP) system to generate greater cost efficiency and also for ascertaining the e-GP system’s adequacy for use in Bank-financed projects; (iii) enhancement of the existing e-GP system (including modules for contract management, bidders’ database, granular M&E data analytics, Red Flag system); (iv) promoting Sustainable Public Procurement through enabling implementation of green and inclusive procurement; and (v) use of advance procurement in both Bank and Government financed projects to speed up contracting. 97. The Bank will streamline procurement processes, build capacity of implementing agencies, and support selective use of the country procurement system. The Bank will focus on facilitating procurement implementation through broader portfolio level efforts which may include: (i) further strengthening project readiness (e.g., timely establishment of PIUs, budget allocation, technical designs, land acquisition, E&S safeguards); (ii) building capacity particularly of financial intermediaries managing 23 decentralized procurement (e.g., municipal level dispersed investments) and new implementing agencies; (iii) encouraging use of qualified government staff in core PIU; (iv) supporting the Government’s initiatives for further improving their project management systems including budgeting, payment and approval processes; and (v) enhancing systematic monitoring and evaluation of project performance. 98. Investment lending in Türkiye relies on country systems in almost all areas of financial management. These include budgeting and planning, flow of funds, accounting and financial reporting, the internal control framework, and external audit. A comprehensive system, Integrated Public Financial Management System (KBYS), keeping the accounting records of all central government institutions and preparing consolidated government financial statistics and statements is in place and aligned with many of the key principles of good international practice. Nevertheless, there is room for improvement, especially in relation to implementation at the institutional level. The Ministry of Treasury and Finance (MoTF) has published standards, methodologies, and manuals to guide public institutions in developing and maintaining their own financial control systems. However, the internal control harmonization functions would be given a more prominent role in the overall functions. 99. Even though the basic components are in place, implementation of internal controls are impacted by capacity and ownership issues. The Internal Audit Coordination Board (IACB) acts as the Central Harmonization Unit for the internal audit function but would benefit from organizational independence and resources to effectively fulfill its mandate. The effectiveness of the internal audit function in Türkiye is further affected by the lack of clarity between the internal audit and inspection organization and functions. Given the World Bank’s heavy reliance on use of country systems in financial management, the efforts of the Government to further improve its PFM systems are critical. The MoTF has plans to prepare a comprehensive Public Financial Management Strategy which would provide the World Bank with an opportunity to develop a systematic approach to its support to the Government in this area. Efforts for implementing program-based budgeting and enhanced PFM systems will be particularly relevant for potential use of PforR as a lending instrument in Türkiye. Managing Program Implementation 100. A priority of the scaled-up program will be to help clients strengthen their implementation and portfolio management capacity. The scale up of the IBRD portfolio under the previous CPF placed increased demands on PIUs. Learning from this, the CPF will support timely PIU capacity building through regularizing a PIU Academy, including on environmental and social monitoring and reporting. Ilbank, the Ministry of Environment, Urbanization and Climate Change (MoEUCC), the Ministry of Health (MoH), TKYB, the Ministry of Industry and Technology (MoIT), and the Ministry of Agriculture and Forestry (MoAF) have become IBRD’s top borrowers in Türkiye, with an exposure of $8.3 billion and an undisbursed balance of $6.7 billion (81 percent). The WBG will use a variety of instruments to enhance institutional capacity to implement and manage their expanding portfolio. Ilbank will benefit from a EUR 36.5 million Technical Assistance (TA) Facility provided through EU Programs: the Instrument for Pre-Accession (IPA) and the Facility for Refugees in Turkey (FRIT) programs of the EU. A major objective of this TA is to assist sub- project preparation, monitoring, and supervision of activities in earthquake-affected provinces. 101. The CPF will rely on a variety of instruments and increase the menu of financing options in the country. IBRD’s portfolio at the end of the previous CPF included only IPFs. Going forward, the menu of options is expected to include results-based instruments such as IPFs with Performance Based Conditions (PBCs), PforRs, and guarantees. As indicated in para. 35, a move towards a programmatic approach will enhance impact at scale by offering scalable and programmatic approaches informed by the best country and global knowledge. Development Policy Financing will be considered based on government demand, the evolving macroeconomic policy framework, and the strength of the government’s program. 24 IV. MANAGING RISKS TO THE CPF PROGRAM 102. The overall risk to the program proposed for the CPF period is assessed as Substantial (Table 2). Risks substantially likely to materialize relate to: (i) macroeconomic; (ii) political and governance; (iii) environmental and social vulnerabilities; and (iv) institutional capacity for managing environmental and social risks. • Macroeconomic: High inflation and large current account deficits are key macroeconomic vulnerabilities which pose risks to Türkiye’s growth in the short-term. Following the May 2023 elections, the government has started to take significant steps towards normalizing the economy, including monetary policy tightening, the unwinding of distortive financial regulations, and fiscal revenue measures to curtail the fiscal deficit. The gradual approach followed by the government is working but it will require patience and perseverance and need to be sustained in the coming months. Additional measures to mitigate macroeconomic risks include WBG dialogue with the government structured around the biannual Türkiye Economic Memorandum and specific areas where the authorities request support. • Political and governance: As noted above, recent steps signal momentum on institutional strengthening (para. 40) that will be supported by the Bank, therefore somewhat mitigating this risk. Moreover, the government’s own reform plans aim to address some of the institutional indicators divergences with the group of high-income countries. Yet, the risk of the reform momentum waning could impact Türkiye’s ability to mobilize private capital (including foreign direct investment). This risk will be reviewed in the PLR and if the pace of reforms matches the momentum signalled in recent months, the rating may be improved. • Addressing environmental and social vulnerabilities: Geographic, climatic, and socioeconomic conditions make Türkiye highly vulnerable to the impacts of climate change, and natural disasters. Environmental and social risks could slow implementation or even roll back the gains achieved by the WBG program. This risk will be mitigated by: maintaining high climate co-benefits (including adaptation) across the portfolio; and prioritizing investments that strengthen Türkiye’s resilience to natural disasters, shocks, and environmental risks. • Institutional capacity for managing environmental and social risks: Implementation capacity constraints to manage environmental and social risks may overload PIUs. Measures to mitigate this risk include: (i) improving ESMS in key ministries and financial intermediary institutions for compliance with international environmental and social standards; (ii) providing additional capacity building to PIU staff through dedicated training; (iii) moving towards selective use of country systems; and (iv) supporting the “PIU Academy” and developing dedicated environmental and social training courses. Table 2. Risk Ratings Matrix Risk Category Rating 1. Political and Governance S 2. Macroeconomic S 3. Sector Strategies and Policies M 4. Technical Design L 5. Institutional Capacity for Implementation and Sustainability S 6. Fiduciary M 7. Environmental and Social S 8. Stakeholders M 9. Other OVERALL S (H = High; S = Substantial; M = Moderate; L = Low) 25 Annexes Annex 1: Additional figures on economic progress and risks Annex 2: CPF Results Matrix Annex 3: Completion and Learning Report Annex 4: Selected Indicators of Bank Portfolio Performance and Management Annex 5: Operations Portfolio (IBRD/IDA and Grants) Annex 6: Statement of IFC’s Held and Disbursed Portfolio Annex 7: MIGA’s Guarantee Portfolio 26 Annex 1: Additional figures on economic progress and risks 1. GDP per capita relative to 2002 levels 2. Poverty rate 2006-2020 (under 6.85 $/head (2017 PPP) 240 Türkiye World 30.0% 26.9% 220 Eurozone 25.0% 200 G7 20.5% 20.5% 20.2% 19.4% Developing exc India and China 20.0% 18.3% 17.8% 180 16.4% 14.8% 13.8% 160 15.0% 11.8% 10.6% 10.1% 10.4% 9.8% 10.1% 140 10.0% 7.8% 120 5.0% 2005 2006 2008 2009 2017 2020 2007* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2018* 2019* 2021* 100 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: Authors’ calculations using data from World Bank WDI. Note: GDP in constant PPP 95% confidence interval Headcount poverty rate (2017 international $). 3. Shared prosperity 2007-2020 4. Decoupling Growth and Emissions Annual CO2 emissions per GDP (kg per international-$) 0.32 0.3 0.28 0.26 0.24 Annual CO2… 0.22 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 5. Türkiye’s 70% seismic vulnerability 6. February 2023 Earthquake effected areas 27 Annex 2: CPF Results Matrix High Level Outcome 1 (HLO 1) – High and Sustainable Productivity Growth The previous CPF was built around three focus areas: (1) Growth; (2) Inclusion; and (3) Sustainability. This HLO carries forward the focus on growth. High-level Outcome Indicators Data source Current value Contribution of total factor productivity to 0.4% (average for 2016-2022) growth Share of full employment within the formal Turkstat/TÜIK sector Labor income growth among bottom 40% High Level Outcome description Rationale: Türkiye needs to balance its accumulation-led growth model with a greater reliance on productivity-led growth if it is to achieve its long-term development goals. Regulatory and competition reforms are needed to boost the productivity. Transport infrastructure and logistics deficiencies and persistent inflation have driven up production costs and broader macroeconomic conditions have negatively impacted investment including in productivity enhancing innovation and technology. The tragic February 2023 earthquakes disrupted economic activity but provide an opportunity to create better production processes. Accelerated green transformation to deliver on Türkiye’s ambitious climate commitments, could also improve firm productivity, help develop new industries, reduce reliance on imported energy, and mitigate risks from the global transition to a low carbon future. WBG engagement contributes to this HLO by: • Boosting competitiveness and enabling services; • Supporting post-earthquake economic recovery and spatial development; and • Promoting logistics and connective infrastructure. Work under HLO1 is complemented by investments in HLO2 (inclusive services and jobs), while HLO3 (strengthened resilience) mitigates the economic and physical impact of shocks on HLO1. Associated Sustainable Development Goals (SDG): (i) SDG 1 (no poverty); (ii) SDG 4 (quality education) (iii) SDG 5 (gender equality); (iii) SDG 7 (affordable and clean energy); (iv) SDG 8 (decent work and economic growth); (v) SDG 9 (industry, innovation, and infrastructure); (vi) SDG 10 (reduced inequalities); (vii) SDG 13 (climate action) CPF Objective 1: Boost competitiveness and enabling services, including by climate smarting agricultural practices and greening the country’s industrial firms Objective builds on previous CPF’s Objective 3: Enhanced Competitiveness and Employment in Selected Industries and 2: Enhanced Access to Finance to Underserved Segments. Intervention Logic: Türkiye’s challenge in factor productivity growth is driven primarily by the fact that the transition between sectors (structural transformation) has slowed, while sector- and within firm productivity growth has been slow to pick up. Underlying constraints to this productivity growth include the regulatory environment for business, innovation and skills, trade integration, and financial and other enabling services sectors, as well as sector specific challenges such as the dominance of small-holdings in agriculture, and the need to prepare industry for the Carbon Border Adjustment Mechanisms (CBAMs). Access to affordable domestic long-term finance remains a key constraint to the competitiveness and growth of the private sector. Developing domestic sources of long-term finance through a more diversified financial sector (including green loans, equity funds, and green capital market instruments), addressing financial sector vulnerabilities, and improving governance will be important policy priorities. Lessons learned and new knowledge at the program level: Innovation performance by company size shows that large Turkish companies have the most crucial role in private investment in research and development, but even innovation numbers for large Turkish firms are below those in comparator countries. 28 WBG ongoing and planned engagement: • Strengthening the competitiveness and environmental sustainability of industry and agriculture; • Supporting regulatory reforms to enable competitive, well-regulated markets that incentivize efficient resource allocation and reduced greenhouse gas emissions; • Improving access to private capital and long-term finance, including green loans, for enterprises; and • Supporting Türkiye’s exporters and green exports . Key risks and mitigation: It is important to regain momentum on Türkiye’s structural reform agenda to raise the potential of the economy. The program allows for structural reform dialogue through project design in sectors such as greening industry, agriculture, urban, connective and energy infrastructure, and through core analytics like the country economic memoranda that dig deep on trade, factor markets and productivity. Supplementary Progress CPF Objective Indicators WBG Program Indicators Indicator 1.1: Share of OIZs that SPI 1.1: Number of export Ongoing Financing: attract new investments (%) oriented small and medium IBRD Baseline [2023]: 0 enterprises and export oriented - Türkiye Green Industry Project Target [2028]: 30 CC mid-caps financed (number) (P179255) Baseline [2023]: 210 - Turkey Organized Industrial Zones Source: Turkey Organized Industrial Zones Project (P171645) Project Target [2026]: 500, of which 50 - Turkey Climate Smart and are women-owned/-led G Competitive Agricultural Growth Indicator 1.2: Farmers adopting Source: Long Term Export Finance Project (TUCSAP, P175011) Guarantee; Green Export Project - Long Term Export Finance Guarantee climate-smart agricultural technologies (number) (P171448) - Formal Employment Creation Project Baseline [2023]: 0 SPI 1.2: Area prepared for (P171766) Target [2028]: 42,500 (of whom climate-resilient greenhouse - Geothermal Development (P151739) 10,375 female) CC G D infrastructure (Ha) - Green Finance Project (P178274) Source: TUCSAP, Agri-food Sector Baseline [2023]: 0 - Türkiye Irrigation Modernization Recovery & Rebuilding in Türkiye’s Target [2026]: 179 CC Project (P158418) Earthquake Affected Provinces - Türkiye Resilient Landscape Source: TUCSAP Integration Project (P172562) Indicator 1.3: Amount of private Ongoing ASA: capital mobilized for green - Turkey Green Growth and investments (amount) Sustainable Recovery (P174569) - Türkiye Climate Action Support Baseline [2023]: 0 (P180448) Target [2028]: 1.3 billion CC CS - Financial Resilience PASA (P500381) Source: Green Finance Project; Green - Türkiye Economic Monitor (IO) Export Project; Geothermal Development; - Employment and Jobs CEM Scaling-Up Distributed Photovoltaics (P178168) Financing Pipeline: IBRD - Green Export Project (181436) - Emissions Reduction Project (P180762) - Türkiye Irrigation Modernization project AF (P181624) - Türkiye Socially Inclusive Green Transition Project (P180173) - Scaling-Up Distributed Photovoltaics Program (P176375) IFC - Antalya Roads Program (Proj. ID 48616) 29 - Green Organized Industrial Zones Project (P607492) - Roll out surface geothermal for district heating and cooling (regional) ASA Pipeline: - CEM micro-foundations of growth - Spending Review and tax risk analysis - TA on PFM with DG Public Accounts and Public Procurement Agency CPF Objective 2: Support post-earthquake economic recovery and spatial development Newly introduced CPF objective Intervention Logic Beyond the tragic human cost, the February 2023 earthquakes caused significant damage to productive capacity and disrupted economic activity. Damaged infrastructure, basic services and labor shortages and lack of employment opportunities coincide to restrain the pickup in business activities in the earthquake affected areas, notably manufacturing of final and intermediate goods for Türkiye’s consumption and exports. Farmers and agribusiness need restored stable supply chains, while rebuilding productive assets for the longer term based on back-building-better principles to enhance climate resilience and inclusive growth. Spatial development objectives have a renewed concern, given the earthquakes impacted the provinces in the lagging regions. Lessons learned and new knowledge at the program level: Despite some regional convergence, several regions, including some of the provinces most affected by the February 2023 earthquake, have poverty rates that exceed the national average. World Bank flagship analytical work has highlighted the underlying causes for regional disparities, with implications for policy and institutional reforms to support the government’s commitments to public investments for growth and employment in the east and southeast regions, WBG ongoing and planned engagement: • Securing private sector funding for both early relief and long-term reconstruction efforts; • Rebuilding agri-food productive capacity and supply chain flows, strengthening agricultural infrastructure, and strengthening agri-food system resilience in earthquake-affected provinces; • Short-term working capital and investment support to affected firms, and reconstruction of damaged commercial buildings and productive assets; • Improving institutional capacity of regional administrations to manage more effective and resilient rural infrastructure investments and to harness economic development growth potential; and • Financial support to rebuild small industrial estates that have suffered the brunt of the earthquakes Supplementary Progress CPF Objective Indicators WBG Program Indicators Indicator 2.1: Share of SPI 2.1: Firms benefitting from Ongoing Financing: beneficiary MSMEs that retained liquidity support / emergency IBRD or increased their employment access to finance - Türkiye: Post-Earthquake Micro, within 24 months of receiving Baseline [2023]: 283 Small and Medium Enterprises reimbursable financing, (MSME) Recovery project (P181068) Target [2026]: 51,000 (of which compared to the average - Emergency Firm Support Project 7,675 women-owned or women- (P174112) employment during the year led) G before the earthquake (percent) MIGA Source: Emergency Firm Support Project, - Türk Eximbank I Project (Proj. ID Baseline [2023]: 0 Türkiye: Post-Earthquake Micro, Small and Medium Enterprises (MSME) Recovery 9416) Target [2028]: 60 - Türk Eximbank II Project (Proj. ID project, Formal Employment Creation Source: Post-Earthquake MSME Recovery Project 13471) project - Türk Eximbank III Project (Proj. ID 14295) SPI 2.2. Number of farmers and Indicator 2.2: Farmers and agri- IFC agri-enterprises benefiting from enterprises with recovery 30 operating capacity at pre- project support - Urban Transport and earthquake levels Baseline [2023]: TBD Water/Wastewater Infrastructure financings with Istanbul, Izmir, and Baseline [2023]: TBD Target: [2026]: TBD Antalya Target [2028]: TBD Source: Agri-food Sector Recovery & - EB B3T2 Sub Debt (Proj. ID 46893) Source: Agri-food Sector Recovery & Rebuilding in Türkiye’s Earthquake Affected Provinces Financing Pipeline: Rebuilding in Türkiye’s Earthquake Affected Provinces IBRD - Agri-food Sector Recovery & Rebuilding in Türkiye’s Earthquake Indicator 2.3 Reconstruct small Affected Provinces (P181428) industrial sites that have been - Small Industrial Estates damaged or destroyed in the Reconstruction and Regional February 2023 earthquakes Economic Recovery (P502837) Baseline [2023]: TBD - Türkiye Regional Development Support Program (P180503) Target [2028]: TBD IFC Source: Resilient Reconstruction of Small Industrial Estates project - Earthquake reconstruction financing for distribution company in impacted region - Ankara Muni WWTP (Proj ID. 45132) - Türkiye Earthquake Response Project FIG (Project ID: 48230) - YKB (Project ID. 48722) Ongoing ASA: - Türkiye Financial Resilience PASA (P500381) - Turkey Green Growth and Sustainable Recovery (P174569) - Türkiye Climate Action Support (P180448) CPF Objective 3: Promote logistics and connective infrastructure Newly introduced CPF objective Intervention Logic: Better connectivity and logistical performance are essential to securing future economic competitiveness while decarbonizing. Its position at the western terminus of the Middle Corridor transporting freight between China and Europe is significant to Türkiye’s trade and growth prospects, placing logistics at the forefront of its strategic goals. However, Türkiye’s logistics sector needs improvement to reach its potential, as evidenced by its downgrading in the World Bank’s Logistics Performance Index (LPI) from 27 th place in 2012 to 47th place in 2018. Türkiye’s most recent LPI rank—for 2022—improved to 38th in the world, but this result is still below its 2012 placement, suggesting untapped potential. Lessons learned and new knowledge at the program level: Innovation in logistics –notably efficiency improvements and technological upgrading– is key for boosting competitiveness in industry and agriculture, serving as an engine for productivity-led growth. Further development of the ports sector to improve governance, last-mile and hinterland connectivity, efficiency, and readiness for low- and zero-carbon bunker fuels will be necessary to maintain Türkiye’s logistical performance and ability to serve its climate-conscious customers. Studying the significant climate risks to road and rail networks would increase resilience in mobility and logistics. WBG ongoing and planned engagement: • Develop railway infrastructure and improve rail sector performance to better capitalize on both the Middle Corridor and the role of rail in domestic logistics; • Expand the railway connectivity of key nodes at the last mile, including maritime ports, organized industrial zones, and areas of high-volume manufacturing; • Invest in port and logistics projects, boosting sector competitiveness, synergy with the Middle Corridor, and green transformation; 31 • Explore new technologies and growth opportunities in zero-carbon fuels for ships and create world- leading approaches to improving transport network resilience using big data and modeling. Key risks and mitigation: Geopolitical risks of intercontinental freight routes (e.g., Middle Corridor and potential new links to neighboring countries) to be mitigated via bilateral arrangements with the Government of Türkiye. Continued improvements in logistics depend on continued economic growth, which depend largely on Turkish exports to the EU, which is becoming highly carbon conscious. Mitigation will require effective measures to decarbonize Turkish transport and logistics to maintain competitiveness. Supplementary Progress CPF Objective Indicators WBG Program Indicators Indicator 3.1: Average rail freight SPI 3.1: Rail freight tonnage Ongoing Financing: travel times between Diviği and market share into/out of IBRD: the Georgia border (logistics Osmaniye OIZ in Çukurova region - Rail Logistics Improvement Project efficiency) (percent) (P170532) Baseline [2023]: 0 Baseline [2023]: 0 IFC Target [2026]: TBD CC Target [2026]: 10% CC - Marport (Project 47580) Source:Eastern Türkiye Middle Corridor Source: Rail Logistics Improvement Project Financing Pipeline: Railway Development Project (ETMIC) IBRD: SPI 3.2. Technical assistance - Easter Türkiye Middle Corridor Indicator 3.2: Modal share of rail provided to TCDD on alternative Railway Improvement Project freight transport (logistical and operational and management (ETMIC, P179128) carbon efficiency) models for rail-embedded IFC: Baseline [2023]: ~4% logistics centers - Engagement with private sector port Target [2026]: ~5-6% CC and logistics companies Baseline [2023]: No Source: Turkish Statistical Institute, MIGA Ministry of Transport and Infrastructure Target: [2026]: Yes - Izmir Marine Transportation Project Source: Rail Logistics Improvement Project (Proj. ID 11781) Ongoing ASA: SPI 3.3: Adoption of preparation - Green Transport in Türkiye PASA documents for potential - Sustainable Shipping and Ports for investments in additional Türkiye sections of the Middle Corridor - Supply Chain Resilience Assessment within Türkiye in Türkiye Baseline [2023]: No ASA Pipeline: Target [2028]: Yes - Logistics clusters Source: Rail Logistics Improvement Project High Level Outcome 2 (HLO 2) – Inclusive Services and Jobs This HLO carries forward the previous CPF’s prioritization of inclusion (previously Focus Area 2). High-level Outcome Indicators Data source Current value Female labor force participation 35.1% (2022) Percentage of youth (15-29) not in 27.2% (2022) employment, education, or training WHO, Tracking Universal Universal Health Care Service Coverage Index Health Coverage Global 76/100 (2021) Monitoring Reports High Level Outcome Description Rationale: Türkiye has achieved impressive results on human capital accumulation, but inequalities persist across gender, age, and geography. Moreover, Türkiye’s impressive results on human capital have not translated into strong human capital utilization (i.e., labor market outcomes), especially for women, youth and vulnerable groups, 32 including SUTPs. Individuals are also ill-prepared to take advantage of structural megatrends, including the technological revolution and green transition. These challenges have been exacerbated by recent shocks, which have also disproportionately impacted poor and vulnerable populations. The February 2023 earthquakes had a devastating impact on provinces with some of the highest poverty rates and hosting almost half of all SUTPs in Türkiye. They disrupted access to services for many of the 14 million Turkish citizens and 1.8 million Syrians under Temporary Protection living in the affected area. Highlighting the interconnectedness of this CPF, the 2023 Country Economic Memorandum asserts that the social benefits of Global Value Chains (GVCs) require improved economic infrastructure (HLO1 and 3) and strengthened workforce skills (HLO2) in lagging regions; addressing constraints to female employment (HLO2); and supporting a green transition of the private sector (HLO1). WBG engagement contributes to this HLO by: • Improving jobs for women, youth and vulnerable groups • Reducing disparities in health and education access and quality • Supporting resilient municipal infrastructure and services Associated SDGs: (i) SDG 1 (no poverty); (ii) SDG 3 (good health and wellbeing); (iii) SDG 4 (quality education); (iv) SDG 5 (gender equality); (v) SDG 6 (clean water and sanitation); (vi) SDG 8 (decent work and economic growth); (vii) SDG 10 (reduced inequalities) (viii) SDG 11 (sustainable cities and communities) (ix) SDG 13 (climate action) CPF Objective 4: Improve jobs for women, youth, and vulnerable groups This objective carries forward the previous CPF’s Objective 5: Increased Labor Force Participa tion of Women & Vulnerable Groups. Intervention Logic: Recent economic growth is yielding fewer higher-quality jobs, labor productivity is declining, and the jobs transformation remains less inclusive for women, youth, and vulnerable groups, including SUTPs. Türkiye’s female labor force participation of 35 percent remains well below the participation rate of comparable countries. Youth NEET aged 15 to 29 has been stagnant at 27 percent since 2015. While significant progress in receiving SUTPs has been made by Turkish institutions, bottlenecks persist, requiring further policy reforms and support for strengthening the inclusion and economic participation of SUTPs and host communities. Lessons learned and new knowledge at the program level: Ongoing analytical work is generating a deeper understanding of jobs for vulnerable populations and the green transition, learning recovery and quality, and social inclusion issues in Türkiye to inform the WBG strategy, portfolio, and policy dialogue. WBG ongoing and planned engagement: • Improving employability, livelihood opportunities and formal employment conditions for women, youth, and SUTPs to improve equality and ensure a just transition; • Carrying out knowledge work on skills for green jobs, and supporting the operationalization of labor market programs for the green transition • Implementing activities to promote livelihoods through community driven and participatory programs; and • Strengthening institutional capacity to assess demand for skills, support job creation and entrepreneurship in selected localities with high incidence of SuTP and evaluate results. Key risks and mitigation: The WBG will continue to produce analysis on social inclusion issues to inform policy dialogue and increasing investments that support a socially inclusive, green transition. Access to credit to project beneficiaries in forest villages and rural areas remains a challenge. Schemes that reduce beneficiary contribution are being promoted to mitigate this risk. Supplementary Progress CPF Objective Indicators WBG Program Indicators Indicator 4.1: Vulnerable SPI 4.1: Number of people who Ongoing Financing: households benefitting from have received job and vocational IBRD improved livelihood counseling or vocational skills - Formal Employment Creation Project opportunities related to (P171766) sustainable landscape 33 management (including fire training (disaggregated by - Support for Transition to Labor management) gender, refugees, youth) Market Project (P171471) - Agricultural Employment Support for Baseline [2023]: 0 Baseline [2023]: 0 Refugees and Turkish Citizens Target [2028]: 34,000 CC CS Target [2026]: 36,000 (of whom, through Enhanced Market Linkages Source: TULIP and Türkiye Climate 20% women, 50% refugees, 25% (P171543) Resilient Forests Project youth) G D - Turkey Resilient Landscape Source: Support for Transition to Labor Integration Project (TULIP, P172562) Market Project, Formal Employment - Türkiye Climate Resilient Forests Indicator 4.2: Percentage of Creation project Project (P179345) beneficiaries (social - Social Entrepreneurship, entrepreneurs and employees) Empowerment and Cohesion in whose earnings have increased SPI 4.2: Percentage of social Refugee and Host Communities in as a result of project entrepreneurs reporting that: (a) Turkey Project (P171456) interventions (disaggregated by project support services; (b) IFC gender) subgrants, meet their needs - IZSU Support (Proj. ID 44190) Baseline [2023]: 0 (disaggregated by refugees/host - Sub debt B3T2 (Proj. 46893) communities, location and - TSKB (Proj. ID 43845) Target [2028]: 70 CS gender, youth); - Denizbank Agri Digital RSF (Proj. ID Source: Social Entrepreneurship, Empowerment and Cohesion in Refugee Baseline [2023]: 0 45177) and Host Communities in Turkey Project Target [2026]: 70% and 70% G Financing Pipeline: Source: Social Entrepreneurship, IBRD Empowerment and Cohesion in Refugee - Türkiye Socially Inclusive Green Indicator 4.3: Number of formal and Host Communities in Turkey Project Transition Project (P180173) jobs created (number, (P171456) disaggregated by gender) Ongoing ASA: - Strengthening Economic Baseline [2023]: 0 Opportunities for Syrians under Target [2028]: 22,000 (of whom Temporary Protection and Turkish 30% for women, 50% for Citizens in Selected Localities refugees) G CS (P165687) Source: Formal Employment Creation - Türkiye Social Inclusion Analytical Project and Agricultural Employment Program (P176861) Support for Refugees and Turkish Citizens - Turkey Green Growth and through Enhanced Market Linkages Sustainable Recovery (P174569) - Türkiye Climate Action Support Indicator 4.4: Total number of (P180448) people employed in businesses - Human Capital, Jobs & Gender that received greening support Assessment (P180222) - Türkiye Employment and Jobs (Number) Country Economic Memorandum Baseline [2023]: 0 (P178168) Target [2028]: TBD CC G (x% - Analysis of Poverty, Inequality and women) Wellbeing in Türkiye, Programmatic Source: Türkiye Socially Inclusive Green ASA (P180097) Transition Project CPF Objective 5: Reduce disparities in health and education access and quality This objective builds on the previous CPF’s Objective 6: Strengthened performance of the education and health sectors and Objective 9: Strengthened Results Under Climate Action Agenda Intervention Logic Over the past few decades, Türkiye developed robust systems for service delivery that have led to relatively strong human capital development. However, challenges remain in terms of equity and quality of services. For example, Türkiye is one of the 10 countries where the gap between schools in reading skills is highest (based on 2018 PISA scores). Türkiye’s health care model needs to shift its emphasis from curative to preventative care, and with an aging population, from communicable to NCDs. For Türkiye to leapfrog and accelerate human capital, it will be 34 essential to ensure increased equitable access to quality health and education. The February 2023 earthquakes had a devastating impact on health and education services, which need restored as a matter of urgency. Lessons learned and new knowledge at the program level: Ongoing and recently completed operational and analytical work on human development revealed that: (i) strengthening primary health care is important for the overall health and wellbeing of the population, but also to effectively respond to acute shocks such as the recent pandemic and other public health emergencies; and (ii) promoting integrated ECE, addressing the country’s significant learning loses, accelerating the enhancement of learning quality, and fostering innovative learning is critical to improve education outcomes for all. WBG ongoing and planned engagement: • Restoring access to health and education services in earthquake affected areas; • Improving primary and secondary prevention of selected NCDs and strengthening health systems capacity to provide geriatric care to address the needs of the elderly; • Strengthening Türkiye’s health system preparedness for public health emergencies; • Enhancing education system capacity to provide equitable access to quality education; • Improving institutional capacity for the administration of public investments to deliver better spatial development outcomes and to develop and strengthen information systems; • Enhancing citizen engagement and participatory process in public service delivery; and • Providing guarantees to investors in specialized health service providers and through financial innovation to help create alternative capital market solutions for health infrastructure financing. Key risks and mitigation: Investments in public service delivery are not sustainable if critical assets are not resilient to climate and disaster risks. Ensuring resilience of critical buildings – such as hospitals and schools– is important for strengthening public health and community resilience, and the government has already done a lot in this area, such as introducing differentiated seismic design codes based on building use category, but further efforts are needed. The WBG will mitigate this risk by ensuring investments in public service delivery are climate and disaster resilient. Supplementary Progress CPF Objective Indicators WBG Program Indicators Indicator 5.1: People provided SPI 5.1: Percentage of Primary Ongoing Financing: with access to restored essential Care facilities implementing a IBRD health services (number, gender minimum set of clinical practice - Education Infrastructure for Resilience disaggregated) guidelines and protocols for (EU Facility for SuTP, P162004) Baseline [2023]: 0 elderly care - Safe Schooling and Distance Education Project (P173997) Target [2028]: 2,914,400 (49.7 Baseline [2023]: TBD - Turkey Emergency COVID-19 Health percent women) G CS Target [2026]: TBD Project (P173988) Source: Türkiye Earthquake Recovery and Source: Türkiye Preparedness for Public MIGA Reconstruction Project Health Emergencies Project (P180781) - Türkiye Gaziantep Hospital BLT Project (Proj. ID 11754) Indicator 5.2: Number of SPI 5.3: Number of schools - Adana Integrated Health Campus beneficiaries who had telehealth constructed/reconstructed with Project (Proj. ID 12118) consultations resilient structure in earthquake- - Yozgat Education and Research Baseline [2023]: TBD affected provinces or high-risk Hospital Project (Proj. ID 12870) areas (number) - Elazig Integrated Health Campus Target [2028]: TBD CS D Project (Proj. ID 12871) Source: Türkiye Preparedness for Public Baseline [2023]: 0 Health Emergencies Project - Bursa Integrated Health Care Center Target [2026]: 60 CC Project (Proj. ID 13543) Source: Disaster Risk Management in - Ikiteli Hospital Project (Proj. ID 13861) Indicator 5.3: Students benefiting Schools Project from direct interventions to Financing Pipeline: enhance learning IBRD Baseline [2023]: TBD SPI 5.2: Number of teachers that - Türkiye Preparedness for Public Health Target [2028]: 18 million (x % complete online certified Emergencies Project (P180781) female) CS professional development IFC 35 Source: Türkiye Safe Schooling and training on distance education - Ankara Muni WWTP (Proj ID. 45132) distance education project - YKB (Proj. ID 48722) (number, per cent women) Baseline [2023]: 8,616 Ongoing ASA: Indicator 5.4. Percentage of - Türkiye Social Inclusion Analytical students from the lowest quintile Target [2026]: 900,000 (59% Program (176861) of regional poverty that access women) G D - Human Capital, Jobs & Gender distance education system Source: Safe Schooling and Distance Assessment (P180222) Baseline [2023]: 30 percent Education Project - Analysis of Poverty, Inequality, and Target [2028]: 100 percent CS D Wellbeing in Türkiye, Programmatic Source: Türkiye Safe Schooling and ASA (P180097) distance education project & EBA Reporting System and MoNE Data Sources CPF Objective 6: Support resilient municipal infrastructure and services Newly introduced CPF objective Intervention Logic: Türkiye’s urbanization has facilitated growth, job creation, and improved living standards. However, as the urban population has increased, cities have sprawled creating challenges for quality services and issues around long-term financing for municipal infrastructure (water, sanitation, wastewater, stormwater/drainage, solid waste, urban transport, emergency/firefighting) have emerged. Improved spatial and urban planning frameworks that combine the urban design with various aspects of municipal planning such as sustainable mobility, energy efficiency, water and waste management are needed to ensure efficient use of land and other natural resources and deliver efficient and sustainable municipal infrastructure. Lessons learned and new knowledge at the program level: Investments in municipal infrastructure need to be accompanied by support to strengthen the institutional capacity of municipalities and associated utilities to implement municipal infrastructure works and adequately operate and maintain the municipal assets. Greater operational coordination among central bodies is necessary to enable municipal governments to pursue collectively determined objectives. While water, wastewater, and solid waste management services are provided by municipal governments, achieving national and international goals requires translating policies proposed at the central or supranational levels into feasible local strategies. WBG ongoing and planned engagement: • Supporting sustainable infrastructure development with creditworthy municipalities; • Improving integrated forward-looking urban and infrastructure planning in cities; • Restoring and expanding access to safely managed water supply, wastewater, and solid waste management services; • Restoring and strengthening municipal buildings and infrastructure, including emergency services; • Expanding stormwater management and sustainable urban drainage; and • Expanding urban mobility planning and urban transport services, including EVs. Key risks and mitigation: Municipal infrastructure investments are not sustainable if critical assets are not climate and disaster resilient. Resilience needs to be mainstreamed across municipal infrastructure assets, not only for municipal buildings. The Bank’s work under this objective and HLO3 will b e critical for mitigating this risk. Supplementary Progress CPF Objective Indicators WBG Program Indicators Indicator 6.1 People provided SPI 6.1: Length of water supply, Ongoing Financing: with access to safely managed, stormwater and sewerage IBRD: climate resilient sanitation networks constructed, - Municipal Services Improvement services (number, disaggregated rehabilitated, reconstructed Project (P169996) by gender / refugees) and/or extended with improved - Sustainable Cities (P128605) resilience (kilometers) - Sustainable Cities II (P161915) Baseline [2023]: 509,160 (254,580 - Türkiye Water Circularity and women, 0 refugees) Baseline [2023]: 828 Efficiency Improvement Project Target [2028]: 5.2 million (2.6 Target [2026]: 3,706 CC - Public and Municipal Renewable million women, 236,000 refugees) Source: Sustainable Cities Project, Energy Project (P179867) CC G CS Sustainable Cities Project 2, and Municipal 36 Source: Sustainable Cities Project, Services Improvement Project, Türkiye - Türkiye Earthquake Recovery and Sustainable Cities Project 2, Municipal Earthquake Recovery and Reconstruction Reconstruction Project (P180849) Services Improvement Project, and Türkiye Project, Türkiye Earthquake, Floods and - Türkiye Earthquake, Floods and Water Circularity and Efficiency Wildfires Emergency Reconstruction Wildfires Emergency Reconstruction Improvement Project, Türkiye Earthquake, Project (P176608) Floods and Wildfires Emergency Project (P176608) Reconstruction Project (P176608) - SPI 6.2: Municipal roads MIGA damaged by floods or wildfires - Ulug Enerji Project (Proj ID 14306) Indicator 6.2: Volume of treated maintained/rehabilitated (km) - Limak Uludag Perakende Elektrik wastewater generated (m3/day) Baseline [2023]: TBD Satis Project (Proj. ID 14919) Baseline [2023]: 200,000 - Uludag Elektrik Dagitim A.S. Project Target: TBD (Proj. ID 14920) Target [2028]: 1,116,000 CC Source: IFC Antalya Roads Program - Kadikoy-Kartal-Kaynarca Istanbul Source: Ankara Muni WWT, IZSU Wastewater Project, Türkiye Water Metro Project (Proj. ID 9401) Circularity and Efficiency Improvement SPI 6.3 Percentage of women’s - Izmir Marine Transportation Project Project needs and investment choices (Proj. ID 11781) that were implemented by - Üsküdar Metro Project (Proj. ID selected municipalities and SKIs 12516) Indicator 6.3: Annual passengers (Percentage) IFC/MIGA provided with green, urban transport systems Baseline [2023]: 0 - Izmir Metro Project (Proj. ID 12580) - Izmir Tramway Project (Proj. ID Baseline [2023]: TBD Target [2026]: TBD G 12240) Target [2028]: 124.7 million CC CS Source: Municipal Services Improvement IFC Project in Refugee Affected Areas Source: Sustainable Cities II, Antalya - IZSU Wastewater Project (Proj. ID Tramway Project, MMI Metro Project, 32078) Green and Future Cities Project - Antalya Tramway (Proj. ID 38506) - MMI Metro Project (Proj. ID 37093) Indicator 6.4: People benefitting - Renewable energy generation / from restored or improved access modernization of transmission and to climate and disaster-resilient distribution network projects municipal and central - Roll out surface geothermal for government infrastructure and district heating and cooling project services (number, gender (regional) disaggregated) Financing Pipeline: Baseline [2023]: 0 IBRD: Target [2028]: 10,684,000 (of - Green and Future Cities Project whom 50% women) CC G CS (179347) Source: Türkiye Earthquake Recovery and - Pollution Reduction in Marmara Sea Reconstruction Project; Climate and (P179244 ) Disaster Resilient Cities Project; Türkiye Ongoing ASA: Earthquake, Floods and Wildfires - Turkey Green Growth and Emergency Reconstruction Project Sustainable Recovery (P174569) - Türkiye Social Inclusion Analytical Program (176861) - Human Capital, Jobs & Gender Assessment (P180222) - Analysis of Poverty, Inequality, and Wellbeing in Türkiye, Programmatic ASA (P180097) High Level Outcome 3 (HLO 3) – Strengthened resilience to shocks Playing a more prominent role in this CPF, environmental sustainability and the challenge of reorienting growth towards a more green, resilient, and sustainable pattern are captured under HLO3 along with strengthening resilience to shocks and climate impacts. High-level Outcome Indicators Data source Current value 37 Overall rating on climate change mitigation Climate Action Tracker “Critically Insufficient” (2023) action 5552 kg CO2/MWh (2020 GridTürkiye national electricity grid greenhouse Turkiye Ministry of Energy average of operating margin gas emissions factor and Natural Resources and building margin) Emergency Events Total direct damage attributed to disasters as Database (EM-DAT) for 0.38 percent (2013-2023) percentage of nominal GDP over past 10 years total direct damage; TURKSTAT for nominal GDP High Level Outcome Description Rationale: Türkiye’s geographic, climatic, and socioeconomic conditions make it highly vulnerable to the impacts of earthquakes, climate change, and other environmental hazards, making adaptation and resilience high priorities. At the same time, climate change is expected to aggravate the pressure exerted by extreme events and environmental degradation on Türkiye’s physical and natural resource bases, posing mu ltidimensional risks to the welfare and livelihoods of people. Wider availability of domestic and international insurance solutions is needed to improve protection against and speed up recovery after natural disasters, including climate-related events. Despite some recent progress with renewables, Türkiye remains a high emitter. Achieving Türkiye’s climate commitments would yield net economic gains but requires significant policy reform and large public and private investments. The WBG contributes to this HLO by: • Enhancing disaster resilience and preparedness; • Strengthening natural resources management; and • Supporting energy transition. Associated SDGs: (i) SDG 1 (no poverty); (ii) SDG 2 (zero hunger) (iii) SDG 5 (gender equality); (iv) SDG 6 (clean water and sanitation); (v) SDG 9 (industry, innovation and infrastructure); (vi) SDG 10 (reduced inequalities) (vii) SDG 11 (sustainable cities and communities); (viii) SDG 13 (climate action); (ix) Life on land CPF Objective 7: Support disaster resilience and preparedness This builds on the previous CPF’s Objective 8: Improved sustainability and resilience of cities Intervention Logic: Natural disasters, climate change, and pollution are having dramatic impacts on welfare, livelihoods, and the sustainability of the nation ’s growth model. The country’s risk profile is dominated by seismic risk, as 70 percent of its population live in seismic zones while it is increasingly exposed to hydrometeorological events. Disasters and climate change directly generate poverty and put an additional burden on the Turkish government’s budget, reducing the fiscal space available for development programs. The CCDR highlights that climate and geological risks affect households unequally. Insurance can help restore livelihoods and rebuild critical infrastructure so that people, communities, and the economy can rebound more quickly. However, Türkiye’s insurance industry needs improvement to reach its potential. Türkiye also needs to ensure increased preparedness for future public health emergencies and pandemics. Lessons learned and new knowledge at the program level: The integration of structural strengthening and EE improvements has been tested in various WBG-financed projects in Türkiye and the ECA region, wherein seismic reduction projects include EE measures alongside structural strengthening and EE projects include some structural improvements, especially in roofs. These functional and energy efficiency upgrades were found to also improve the quality of the learning environment in the schools and health service delivery in the hospitals. Global experience also demonstrates the benefits of investing in preparedness and prevention activities with huge economic return compared to post-reconstruction efforts.9 Similarly, WBG-financed projects have moved towards adopting a multi-hazard risk approach consisting of broader assessments that cover both geophysical and climate-related hazards facing buildings and infrastructure assets as well as investments in enhancing multi-hazard resilience of critical public infrastructure across sectors. 9 https://www.worldbank.org/en/news/feature/2012/06/06/creating-a-safer-romania 38 The PASA on Financial Resilience (P500381) supports related diagnostic work, which includes informing the development of relevant disaster risk finance instruments. WBG engagement: • Supporting resilient retrofitting and reconstruction of collapsed, damaged and vulnerable housing, schools, public buildings and other buildings alongside measures to improve energy efficiency, scale up renewable energy, facilitate modernization (including for fire safety and sanitation) and support universal access; • Strengthening capacities of municipalities and utilities to prepare for, and respond to, multi-hazard risks and climate change; • Supporting disaster insurance and risk transfer solutions and strengthen financial resilience against disaster risk; • Enhancing flood and drought management; and • Improving health sector preparedness to sustain access to services during public health emergencies and shocks. Green / CC Focus: Mainstreaming green approaches as part of resilient reconstruction and risk reduction. Key risks and mitigation: Reconstruction and enhanced resilience require government’s strong commitment, resources, and implementation/coordination capacity at the implementing agency level. Stringent enforcement of building codes is vital for new construction. The Bank will continue a strong dialogue with the government in these areas and remain flexible to adjust the program/instruments to support priority areas, including strengthening institutional capacity for regulatory enforcement. Supplementary Progress CPF Objective Indicators WBG Program Indicators Indicator 7.1: Percentage of the SPI 7.1: Number of government Ongoing Financing: population insured against staff and technical professionals IBRD earthquake risk (number) trained in the design and - Climate and Disaster Resilient Cities Baseline [2023]: 55 implementation of building Project (P173025) retrofitting and renovation - Seismic Resilience and Energy Target [2028]: 65 (number, gender disaggregated) Efficiency in Public Buildings Project Source: Financial Resilience PASA (175894) Baseline [2023]: 0 - Türkiye Earthquake, Floods and Indicator 7.2: Vaccine production Target [2028]: 3,500, of whom 30 Wildfires Emergency Reconstruction center acquired WHO pre- per cent women) CC G D Project (P176608) qualification (number) Source: Seismic Resilience and Energy - Türkiye Earthquake Recovery and Efficiency in Public Buildings Project Reconstruction Project (P180849) Baseline [2023]: No - Disaster Risk Management in Schools Target [2028]: Yes Project (P157683) Source: Türkiye Preparedness for Public SPI 7.2: National disaster risk - Education Infrastructure for Health Emergencies Project finance instruments in place Resilience (EU Facility for SuTP, (number) P162004) Indicator 7.3: People living in Baseline [2023]: 1 IFC disaster and climate resilient, Target [2026]: 3 - Housing Finance project with Isbank reconstructed housing (number, Source: Financial Resilience PASA (Proj. ID 46006) gender disaggregated) MIGA Baseline [2023]: 0 SPI 7.3: Public buildings - Türkiye Gaziantep Hospital BLT structurally strengthened and Project (Proj. ID 11754) Target [2028]: 39,000 (50% renovated or reconstructed to be - Adana Integrated Health Campus female) CC G Project (Proj. ID 12118) Source: Türkiye Earthquake Recovery and disaster and climate resilient and - Yozgat Education and Research Reconstruction Project and Climate and energy efficient (number) Hospital Project (Proj. ID 12870) Disaster Resilient Cities Project Baseline [2023]: 0 - Elazig Integrated Health Campus Project (Proj. ID 12871) Indicator 7.4: Number of - Bursa Integrated Health Care Center beneficiaries (building occupants) Project (Proj. ID 13543) 39 benefitting from disaster resilient Target [2026]: 133, of which 20 in - Ikiteli Hospital Project (Proj. ID Central Government Buildings earthquake-affected provinces CC 13861) (number) G Financing Pipeline: Baseline [2023]: 0 Source: Seismic Resilience and Energy IBRD Efficiency in Public Buildings Project, - Türkiye Preparedness for Public Health Target [2028]: 26,000 CC Disaster Risk Management in Schools Emergencies Project (P180781) Source: Climate and Disaster Resilient Project Cities Project; and Seismic Resilience and - Flood and Drought Management Energy Efficiency in Public Buildings (P179313) Project SPI 7.4: Country area covered by Ongoing ASA: updated, modernized digital - Turkey Green Growth and cadaster (percentage) Sustainable Recovery (P174569) Baseline [2023]: 80 - Supporting education for recovery from the earthquake emergency Target [2026]: 90 CC D towards the implementation of Source: Land management infrastructure Türkiye’s Vision 2030 (P180190) for green and sustainable development - Türkiye Financial Resilience PASA (P500381) Logistical Chain Resilience and Inter-city Mobility Assessment in Türkiye ASA Pipeline: - Improving construction code compliance CPF Objective 8: Strengthen natural resources management This builds on the previous CPF’s Objective 9: Strengthened Results Under Climate Action Agenda Intervention Logic: Türkiye is highly vulnerable to climate impacts – both climate-related hazards that threaten communities and infrastructure (such as flooding) as well as slow onset impacts that exacerbate land degradation, increase water scarcity, and undermine coastal communities. Climatic and human-induced factors continue to put pressure on natural assets including land, soil, forests, biodiversity, and water resources. Many cities in Türkiye will also increasingly suffer the impacts of floods, sea level rise, heatwaves, and other extreme weather events due to climate change paired with rapid urban growth and inadequate planning. Türkiye’s climate change commitments will require significant land resources that need to be carefully managed along with other growing land demands for urban development and agriculture. Lessons learned and new knowledge at the program level: Serving as a platform for policy engagement, the Green Growth PASA built on the CCDR with more in-depth reports, the first published in 2023 on the institutional gaps for adaptation and resilience. Sector specific analyses have also been undertaken, often in conjunction with related projects, such as city-wide disaster risk assessments and analysis of pollution in the Black Sea. The WBG contributes to this objective by: • Strengthening land administration and integrated land management; • Promoting sustainable, competitive agricultural growth; • Increasing resilience of forests and people to wildfires; • Improving efficiency, reliability and inclusiveness of irrigation and wastewater services and reuse; • Promoting city greening and nature-based solutions to reduce urban heat and flooding; and • Strengthening institutional capacity for integrated fire management, water circularity management, point source pollution reduction, and integrated flood and drought risk management. Key risks and mitigation: Despite recent improvements, further efforts are needed to enforce environmental legislation, which is a priority to mitigate risks presented by climate change and environmental degradation. Supplementary Progress CPF Objective Indicators WBG Program Indicators 40 Indicator 8.1: Land area under SPI 8.1: National Strategy for Ongoing Financing: sustainable landscape Resilient Landscape Integration IBRD management practices / developed (Yes/No) - Turkey Resilient Landscape improved climate adaptation Baseline [2023]: No Integration Project (TULIP, P172562) management (Hectares [Ha]) - Land management infrastructure for Target [2026]: Yes CC green and sustainable development Baseline [2023]: 1,306 Source: TULIP (P179217) Target [2028]: 150,000 CC - Türkiye Climate Resilient Forests Source: TULIP, Agri-food Sector Recovery Project (P179345) & Rebuilding in Türkiye’s Earthquake SPI 8.2. Annual Water User - Türkiye Water Circularity and Affected Provinces Associations consultations Efficiency Improvement Project conducted and results discussed (P174915) via Devlet Su İşleri’s - Türkiye Irrigation Modernization Indicator 8.2: Area benefitting communication channels (P158418) from reduced risks of floods and (Number) - Turkey Climate Smart and Early Warning systems (Ha) Baseline: 0 [2023] Competitive Agricultural Growth Baseline [2023]: TBD Project (TUCSAP, P175011) Target: 245 (of which 35 Target [2028]: TBD CC - Gas Storage Expansion Project specifically conducted with (P162727) Source: Flood and Drought Management women) [2026] G - Climate and Disaster Resilient Cities Source: Türkiye Irrigation Modernization Project (P173025) Indicator 8.3: Forest area with (P158418) - Seismic Resilience and Energy increased wildfire resilience in Efficiency in Public Buildings Project targeted areas (Ha) SPI 8.3: City-level climate action (175894) Baseline [2023]: 0 - Türkiye Earthquake, Floods and plans adopted, with Wildfires Emergency Reconstruction Target [2028]: 6,800,000 CC consideration for gender and Project (P176608) Source: Türkiye Climate Resilient Forests other vulnerable groups - Sustainable Cities II (P161915) Project mainstreamed (number) Financing Pipeline: Baseline [2023]: TBD IBRD Indicator 8.4. Water users Target [2026]: TBD CC G - Agri-food Sector Recovery & provided with improved Source: Green and Future Cities Project Rebuilding in Türkiye’s Earthquake irrigation service (number, Affected Provinces (P181428) gender disaggregated) - Green and Future Cities Project (P179347) Baseline [2023]: 1,200 Ongoing ASA: Target [2028]: 22,192 (1,039 - Turkey Green Growth and female) CC G Sustainable Recovery (P174569) Source: Turkey Irrigation Modernization - BBSEA: Turning the tide of pollution Project and Türkiye Water Circularity and Efficiency Improvement Project in the Black Sea (P173334) - Türkiye Climate Action Support (P180448) - Türkiye Financial Resilience PASA (P500381) - Climate Adaptation and Resilience of the Power Sector (P179816) CPF Objective 9: Support energy transition Objective builds on previous CPF’s Objective 7: Improved reliability of energy supply and generation of green energy and Objective 9: Strengthened Results Under Climate Action Agenda Intervention Logic: Türkiye is the 15th highest annual emitter globally, up from 18th in 2019, with a large emissions intensive industrial base, high use of imported fossil fuels, carbon-intensive transport, and inefficient buildings. By taking action to accelerate its green transformation, Türkiye can minimize the impact of the changing regulatory environment and could increase exports if it can out-compete more emissions-intensive producers while reducing harmful air pollution. By putting downward pressure on electricity costs and mitigating exposure to fossil fuel price volatility, decarbonization in the power sector through renewables is also 41 expected to further improve industrial competitiveness, exports, and growth in Türkiye while improving energy security. Cities are also critical in making progress on emissions reductions in Türkiye, particularly improving energy efficiency of the building stock and supporting a modal shift to low or zero emission public transit and smart green urban mobility as well as integrating green solutions to municipal infrastructure management. Sound planning of the built environment and land development is also needed to avoid locking in high-emission urban growth. Lessons learned and new knowledge at the program level: Ongoing analytical work including on decarbonization of maritime transport, sustainable urban mobility, energy, green growth, and plastic and waste circularity are building a new foundation for further engagement in climate change mitigation. Work under the Green Growth PASA is helping to build the capacity of the government to undertake climate strategy planning, evidenced by the increased prominence of climate action in the 12th National Development Plan. Ongoing work under the Financial Resilience PASA and by the financial sector regulators aim at greening the financial sector, which can help channel financing for climate mitigation purposes. WBG ongoing and planned engagement: • Increasing renewable energy generation, modernizing distribution networks, and promoting EV charging infrastructure networks; • Enhancing energy efficiency especially in the building stock; • Supporting development and implementation of city climate plans, and greenhouse gas reductions for municipal infrastructure and services; • Supporting efforts aimed at greening the financial sector (banking and capital markets); and • Improving the policy environment for climate mitigation, including the emissions trading system. Key risks and mitigation: The possibility of new coal and lignite plants risk locking the country into carbon- intensive infrastructure for decades, undermining decarbonization efforts. As highlighted in the CCDR, Türkiye’s energy transition will have long-term economic benefits, but requires significant policy reform plus large investments from diverse financing sources. The WBG’s support will only ever cover a fraction of these needs, and therefore needs to be highly strategic in its targeting to influence: (i) national policies, to incentivize investments on a national scale and (ii) national investment programs that can be scaled up to drive change. Supplementary Progress CPF Objective Indicators WBG Program Indicators Indicator 9.1: Projected lifetime SPI 9.1 National ETS designed Ongoing Financing: greenhouse gas emissions and pilot ETS initiated IBRD reduction from results achieved Baseline [2023]: No - Türkiye Partnership for Market Baseline [2023]: 64.96 Mt CO2e Implementation (PMI) Carbon Target [2027]: Yes Market Development Project Target [2028]: 96.38 Mt CO2e CC Source: Türkiye PMI Carbon Market (P180248) Source: Turkey Organized Industrial Zones Development Project - Renewable Energy Integration Project; Renewable Energy Integration / (P144534) AF; Geothermal Development Project; Public and Municipal Renewable Energy SPI 9.2: Sites where de-risking - Turkey Geothermal Development Project; Sustainable Cities 2; Sustainable studies have been conducted for Project (P151739) Cities 2 AF; EE in Public Buildings; Seismic offshore wind energy generation - Türkiye EU-IPA Energy Sector Resilience and EE in Public Buildings; (number) Program Phase III Project (P173247) Second EE in Public Buildings; Emissions - Türkiye - EU IPA Energy Sector Reduction Project; Scaling Up Distributed Baseline [2023]: 0 Program Phase IV Project - Offshore PV Program; Green and Future Cities; Target [2026]: 3 CC Wind Support (P179235) Green Finance; Green Export; Green Source: Türkiye - EU IPA Energy Sector - Rail Logistics Improvement Project Industry; 10 MIGA projects. Turkey Program Phase IV Project - Offshore Wind (P170532) Organized Industrial Zones Project; Support - Turkey Energy Efficiency in Public Renewable Energy Integration and Additional Financing; Geothermal Buildings (P162762) Development Project and Additional - Public and Municipal Renewable Financing; Public and Municipal SPI 9.3: Number of innovative Energy Project (P179867) Renewable Energy Project; EE in Public green efficiency solutions - Seismic Resilience and Energy Buildings (1 and 2); Seismic Resilience and introduced by beneficiary firms Efficiency in Public Buildings Project EE in Public Buildings; Industrial Emissions (#) (175894) 42 Reduction Project; Accelerating the Baseline [2023]: 0 - Sustainable Cities II (P161915) Market for Distributed Energy; Green and - Green Finance Project (178274) Future Cities; Green Export. Target [2028]: 200 CC Source: Türkiye Green Industry Project IFC - Port and logistics projects Indicator 9.2 Projected lifetime - Renewable energy projects, including energy savings (terajoules) surface geothermal heating and Baseline: 4.08 TJ cooling - Modernization of distribution Target: 25.95 TJ network investment projects Source: Energy Efficiency in Public - Yapi Kredi Leasing (Proj. ID 46788) Buildings; Seismic Resilience and Energy - GTLP RSF structures (Proj. ID 46777 Efficiency in Public Buildings; Second EE in Public Buildings; Organized Industrial and 47902) Zones; Green Industry; Sustainable Cities - MAS EV buses 2; Green and Future Cities Energy - Green OIZ Project (P607492) Efficiency in Public Buildings (1 & 2); - Pipeline shallow geothermal project Seismic Resilience and Energy Efficiency in (regional) Public Buildings; Organized Industrial IFC/MIGA Zones - Izmir Metro Project (Proj. ID 12580) - Izmir Tramway Project (Proj. ID Indicator 9.3: Renewable energy 12240) capacity enabled (MW) - MAS upstream project on plastic Baseline [2023]: 956 MW circularity 607492 Target [2028]: 2,273 MW CC CS MIGA Source: Renewable Energy Integration / - Ulug Enerji Project (Proj ID 14306) AF; Geothermal Development; - Limak Uludag Perakende Elektrik Accelerating the Market Transition for Satis Project (Proj. ID 14919) Distributed Energy; Public and Municipal - Uludag Elektrik Dagitim A.S. Project Renewable Energy; Green and Future Cities. (Proj. ID 14920) - Kadikoy-Kartal-Kaynarca Istanbul Metro Project (Proj. ID 9401) - Izmir Marine Transportation Project (Proj. ID 11781) - Üsküdar Metro Project (Proj. ID 12516) Financing Pipeline: IBRD - Green and Future Cities Project (P179347) - Accelerating the Market Transition for Distributed Energy (P176375) - Eastern Türkiye Middle Corridor Railway Improvement Project (ETMIC, P179128) - Türkiye Energy Efficiency in Public Buildings 2 Project (P500777) - Green Export Project (P181436) - Emissions Reduction Project (P180762) IFC − Private sector renewable energy projects including surface geothermal for heating and cooling − Pipeline investment in modernization of distribution network project − Methane emissions abatement Ongoing ASA: 43 - Green Growth PASA (P174569) - Sustainable Urban Mobility in Türkiye (P175806) - Türkiye E-Mobility TA Program (P177079) - Turkey Green Growth and Sustainable Recovery (P174569) - Türkiye Climate Action Support (P180448) - Financial Resilience PASA (P500381) - Energy Transition Program in Türkiye (P173157) G Gender related indicators10 CC Climate change related indicators CS Potential alignment with provisional Corporate Scorecard indicators D Relevant to cross-cutting theme of accelerating digitalization 10 Genderconsiderations are integrated into all CPFs according to the provisions of OP/BP 4.20, Gender and Development and the corresponding Guidance. 44 Annex 3: Completion and Learning Report TÜRKIYE CPF FY18-23 COMPLETION AND LEARNING REVIEW Date of CPF: July 28, 2017, covered period FY18-21 (Report No. 11096-TR) Date of PLR: February 13, 2020, extended CPF to FY23 (Report No. 142353-TR) Period covered by the CLR: FY18-FY23 I. INTRODUCTION 1. This Completion and Learning Review (CLR) assesses the progress made and lessons learned through the World Bank Group (WBG) Türkiye Country Partnership Framework (CPF) for the FY18-21 period, extended to FY23 by the Performance and Learning Review (PLR). Aligned to the Government’s 10th National Development Plan and informed by the 2017 Systematic Country Diagnostic (SCD), the CPF aimed to develop strategies, policies, and institutions to assist Türkiye accelerate growth, inclusion and sustainability, and to complete its transition to a high-income country. Given the evolving country context in the first two years of the CPF, the PLR adjusted the WBG’s engagement strategy and extended its implementation through FY23 to reflect the Government’s 11th Development Plan. 2. The CPF was implemented within a challenging and continuously evolving country context, which included a sweeping governance reform (effective after the CPF approval), the COVID-19 pandemic (after finalizing the PLR), and natural disasters. Specifically, (a) Türkiye modified its governance system in 2018 from a Parliamentary to a Presidential Republic, and created new institutions; (b) the COVID-19 pandemic; (c) the continuous influx of people fleeing conflicts making Türkiye the largest refugee-hosting country in the world; and (d) the February 6, 2023, catastrophic earthquakes. Additionally, Türkiye ratified the Paris Agreement in 2021, which enabled new WBG financing and non-financing to assist the country address climate change. Given that most of these developments occurred post-PLR, only some were fully reflected in the country strategy documents while others, like the 2023 earthquakes were not and required ad hoc adjustments to the ongoing program. The WBG portfolio grew exponentially to support country efforts to address climate change and respond and recover from the intense shocks. The WBG demonstrated agility, flexibility and capacity to adjust paying particular attention to the sustainability of development outcomes, and assisting institutions and people to build resilience against future crises. 3. The overall performance of the CPF program is rated Moderately Satisfactory. The rating is based on the aggregate assessment of the nine CPF objectives supported by 29 indicators contributing to three focus areas. They reflect the results of WBG financing, trust funded activities, guarantees, as well as country dialogue, advisory services and analytics (ASA). The CLR also presents complementary indicators to capture the development impact of WBG support in areas that had not been envisaged in the CPF or the PLR. This is motivate by the extent of the shocks experienced during CPF implementation, the fast- changing and urgent priorities, and the need to remain flexible and agile to ensure timely support. 4. The overall performance of the WBG in designing and implementing the CPF is rated as Good. The WBG’s program in Türkiye was relevant to the country’s long term development goals and adjusted timely and adequately to context changes in line with the WBG’s comparative advantage and country needs. The portfolio grew from US$3.1 billion to US$10.9 billion (251 percent increase) and diversified significantly, driven largely by WBG efforts in assisting the Government with the COVID-19 response, the implementation of the climate change Memorandum of Understanding (MoU), and the earthquakes response. Beyond lending, the WB used its convening power to further strengthen partnerships with other international institutions, resulting in an increased volume and number of EU-funded Recipient-Executed Trust Fund (RETF) operations and mobilization of co-financing from the Asian Infrastructure Investment 45 Bank (AIIB) and Japan International Cooperation Agency (JICA). In 2021, the WBG assumed a leading role in facilitating Türkiye’s signing of a MoU with France, Germany, and the United Nations (UN), to assist the country in developing and rolling out climate policies and action. The International Finance Corporation (IFC) delivered a robust program supporting private sector development, playing a counter-cyclical role, focusing on building critical infrastructure, promoting further integration into global value chains of export-oriented manufacturing, enhancing financial inclusion, and accelerating green transition. For the Multilateral Investment Guarantee Agency (MIGA), Türkiye remained its largest exposure country globally and delivered an impactful program with projects supporting foreign investors in the health, energy, transport, and financial sectors, with a strong focus on climate finance. 5. The results from the diversification and expansion of the WBG portfolio, especially during the extended CPF period, are only partially captured by the post-PLR results framework (RF) as most of the outcomes will materialize during the next CPF. IBRD lending commitments during the CPF exceeded US$12.511 billion, but (i) 43 percent of these were approved during the 2-year extension; and (ii) almost half of the end FY23 active lending portfolio of US$10.9 billion became effective during the last 18 months. Beyond sector investments, the program aimed to strengthen institutions and improve capacity through innovative and intensive training curricula, including the development of the Türkiye Project Implementation Unit (PIU) Academy program, and assistance to help the country tap into capital markets on reasonable terms. Türkiye country program pioneered the preparation of a Country Climate and Development Report (CCDR), which informed the SCD and upcoming CPF. Table 1. Ratings of FY18–FY23 CPF Strategic Objectives by Focus Area Focus Area/Strategic Objective Rating Focus Area 1: GROWTH – Moderately Satisfactory Objective 1: Contribute to Strengthened Policies that Boost Economic Stability Partially Achieved Objective 2: Enhanced Access to Finance to Underserved Segments Mostly Achieved Objective 3: Enhanced Competitiveness and Employment in Selected Industries Mostly Achieved Focus Area 2: INCLUSION – Moderately Satisfactory Objective 4: Increased Effectiveness of Social Assistance Partially Achieved Objective 5: Increased Labor Force Participation of Women & Vulnerable Groups Mostly Achieved Objective 6: Strengthened Performance of the Education and Health Sectors Mostly Achieved Focus Area 3: SUSTAINABILITY – Moderately Satisfactory Objective 7: Improved Reliability of Energy Supply and Generation of Green Energy Mostly Achieved Objective 8: Improved Sustainability and Resilience of Cities Partially Achieved Objective 9: Strengthened Results Under Climate Action Agenda Mostly Achieved II. PROGRESS TOWARDS CPF DEVELOPMENT OUTCOMES 6. The progress towards the achievement of CPF development outcome was overall Moderately Satisfactory.12 The WB program comprised a coherent blend of investment projects and ASAs, complemented by IFC investments and advisory services, and MIGA guarantees. All three focus areas are rated Moderately Satisfactory. Six of the nine Objectives were Mostly Achieved and three Partially Achieved. The targets for 17 of the result indicators were Achieved; 5 were Mostly Achieved, and 6 were Partially Achieved. The targets of 1 indicator were Not Achieved. Focus Area 1: GROWTH (Overall Rating: Moderately Satisfactory) 11Including FY17 lending approvals since FY17 was not covered by any CPF. 12Table 1 and Annex 1 provide the assessments summary for all Objectives and indicators. Annex 2 has details on indicators, targets, achievements, and contributing operations, to assess progress of the Focus Areas and individual Objectives. 46 Objective 1: Contribute to Strengthened Policies that Boost Economic Stability (Partially Achieved) 7. This CPF indicator was revised in the PLR. To support this objective, the WB mostly relied on policy advice through Country Economic Memoranda (CEM), the Türkiye Economy Monitor (TEM) series and other ASAs. These efforts supported the restructuring of a significant number of corporate bank loans applying a new financial restructuring framework. As of July 2023, 603 loans were restructured, exceeding the initial target of 200.13 The other indicator related to the Integrated Public Financial Management Information Systems aimed to utilize public resources more efficiently and effectively. This framework was supported by the Public Finance Management Reform Implementation Support Project (P158799). However, the monitoring and reporting of government contractual commitments, which was measured through the indicator on improved transparency for public sector contractual commitments, fell short of expectations.14 At the time, opportunities for engaging the Government on procurement reform and on the country procurement system were limited, including its use in WB-financed projects. The WB’s contribution and attribution to this focus area in the second half of the CPF was limited due to the adequacy of the macro-economic framework as a prerequisite for Policy Lending. Objective 2: Enhanced Access to Finance to Underserved Segments (Mostly Achieved) 8. WBG efforts contributed to enhance access to finance for underserved segments (women and MSMEs). IFC operations helped to partially alleviate lending-related constraints by providing loans to commercial banks, including Akbank TK (Project No. 3381), Garanti Bankasi (511503), QNB Finansbank (510236), and DenizBank AS (621859).15 Several IBRD financial intermediation operations were delivered to reach these segments. With 5.4 million individuals reached, the target of 3.6 million was exceeded. Moreover, MIGA supported Turk Exim in 2015 (Proj. ID 9416), 2016 (Proj. ID 13471) and 2018 (Proj. ID 14295) to increase medium- and long-term financing to the export sector, focusing on MSMEs. Yet, the number of women-owned SMEs reached by IFC financial services was only mostly achieved with 85,538 MSMEs against the target of 100,000. Notably, the number of women-inclusive enterprises financed under IBRD lines of credit exceeded the target of 80 MSMEs, reaching 474 enterprises by May 2023. The indicator on MSMEs and exporters served by banks benefiting from IBRD financial intermediary loans, was partially achieved reaching 50 percent of its target. One of the factors contributing to this was the decision to temporarily halt financial intermediary operations in the second half of CPF, due to perceived risks in macro-fiscal conditions. 9. Post-PLR, an innovative approach was adopted by financing the underserved segments of the population through grants or reimbursable grants. These segments were reached via the Small and Medium Scale Industry Development and Support Administration (KOSGEB), the Agricultural Credit Cooperatives (ACC), the Turkish Employment Agency (ISKUR), and by the Development Bank of Türkiye (TKYB), through RETFs, mainly funded by the EU as part of the refugee crisis-response. The original indicator was limited to include clients served by Banks benefiting from IBRD “financial intermediary” operations. But given the significant financial commitments through IBRD non-financial-intermediary operations and RETFs, the expansion of this indicator to include the impact of non-financial-intermediary operations’ would add 58,853 additional MSMEs and exporters which were directly reached by such operations (for a total of 297,853 MSMEs and thus getting closer to the original target). Objective 3: Enhanced Competitiveness and Employment in Selected Industries (Mostly Achieved) 13 The total amount of debt restructured under the framework agreement reached TRY 142 billion. 14 Although the Integrated Financial Management System became fully operational, the information from the contractual commitments was captured only after processing the first payment, which was contrary to the original design to assess such information beforehand. https://muhasebat.hmb.gov.tr/bkmybs-projesinin-amaci 15 Respective data can be collected from IFC Development Outcome Tracking System, https://dotsc.ifc.org/ 47 10. All IFC indicators reached or exceeded their targets – employment supported by IFC clients in manufacturing, telecom, technology, and agribusiness reached 135,857 jobs (against a target of 60,000); supported female employment resulted in 40,133 jobs (target of 14,000), and employment supported by IFC equity funds investees, reached 22,025 jobs (target of 20,000). Industries supported by IFC intervention are of systemic importance for growth dynamics and job creation. IFC lending has helped companies to expand their business and create more jobs as credit constraint has been alleviated. While there was no specific indicator measuring IBRD’s employment support in selected industries, the CPF program has significantly shifted to retain and enhance employment opportunities especially during and after the COVID-19 pandemic. Thus, IBRD lending operations and RETFs, namely the Formal Employment Creation (P171766), Türkiye Rapid Support for Micro and Small Enterprises during the COVID-19 crisis project (P174144), and Long-Term Export Finance Guarantee Project (P171448) contributed to maintaining or creating an additional 90,730 jobs. Rapid Support to MSMEs Project (P174144) aimed to avert the closure of viable Micro and Small Enterprises affected by the COVID-19 crisis, and to maintain their employment levels during the crisis. Among the firms who benefitted, 98 percent have survived and not only maintained their employment level, but also created 66,700 new jobs16.The WB program also continued to support the creation of jobs related to the climate change agenda, through the Green Industry Project (P179255) and in the aftermath of the earthquake, Post-Earthquake MSME Recovery project (P181068) focusing on vulnerable groups, such as women, youth, and refugees. However, these two new operations were delivered in late FY23 and only recently became effective. On the competitiveness front, Improvement in Composite Doing Business Score index was set as the relevant indicator with a baseline value of 68.1 in 2015 and a target of 78.0 as of 2021. Although, the Doing Business report was discontinued and the latest available score for Türkiye was 76.8 as of 2020, the country’s progress in enhancing competitiveness has been captured by other international indexes, including UN Industrial Development Organization’s Competitive Industrial Performance Index where Türkiye’s score increased from 0.124 in 2015 to 0.122 in 2021; and overall country ranking went up from 29th to 27th worldwide17. Focus Area 2: INCLUSION (Overall Rating: Moderately Satisfactory) Objective 4: Increased Effectiveness of Social Assistance (Partially Achieved) 11. The WB aimed to reach this objective mainly through programmatic ASAs. The focus shifted mid- course to account for the change in the policy context to also: (i) strengthen institutions to enhance the possibilities of social assistance beneficiaries to find income-generation opportunities; and (ii) enhance the evidence based social assistance programming. The indicator on the number of social assistance beneficiaries referred to employment services surpassed the target and reached 822,000 beneficiaries. But the indicator on inclusion of social protection performance indicators in the Ministry of Family, Labor, and Social Services (MOFLSS) social assistance monitoring and evaluation (M&E) system for evidence-based program management was not achieved. Overall, social assistance coverage has been expanded during and after the pandemic period; but CPF indicators focused mainly on the basic definition of social assistance as formulated at the design stage. Indeed, the valuation part of the M&E systems in Türkiye remains a challenge affecting social assistance impact measurement throughout the country. 12. Over time, the number and budget of social assistance programs has grown to cover a broader range of sources of vulnerability and sustain the living standards of vulnerable populations. There are about 45 programs with a budget equivalent to 1.5 percent of GDP that help vulnerable groups focusing on poverty, electricity access, health, old-age, disability, and employment risks. Most of them are 16https://operationsdashboard.worldbank.org/project/secure/sap/forms/isr?projId=P174144&stage=IMP&SeqNo:05#statusandkeydecisions- objectiveandratings 17 UNIDO Competitive Industrial Performance Index (CIP): https://stat.unido.org/cip/ 48 centralized by MOFLSS and ran under an investment stream achievement sheet with 57 million people enrolled in the registry. The programs are flexible to react to changing economic circumstances, which contributed to the expansion of their resources and coverage during the COVID-19 pandemic. Objective 5: Increased Labor Force Participation of Women & Vulnerable Groups (Mostly Achieved) 13. WBG support aimed to bring more people into the formal labor market to help Türkiye reap the benefits of its demographic dividend. WB support to ISKUR aimed to strengthen its capacity and effectiveness in helping job seekers, particularly women and youth. The Facility for Refugees in Türkiye18 (FRiT) Social Entrepreneurship, Empowerment and Social Cohesion Project (P171456) helped promote social cohesion outcomes in communities where Syrians under Temporary Protection (SuTPs) reside. The Employment Support Project for SuTP and Turkish Citizens (P161670) and Support for Transition to Labor Market Project (P171471) helped to finance ISKUR placement programs and trainings. As a result, there was a significant increase in the number of women and youth placed in jobs by ISKUR, surpassing the indicator targets for youth, male, and female placements.19 Although the CPF indicators only focused on placements generated by ISKUR, several IBRD lending operations prioritized employment generation for women and vulnerable groups, adding 43,591 new placements outside ISKUR programs.20 However, the direct employment generation supported by IFC clients in less developed regions did not meet its target (45,000), reaching 38,111 placements. Yet, IFC engagement with lending institutions and firms helped create job opportunities for vulnerable groups, especially for women in lagging regions. Additionally, MIGA projects in the health sector supported 9,759 employees, of which 49.7 percent were women. Objective 6: Strengthened Performance of the Education and Health Sectors (Mostly Achieved) 14. The CPF focus in the health and education sectors was the promotion of healthy lifestyles, and supporting primary education and teacher training reform effort respectively. The education aim was in response to the fall experienced in the Program for International Student Assessment (PISA) and Trends in International Mathematics and Science Study (TIMSS) scores for Türkiye. IFC and MIGA continued to support Türkiye’s health sector through investments in specialized health service providers, and through financial innovation to help create alternative capital market solutions for health infrastructure financing. However, considering how the engagement in this CPF Objective evolved, the PLR adjusted to realistically capture the impact of WBG support. Several weeks after the PLR was noted by the Board, the COVID-19 pandemic emerged, with significant impacts on Türkiye’s economy, health and education sectors. 15. Despite several unforeseen shocks, the performance of the Turkish health and education sectors remained resilient, which included uninterrupted and inclusive health and education services during the COVID pandemic and the earthquakes. Educational achievements have increased with PISA and TIMSS recording noticeable improvements between 2015 and 2019 school enrollments are almost universal for all basic levels, and have slowly increased for post-secondary and pre-school education. However, it is difficult to assess the level of achievement under this Objective despite RF revisions at the PLR stage, as the impact of the COVID-19 pandemic on the health and education sectors significantly shifted the needs of the population. The original indicator on the number of students, teachers, and staff having access to schools constructed or retrofitted by IBRD operations has been partially achieved, missing its original target (320,000). The Education Resilience Project (P162004) has been satisfactorily 18 As part of the EU response to the refugee issue in Turkey, the EU Facility for Refugees in Turkey (FRIT) “FRIT Facility” was established in 2016 to support the EU-Turkey Joint Action Plan of November 2015 and the EU-Turkey Statement of March 2016. 19 Notably, the number of women placed in jobs by ISKUR reached 1,874,699 against a target of 900,000; the number of youths placed reached 1,190,792 (male youth) and 758,345 (female youth), against targets of 450,000 and 400,000, respectively. 20 Including Formal Employment Creation Project (P171766), KOSGEB Rapid Access to Finance (P174144), Agricultural Employment Support (P171543). 49 implemented and supported the construction of 57 schools with 49,000 students, teachers and staff having access to safe schools, which was proved to be among the safest superstructures during the 2023 earthquakes.21 However, the Disaster Risk Management (DRM) in Schools Project (P157683) did not perform as expected, causing the indicator to fall short of its target. In addition, the WB contributions to achieve the indicator on the percentage of households that receive counselling or education related to healthy living from health workers were disrupted for three years due to the COVID-19 pandemic. The Health System Strengthening and Support Project (HSSSP, P152799) was restructured to address the immediate needs of COVID-19 response, and the indicator was replaced with an indicator that tracks the COVID-19 vaccination coverage. 16. Although the CPF original targets have not been met, the WB support for the Government’s COVID-19 response has been significant and is widely regarded as one of the best practices worldwide22. The WB’s new emergency lending and restructuring of ongoing programs allowed for 68.9 percent of the Turkish population (57.9 million people) to be vaccinated, surpassing the original target of 50 percent. IBRD assistance helped upgrade the capacity of 173 hospitals to tackle COVID-19 and future pandemics. The number of patients served through IFC’s health sector clients exceeded its target (3.0 million), reaching 7.9 million (2022), as IFC investment allowed hospitals located in large municipalities to expand further and operate more efficiently, thereby meeting increasing demand for healthcare services during the COVID-19 pandemic. In addition, five MIGA guarantees serving hospitals became fully operational during the CPF period and made it possible by 2022 to serve 10 million people, of which 55 percent were women. 17. Coordination among WBG institutions was instrumental to support the strengthening of the Turkish health sector and mobilize private capital. IFC and MIGA supported seven health Public‐Private Partnership (PPP) projects in Türkiye, two of which were joint ones. These projects included the development of greenfield modern facilities and the expansion of existing ones. MIGA political risk insurance helped to mobilize international partners, which brought financial and operational strength to the projects, while IFC helped to finance and mobilize additional private capital for undertaking these projects. The outdated structures have been replaced with modern, more energy efficient, and earthquake-resilient healthcare infrastructures and new ones have been developed with these principles. MIGA support to the development of the Gaziantep Hospital, which started operations in October 2023, employs 6,000 people and offers treatment to 9,000 outpatients daily, is an example of WBG private sector solutions to regions facing significant stress due to health emergencies. Overall, the cascading effect of reaching multiple segments of the population in parallel to WB emergency lending and MIGA guarantees, made this Objective the strongest CPF achievement. Focus Area 3: SUSTAINABILITY (Overall Rating: Moderately Satisfactory) Objective 7: Improved Reliability of Energy Supply and Generation of Green Energy (Mostly Achieved) 18. The Türkiye energy sector continued to increase its reliability by diversifying the source of energy supplies, shifting from fossil fuels into increased and diversified renewable energy generation. The WB continued its focus on the energy sector, with ASAs, RETFs funded by the EU, IBRD loans supporting geothermal, wind, solar energy generation, and energy efficiency, paving the way for stepped-up private sector engagement supported by IFC and MIGA. IFC contributed to Türkiye’s energy security and helped rebalance its energy mix through selective and strategic engagements in the sector. MIGA continued supporting foreign direct investments (FDI) in the renewable space through the provision of political risk insurance guarantees. Türkiye’s renewable electricity generation as a percentage of the total generation 21 World Bank Intranet Page: Türkiye Schools Serve as Beacons of Hope https://worldbankgroup.sharepoint.com/sites/news/Pages/In-Trkiye-Schools- Serve-as-Beacons-of-Hope-06072023-200244.aspx. 22 WHO, Türkiye`s Response to COVID-19, First Impressions [2020, https://iris.who.int/handle/10665/335803?locale-attribute=en& ,]. 50 exceeded its CPF target (35 percent), reaching 45 percent by 2022. Similarly, the capacity of gas storage and gas imports through the Trans-Anatolian Natural Gas Pipeline (TANAP), supported by the Gas Sector Development Project (P093765) and the Gas Storage Expansion Project (P162727) met their targets. Cumulative energy savings achieved through the WB financed energy sector projects have reached 11,590,181 MWh (2023), exceeding the target. In addition, total power generation and distribution clients reached by IFC almost achieved its target (6.86 million against a target of 7.0 million) as of 2022. MIGA guarantees issued to electricity distribution companies allowed to distribute and supply electricity to over 3 million customers in the southern Marmara region across an area of 35,500km. Objective 8: Improved Sustainability and Resilience of Cities (Partially Achieved) 19. The Bank helped cities to become more environmentally and socially sustainable, and resilient. Through the IBRD/IFC investment coordination platform under the “Sustainable Cities Program”, the WBG maintained a constructive dialogue with the Government on policy and regulatory changes to modernize the existing municipal financing and investment framework, thus paving the way for stepped-up private investment supported by IFC and MIGA. In line with this cascading approach, the largest volume of IBRD lending approvals were made under this objective. Service delivery and access to digital land registry and cadaster information have been steadily improving; the satisfaction service measurement methodology has been revised to capture broader coverage and 83 percent23 satisfied customers show a major increase against the revised baseline of 40 percent. The number of additional people benefitting from improved urban infrastructure through IBRD and IFC financing fell short of the target (1.3 million) by 370,000. The CPF Citizen Engagement (CE) objective has been exceeded by maintaining 87.5 percent of the projects rated with high quality CE index. IBRD lending in the urban development area expanded, but the implementation was slower than anticipated and the results are expected during the next CPF. Objective 9: Strengthened Results Under Climate Action Agenda (Mostly Achieved) 20. This objective was introduced at the PLR stage due to the increase in the severity of climatic impacts on Türkiye’s development agenda and before Türkiye ratified the Paris Agreement. The PLR proposed a stepped-up engagement based on the demand by Government for greater partnership with the WBG and other partners; it included IBRD investments in operations that have a strong climate focus and WBG’s ASA to further inform the climate change agenda. While the targeted level of annual greenhouse gas (GHG) emissions reduction/avoidance was met, the indicator regarding area provided with new/improved irrigation or drainage services was only partially achieved, reaching 9,600ha (2023) against a target of 50,000ha. IFC engagement in resource efficiency projects and with lending institutions financing renewable energy have been sizeable enough to deliver a relatively large reduction and/or avoidance of annual GHG emissions. MIGA projects in the health sector also contributed to GHG emissions reductions in the country, by developing energy efficient buildings. III. WORLD BANK GROUP PERFORMANCE 21. The overall WB performance was assessed as Good. The design and implementation of the CPF Program successfully contributed to the achievement of the CPF Objectives. Although lending grew considerably in response to emergencies and external shocks, the portfolio fragmentation was contained, albeit with limited results, by right-sizing of the lending operations. The program sustained average disbursement rates at 21 percent, although with a decline in the last two FYs. Throughout the CPF period, IEG-approved satisfactory exits remained 100 percent; however, starting from FY22, the 100 percent proactivity rate has not been maintained. Knowledge products informed the WBG’s operations in a timely 23 The customer satisfaction rate decreased due to a change in the measurement method. 51 manner, including the CCDR (P177479) and the Water Sector Engagement Note (P179874). The program exited the CPF period with a robust pipeline, reflecting the strong partnership with the Government. Design 22. The formulation of the CPF strategic Objectives was relevant and aligned with Türkiye’s development goals. The CPF program was anchored in the priorities of the 10th NDP identifying challenges to escape the “middle income trap” and setting priorities for succeeding in crossing the threshold to high-income status by 2017. The Government selected 25 transformation areas and developed comprehensive action plans. A subset of these programs corresponded to the NDP pillars and the priority areas identified in the SCD, grouped into three focus areas (growth, inclusion, and sustainability) with nine strategic objectives. The design reflected the adaptable nature of country engagement with outcomes identified for initial years, remaining flexible in the outer years of the CPF. 23. The choice of instruments was fit for purpose and diverse. The CPF allowed for a cascade approach and flexibility manifested by matching areas of engagement, instruments, and timeframes. Investment Project Financing (IPF) was the main IBRD lending instrument with RETFs, and resources from Clean Technology Fund (CTF) and Global Environment Facility (GEF) complementing green projects. A range of financial instruments were applied to match strategic objectives aiming at enhancing access to finance, bolstering the sustainability and resilience of cities, and promoting sustainability in infrastructure and natural capital. All three objectives demonstrated this range and mix of IBRD, IFC, and MIGA instruments.24 24. The flexibility of the program design made it possible for the WBG to provide quick responses to crises and emergencies. The CPF program adapted flexibly to the regional emergencies, natural disasters, and shocks, including the geopolitical crisis. The earthquakes and COVID-19 pandemic had a major impact on tourism and on the manufacturing sector. Becoming the largest refugee-hosting country, Türkiye needed to provide housing, education, health facilities, and social assistance to more than 4 million refugees. The WBG deployed a spectrum of response instruments, including the Emergency COVID-19 Health Project, Rapid Support for MSMEs during the COVID-19 Crisis Project, the Safe Schooling and Distance Education Project, and the Emergency Firm Support Project. 25. The RF was coherent and adequate in linking the government program to SCD priorities and these to CPF objectives and supporting interventions. The RF exhibited realism in selecting and tying interventions to strategic targets; the results expectations rested on better-defined initial years programming, leaving the second half of the CPF period undefined, allowing for flexibility. The PLR was completed before COVID-19 and other emergencies (including earthquakes, forest fires, and floods), and thus did not capture the results of the WBG emergency effort. The FY18–21 CPF aimed to be more focused than the 2012–16 CPS, keeping a similar number of objectives (9 vs. 8) with a reduced number of indicators (from 34 to 29). The RF incorporated the coordinated support of IBRD, IFC/MIGA across eight of the nine objectives. IFC focused on “creating markets” and helping boost Türkiye’s private sector -led growth, coordinating closely with MIGA to respond to commercial lenders’ increasing demand for risk guarantees. 24 For example, in Objective 2, IBRD focused on a line-of-credit targeting MSMEs, while IFC leveraged diverse forms of finance (e.g. supply chain finance, digital financial services, investments in capital market instruments like bonds). And MIGA extended guarantees to strengthen the creditworthiness of municipalities. In Objective 8, IFC and MIGA worked directly with municipalities, offering long-term loans, municipal bonds, and hedging for foreign-exchange loans, assisting creditworthy cities to develop bankable projects. In Objective 9, IBRD supported carbon pricing instruments; IFC provided private sector investments in energy efficiency through loans, equity, and green bonds; MIGA extended credit guarantees for major municipal infrastructure projects. 52 At the same time, the formulation of some Objectives was quite general and broad without clear final beneficiary, while others had compounded formulations and presented measurement challenges.25 26. Most selected indicators measured the objectives and allowed to validate against defined baselines, targets, and timeframes. However, the indicators varied widely in scope, scale and targeting types – with some focusing on outputs (e.g., “Publication of a new internal audit strategy paper”), while others targeting sector-wide outcomes (e.g., “Increased female labor force participation”). In some instances, there was a disconnect between a broadly formulated objective and a narrowly focused indicator (e.g., “Social Assistance Assessment publicly disseminated” as a measure of the Objective on “Increased Effectiveness of Social Assistance”). Some targets lacked ambition (e.g., “women owned MSMEs reached by IFC financial services”, targeting only 500 women). The baselines of a few indicators also could have been better defined. The PLR replaced 24 indicators to strengthen the results measurement and raised many indicator targets to strengthen the program reach and coverage. 27. The PLR ensured alignment and continuity with the new 11th Development Plan (DP2019-23), and adjusted the results matrix to update relevant indicators, baselines, and targets . The main program adjustments included amendments to the objectives and indicators within the three focus areas of growth, inclusion, and sustainability to reflect the new Government DP and adapt program focus and scale up ambition. The PLR also extended the CPF by two years (FY22 and FY23) to allow more time to implement programs and achieve a critical mass of CPF results. Additionally, the PLR ensured continued alignment between the priorities of the Government's 11th development plan and the WBG program. 28. Risks were properly identified and rated against the implementation challenges; the mitigation measures were strategic and adequate, both at CPF and PLR stages. The risk mitigation helped to improve the flexibility and agility of the program, which were sufficient and timely. Throughout the CPF, most of the envisaged risks have materialized, but the flexible design of the program allowed for adaptive response, 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. The WB teams’ efforts were instrumental in managing and mitigating project processing delays and constraints that emerged due to the evolving pandemic. The flexible CPF design allowed to adapt ad hoc and rapidly to the unforeseen challenges. None of the lending pipeline operations have been dropped during the pandemic period, while new emergency lending operations were designed and delivered promptly and effectively, in addition to the regular pipeline. Implementation 29. The CPF program was well resourced; during the CPF period the WB's engagement in Türkiye experienced substantial expansion in project size and coverage. By the end of the CPF, total IBRD lending approvals reached US$12.5 billion in 36 projects26 compared with a targeted range of US$6.0-9.0 billion at the start of the CPF, subsequently revised to US$7.0-US$10.5 billion by the PLR. These approvals included lending prompted by new emergency projects in response to COVID-19 pandemic, the Climate MoU, and the 2023 earthquakes. An IBRD Partial Credit Guarantee operation, the first of its kind in Türkiye and the first completed with a state-owned Turkish bank, was carried out successfully in 2020. In addition, US$662 million of RETFs have been approved throughout the CPF period. 25 For example, “Improved Sustainability and Resilience of Cities”; “Increased Sustainability of Infrastructure Assets and Natural Capital” or “Enhanced Competitiveness and Employment in Selected Industries”; “Strengthened Performance of Education and Health Sectors”; “Improved Reliability of Energy Supply and Generations of Green Energy”. 26 This includes one regional project and a guarantee operation. 53 30. Adaptive management decisions kept the WB program highly relevant and flexible in response to shifting domestic and external circumstances. The PLR adjusted the RF to reflect the evolving government development priorities and climate commitments; and introduced a new Objective (#9), projecting the WB’s deeper engagement in scaling up its climate change actions. The CPF extension enabled the alignment of the CPF with the new Government five-year plan, while creating space for the WBG to collaborate with the Government on deepening the engagement in areas important on the IBRD graduation path. Post-PLR, in response to the COVID-19 pandemic, the Country Program Adjustment Note issued in August 2020 pivoted the WB’s focus towards protecting lives, safeguarding the poor and vulnerable, and fortifying relevant policies and institutions. The Country Team prioritized delivering on crisis response and did not consider preparing a second PLR.27 31. Implementation of the WB portfolio was satisfactory. The IBRD portfolio grew from US$3.1 billion and 11 active lending operations in FY17 to US$10.9billion and 28 active lending operations in FY23, not including six additional RETFs. Half of the lending volumes were concentrated in Urban, Resilience and Land sector (31 percent) and Energy & Extractives (23 percent). Water, Agriculture, Transport, Education, and Social Protection & Jobs GPs have delivered at least one IBRD lending operation, increasing the breadth and depth of WB engagement. The lending instruments remained largely unchanged, with IPFs contracted with line Ministries and State-Owned Enterprises (SOEs) as implementing agencies. Due to the macroeconomic environment and budget support prerequisites, DPFs were not part of the menu (other than one operation in early FY18). Results-based lending was not explored due to lack of client demand. The portfolio key performance indicators remained satisfactory even after the significant increase of the portfolio size; disbursement ratio remained within the 16-20 percent range until the end of FY23. 32. The delivery of emergency response was a major WBG achievement during the CPF period. The WBG delivered US$6.97 billion within the last 3 years of the CPF. IBRD provided around US$1.6 billion of lending, to address the adverse impacts of the COVID-19 pandemic. In FY23, in addition to the US$1.5 billion of planned IBRD annual deliveries, another US$983.8 million were delivered as part of the Climate MoU. Also, in FY23, IBRD delivered an additional US$1.45 billion to address post-earthquake recovery needs. Forty percent of the lending approvals (i.e., US$4.9 billion out of US$12.5 billion; 14 out of 34 approved projects) were delivered for emergency response and climate change projects. While pipeline delivery was relatively smooth throughout the CPF (although a heavy Q3-4 bunching was observed in FY23), the pace of implementation showed a higher variance across instruments (emergency vs non-emergency) and among implementing agencies. Even for the operations that addressed urgent and emerging needs the readiness for implementation and the performance differed depending on the sector and implementing agency.28 33. Despite the strong delivery, systemic and project level challenges became apparent, putting stress on the Government and WBG’s implementation capacity. The broadened scope and depth of the WB’s engagement with Türkiye, and the rapid portfolio growth increased the workload demands on the PIUs exponentially, testing the implementation capacity of experienced PIUs, while giving little time for new PIUs to develop knowledge, skills and implementation experience with WB financed projects. Given the crisis operation mode during emergencies, the WB and the client faced important trade-offs between project preparation readiness and project implementation. In FY22, to address this challenge, the WB organized a dedicated and tailor-made capacity expansion program – Türkiye PIU Academy. 27 This was in line with the WB COVID-19 Crisis Response Approach Paper which recommended deferring the development of new strategy products until the return of steadier conditions. 28 Some emergency response operations (Emergency COVID-19 Health (P173988), Rapid Support for Micro and Small Enterprises During the COVID- 19 Crisis projects (P174144) were fully disbursed and implemented within 24 months, whereas the disbursements for other projects (Safe Schooling and Distance Education (P173997), Emergency Firm Support projects (P174112)) lagged. 54 34. The IBRD portfolio was complemented by a sizable TF portfolio, which included recipient- executed grants for US$662.6 million. These funds were mostly provided by, but not limited to, the EU, and complemented the IBRD program in education, urban development, and refugee support. The collaboration of the EU helped the WB to unlock and enhance engagements in several sectors. 35. Building on the lessons learned from the previous CPF, the ASA portfolio was consolidated for greater impact. During the CPF, the Türkiye ASA program was significantly streamlined to focus on institution building and business development, and in areas where the WBG can add value and influence policies and institutions with high development impact. During the ASA preparation, the WBG teams engaged routinely with the client counterparts to strengthen ownership and collaboration. The ASA portfolio evolved from small-size tasks, delivering 30+ ASAs annually, to 6-8 larger, multi-year programmatic ASAs. The Bank continued to produce highly relevant core- and extended core ASAs with increased analytical depth, advising key stakeholders on changing needs under the country’s evolving circumstances; informing the CPF program adjustments and the new CPF design.29 36. IFC Program implementation during the CPF was successful and largely on track. IFC supported private sector development, playing a countercyclical role, focusing on critical infrastructure, promoting integration into global value chains (GVCs), enhancing financial inclusion, and accelerating transition towards a greener and more resilient economy. IFC’s upstream initiatives focused on developing private sector investment opportunities in climate-smart manufacturing (including electric vehicles) and supply chains, as well as green and resilient cities (e.g., water, waste, and transportation). During the CPF, IFC committed US$6.5 billion in long-term finance to Turkish private sector companies, thereby averaging US$1.1 billion annually (US$730 million from own accounts and US$370 million from other investors).30 In addition, each year of the CPF period, IFC facilitated close to US$700 million in short term finance (STF) for cross-border trade through banks participating in its Global Trade Finance Program (GTFP). FY23 has been a record year for IFC in Türkiye with LTF commitments reaching US$2 billion, of which US$1.5 billion from own account (OA). Globally, Türkiye represents IFC's third-largest country exposure, with a committed portfolio of close to US$4.7 billion as of June 2023. 37. MIGA supported the modernization and expansion of green healthcare facilities, increasing access to finance, including to SMEs and development of sustainable infrastructure. MIGA was a strong supporter of FDI into Türkiye, working across a wide range of sectors. Strong guarantee issuances, allowing for Türkiye to remain MIGA’s largest country exposure globally, represent 8 percent of MIGA’s total portfolio and with an outstanding exposure at US$2.2 billion in support of 15 projects at the end of FY23.31 MIGA’s guarantees to the health sector, in coordination with IBRD and IFC, were particularly crucial and included six hospitals with an outstanding exposure of US$849 million. In April 2023, MIGA issued new guarantees in the amount of US$134 million for the Gaziantep Hospital complex, bringing its total exposure to the project to US$190 million.32 Through the CPF, MIGA’s program remained flexible and adapted well to the evolving macroeconomic conditions and political context. MIGA has been selective in its engagement with the Government and private sector partners to ensure strong additionality and 29 E.g., A Stocktaking Programmatic Advisory Services and Analytics (PASA) on Refugees (P176861), a Country Climate and Development Report (CCDR) (P177479), a Pandemic Preparedness ASA (P175843), Leveraging Global Value Chains for Growth in Turkey (P169301), and several Country Economic Memorandums (CEMs) on Investment (P148205), Firm Productivity and Economic Growth (P162693), Leveraging Global Value Chains for Growth (P169301), and Quality of Jobs (P159817). 30 CPF targets on IFC OA commitments varied from US$0.6 to US$0.8 billion per FY. The historical trend in Türkiye is a 60 percent ratio between OA and LTF (OA plus mobilization), bringing LTF targets as per current CPF from US$0.9 to US$1.25 billion per FY. 31 Specifically: (i) 6 projects in urban transportation supported by non-honoring sub-sovereign guarantees to the municipalities of Istanbul and Izmir; (ii) energy distribution projects supported by Political Risk Insurance; (iii) 3 in the financial sector in support of Turk Exim by non-honoring SOE guarantee; and (iv) 6 in the services sector by PRI guarantees to the health PPP program. 32 This Project supports 1,875-bed complex in an area that was severely impacted by the earthquakes of February 2023, and will consist of a general hospital, a women and children’s hospital, and a cardiovascular and oncology hospital. 55 development impact for its projects. During FY17-23, MIGA issued US$2 billion of new political risk guarantees in support of the development of health, energy, and financial sectors.33 38. The CPF has effectively maximized finance for development opportunities by applying the strategic principles of the cascade approach. IBRD, IFC, and MIGA have delivered a concerted program of strategic complementarity. IFC and MIGA support was mobilized where the private sector is best placed to deliver results, such as in employment and access to finance for small businesses, while IBRD resources were devoted to the provision of public goods, strengthening human capital and to supporting labor market policies to better enable women and vulnerable groups to qualify for and benefit from the employment opportunities that IFC and MIGA helped create. Synergies have been generated between IFC and IBRD financial innovation teams, sharing the same CPF objectives but leveraging different instruments. There have been strategic alignment, complementarity, and synergies between IFC and IBRD engagements in the urban and municipal sectors: IFC was supporting sustainable infrastructure development with creditworthy municipalities that can borrow without sovereign guarantee, while IBRD supported cities and projects that are not yet able to borrow on commercial, non-sovereign terms. 39. The WB partnerships with other IFIs strengthened significantly during the CPF period; the Bank took a leadership role in coordinating the IFIs’ support for Türkiye’s development agenda. The WB led the coordination with the IFIs in designing and implementing the Climate MoU signed with the Turkish Government. Following the 2023 earthquakes, the WB collaborated closely with the UNDP and established an effective coordination platform partnering with the EU under the Regional Refugee and Resilience Plan framework. Several WB operations have been co-financed with the EU, JICA, and AIIB. 40. The WB proactively addressed ESF, governance, and fiduciary risks and ensured the satisfactory quality of program implementation; however, the increased portfolio scope and size requires further implementation support to sustain performance. These efforts at portfolio level included: (a) conducting regular trainings; (b) supporting implementing agencies (IAs) to establish Environmental and Social Management Systems (ESMS) and enhance environment and social (E&S) management capacity; and (c) conducting procurement prior reviews focusing on large and complex contracts and enhanced post- reviews of a representative sample of remaining contracts. The WB also provided intensive hands-on support in ensuring ESF compliance.34 Several new operations included an effectiveness condition to hire social, environmental, and occupational health and safety specialists in the PIUs, along with establishing a project-specific Grievance Mechanism. The intensive joint efforts of the WB and the Government to improve implementing agencies’ capacities yielded two IAs – TKYB and TSKB – to receive best ESF practice awards in the Europe and Central Asia, as well as in the Middle East and North Africa regions. IV. ALIGNMENT WITH CORPORATE GOALS 41. The CPF effectively mitigated the poverty impact of the shocks that the country faced in recent years. The WB played a major role in increasing access to finance for the underserved segments of the economy, improving the effectiveness of the social assistance, and promoting labor force participation of women and youth. During 2015-19 female labor force participation increased from 30 to 35 percent; in the same time period educational achievements have increased with measures of academic performance 33 MIGA guarantees covered against risks of transfer and inconvertibility, expropriation, and breach of contract for the construction of four hospitals in the amount of US$742 million. MIGA also issued credit enhancement guarantees for US$988 million to a syndicate of international lenders to secure financing that would enable Türk Exim Bank to provide medium and long-term funds to the Turkish export sector, with a focus on SMEs. Finally, MIGA provided guarantees against expropriation, breach of contract and war and civil disturbance in the amount of US$232 million to support energy distribution companies, aiming to strengthen the quality and reliability of the electricity supply network. 34 For instance, any project with Moderately Unsatisfactory/Unsatisfactory ESF rating was automatically downgraded to Moderately Unsatisfactory status for Implementation Progress; and one operation (Gas Sector Expansion Project - P162727) suspended disbursements for six months until environmental and social compliance measures were put in place by the implementing agency. 56 such as PISA and TIMSS recording noticeable improvements, school enrollments are almost universal for all basic levels, and have slowly increased for post-secondary and pre-school education. During 2005-2020 regional disparities in standards of living also declined, and the average poverty rate across regions went from 56 to 27 percent. The contribution of the CPF towards reducing poverty and promoting shared prosperity was significant. Although the COVID-19 pandemic negatively impacted poverty, Türkiye was one of the countries that experienced positive growth during the pandemic. 42. Türkiye’s Gross National Income (GNI) per capita in 2022 of US$10,590 (Atlas method, current US$) is above the GDI threshold of US$7,155. Türkiye crossed the GDI threshold in 2006, however, since then its growth trajectory has been volatile, fluctuating between the GDI and the high-income threshold. As an above GDI country, Türkiye has maintained a dialogue with the WBG on its overall economic status, in line with the key elements of the IBRD graduation trajectory and policy.35 To address its above GDI profile during the CPF, Türkiye focused on factors such as access to capital markets to fund development programs, strengthening macroeconomic and debt management, improving creditworthiness, and enhancing governance practices to attract private investment. As part of this engagement, Türkiye Economic Monitor engaged the authorities and public on macroeconomic management and structural topics such as drivers of poverty and inequality, impediments to FDI, and impacts of the EU Carbon Border Adjustment Mechanism. The Public Finance Review (P173979) report combined with TA focused on debt and fiscal risk management, the impact of social spending, and green fiscal policies. An analysis of the institutions that Türkiye needs for high income status (P175299) was also conducted. The Financial Sector Stability and Inclusion PASA (P174648) and FSAP (P176787) analyzed the exposure of the financial system to economic and climate shocks. The 2022 CCDR explored opportunities and challenges for aligning Türkiye’s development goals with its commitments on climate change. The Green Growth PASA (P174569) investigated a range of climate and environment issues important for progressing green growth in Türkiye. 43. Throughout the CPF, the share of active gender-tagged projects have averaged 87 percent while reaching 100 percent levels in FY19, FY20, and FY23. The WB program continued to bring significant benefits to women and vulnerable groups through its lending, trust funded activities and ASA interventions. Most CPF level indicators have gender disaggregated results that have been fully achieved. 44. Türkiye, recognizing its climate change exposure and increasing carbon intensity, has made an important progress on climate action policy; however, the implementation is yet to come. Türkiye ratified the Paris Agreement in October 2021, committed to reach net zero emissions by 2053, establish an emissions trading system by 2025, and establish a Directorate of Climate Change. These are encouraging steps, although the difficult challenge of implementing climate policy still largely lies ahead. The WBG, together with other DPs, signed a Climate MoU with the government aimed at investing US$3.2 billion of additional climate finance by end-2024. At the end of FY23, IFC and IBRD have committed almost $2 billion to climate focused projects to address mitigation and adaptation. Although climate co-benefits (CCBs) of the WB’s lending fell during the COVID-19 emergency response, it’s on an upward trajectory since FY22.36 Table 2. Corporate Goals Alignment IBRD FY19 FY20 FY21 FY22 FY23 Share of new projects with Gender tag (assessed & validated) 100% 100% 66.7% 67.0% 100% % IBRD Climate Co-Benefits Over Total IBRD Commitment 76% 42% 28.0% 54.0% 58% 35 The IBRD Graduation Policy emphasizes two key criteria (i) access to external capital markets on reasonable terms, and (ii) progress in establishing key institutions for economic and social development. While WBG financing prioritizes countries below GDI, engagement continues with clients across the income spectrum, as does lending for crisis response to countries above GDI. 36 Türkiye IBRD portfolio CCBs are recorded as follows (%): FY17: 37; FY18: 08; FY19: 76; FY20: 42; FY21: 28; FY22: 54; FY23: 58. 57 % Citizen Engagement (Corporate Requirement 1 - CE Design) 100.0% 100.0% 100% 45. The CPF objective of 100 percent beneficiary feedback under the Citizens Engagement (CE) mechanism was fully achieved. This goal was aligned with the priorities of the 10th and 11th Government’s Development Plans and was implemented through increased focus of the ASA portfolio on strengthening CE in public administration37 and the PLR added a new indicator to the RF. V. LESSONS LEARNED 46. Türkiye has made remarkable development progress over the last two decades. However, to sustain this positive trend, the country needs to address emerging challenges in growth, poverty and inclusion, and sustainability. Over the last CPF period, the WBG played a relevant role in accompanying Türkiye in its journey towards a high-income country, while helping the authorities confront severe, frequent and compounding crises. The CPF has allowed Türkiye and the WBG to collaborate and adjust the country program to evolving needs, particularly in the face of major disruptions. The engagement over these last six years has shown not only that the WBG can play a relevant role in accompanying an UMIC country like Türkiye on its path towards becoming a HIC, but also that it is necessary to maintain a long- term strategic approach for the impact and relevance of WBG interventions. While this applies to many countries, the scale of the overlapping crises during the CPF has been unparalleled, and the CPF enabled the three WBG institutions to support the authorities in navigating and responding to the crises while ensuring that programs and projects were not abruptly discontinued.38 Going forward, the principle of long-term and programmatic engagement should be maintained, made visible, and expanded. 47. The WBG’s excellent working relations and convening power with other multi and bilateral DPs were crucial for the success of the country program implementation and efficient use of financing. The WBG expertise and experience made it an effective convener and in-country coordinator of other MDB interventions, particularly in the areas of climate change, and earthquake recovery and reconstruction. In the face of increasing shocks, the role of MDBs in assisting the government in identifying, analyzing, and strategically planning government response and recovery efforts remains highly valued and demanded by the authorities to ensure a well-coordinated and seamless response that avoids redundancy among MDBs. In the next CPF, the WBG needs to build on the ingredients of this success and deepen partnerships with other MDBs for impact and sustainability in line with the WBG Evolution Roadmap. 48. The WB has strengthened its DRM capability to address countries’ needs in emergencies, through experience in designing, delivering, and implementing lending operations. The agility of the WBG in responding swiftly has been commended by the Turkish authorities, beneficiaries, and partners. This improved delivery performance needs to be matched by an enhanced implementation capacity, so that concrete results are achieved in a timely manner. For this, the next CPF may consider: i. Enhance project readiness through advanced procurement during preparation; less complex designs; standardization of ESF documentation; or allocation of resources in existing projects to design follow- up phases. In addition, stronger and joint WB/government efforts are needed for more effective portfolio monitoring and management. ii. Continue working with the client on enhancing PIU capacity to speed up implementation and sustain results over the longer term, building on the success of the Türkiye PIU Academy. 37 Specifically, the focus of CE was on (i) strengthening grievance redress systems; (ii) removing barriers for women and vulnerable groups to public participation in social and environmental issues; and (iii) engaging community institutions in disaster risk reduction and management. 38 For example, several WB projects that supported Syrian refugees were adjusted to adapt to the situation during the pandemic and in the aftermath of the earthquakes, while maintaining the same long-term development objective. 58 iii. Improve selectivity in applying the emergency tag, which has proven effective in supporting rapid response and recovery, however, if the design is unrealistic, too complex or lacks readiness, applying the emergency tag will disrupt pipeline delivery, burden essential government institutions and WB support units. Turkish government favors new emergency loans over existing Contingent Emergency Response Components, which underscores the importance of efficiency in emergency tagging. 49. While an adaptive and flexible CPF implementation enabled the WBG program to respond to the emerging needs of the client due to unforeseen crisis, the impact of the response was inadequately captured by the RF. The RF was coherent and adequate at the design and the PLR stage; however, the 2- year extension of the CPF made the RF horizon longer than in regular CPFs. Due to the multiple unforeseen crises in the post-PLR period, including COVID-19, earthquakes, and climate crisis, quick and adaptive management decisions kept the WB program highly relevant and flexible in response to shifting circumstances. However, the RF remained unchanged and unable to capture an expansion in WB support in several new sectors. While theoretically a second PLR was an option, in practice it was infeasible because of the ongoing COVID-19 pandemic and earthquakes emergencies. Going forward, it is important to identify procedural options for processing post-PLR RF revisions in exceptional cases, through a simplified process without the need for a second full-fledge PLR. In the case of CPF extensions of two or more years, a second PLR should be committed to as part of the country engagement framework, so that it could be planned well in advance and client counterparts are informed accordingly. 50. In a growing program with a sophisticated client such as Türkiye, a CPF should be implemented with a more balanced mix of financing instruments, to optimize project implementation and disbursements. IPFs account for almost the entire IBRD portfolio and the WB and the government should seek to enhance the deployment of other instruments to incentivize policy reforms, continue strengthening institutions, fully utilize suitable country systems, shift focus from inputs to outcomes and ensure greater flexibility and tailored approaches in addressing emerging development challenges. 51. Coordination among IFC, MIGA and IBRD is of great importance for Türkiye. IBRD has played a crucial role in developing policy frameworks and sector strategies in Türkiye, setting the stage for private sector engagement supported by IFC and MIGA (especially in the energy sector). This coordination ensures that the private sector can contribute effectively to Türkiye’s development goals. IFC promotes FDI in Türkiye and has worked on improving the internal business environment. Through its guarantee program, MIGA supports FDI, particularly in the infrastructure and power sectors. This support helps attract investments and enhances Türkiye’s position as a regional financial and technology hub. The results achieved under the CPF were better in those areas where IBRD, IFC, and MIGA worked in parallel, where results indicators were aligned, and where there was a concentrated engagement in a sector utilizing a range of available lending and non-lending instruments. 59 CLR ANNEXES CLR Annex 1: Status of Türkiye FY18-FY23 CPF Results Matrix (Summary table) Description Status at CLR Overall rating Focus Area 1: GROWTH (Moderately Satisfactory) Objective 1: Contribute to Strengthened Policies that Boost Economic Stability Indicator 1: Total number of bank loans to corporates restructured under the new financial restructuring framework Achieved Target: 200 (2023) / Actual: 603 (As of July 2023) Partially Indicator 2: Improved transparency of public sector for contractual commitments Achieved Target: The Integrated Financial Management System is fully operational and accessible by Central Government institutions to capture the contractual Partially commitments from public procurements (2022) Achieved Actual: The Integrated Financial Management System is operational but contractual commitments are captured only after processing of first payment. Objective 2: Enhanced Access to Finance to Underserved Segments Indicator 1: People, MSMEs and exporters reached with IFC financial services Achieved Target: 3,6 million (2023) / Actual: 5,4 million (2023) Indicator 2: Of which women owned SMEs reached (number) Mostly Target: 100,000 (2023) / Actual: 85,538 (2023) Achieved Indicator 3: MSMEs and exporters served by banks benefiting from IBRD financial intermediary loans Mostly Target: 480,000 (2023) / Actual: 239,000 (2023) Achieved Complementary Indicator Partially MSMEs and exporters served by the institutions benefitting from IBRD non-financial-intermediary loans: 58,853 Achieved Total Indicator Actual Value inc. Complementary indicator: Total MSMEs and exporters served by the institutions benefitting from IBRD lending operations (including FI and non-FI loans): 297,853 Indicator 4: Number of women-inclusive enterprises financed under IBRD lines of credit Achieved Target: 80 (2023) / Actual: 474 (As of May 2023) Objective 3: Enhanced Competitiveness and Employment in Selected Industries Indicator 1: Employment supported by IFC clients (manufacturing, telecom, technology, agribusiness) Target: 60,000 (2023) / Actual: 135,857 (2022) Complementary Indicator Achieved Employment supported by IBRD lending operations (manufacturing, telecom, technology, agribusiness): 90,730 Total Indicator Actual Value inc. Complementary indicator: Total employment supported by WB (including IFC and IBRD lending operations): 226,587 Mostly Achieved Indicator 2: o/w Female Employment supported. Achieved Target: 14,000 (2023) / Actual: 40,133 (2022) Indicator 3: Employment supported by IFC equity funds investees. Achieved Target: 20,000 (2021) / Actual: 22,025 (As of October 2022) Indicator 4: Improvement in Composite Doing Business Score Mostly Achieved Target: > 78 (2021) / Actual: 76.8 (2020) Focus Area 2: INCLUSION (Moderately Satisfactory) Objective 4: Increased Effectiveness of Social Assistance Description Status at CLR Overall rating Indicator 1: Number of social assistance beneficiaries referred to employment services. Achieved Target: 800,000 (2022) / Actual: 822,000 (2022) Partially Indicator 2: Social protection performance indicators related to benefit levels, equity and coverage included in MOFLSS M&E system for evidence-based program Achieved management. Not achieved Target: Yes (2022) / Actual: No Objective 5: Increased Labor Force Participation of Women & Vulnerable Groups Indicator 1: Increased number of women placed in jobs by ISKUR Target: 900,000 by 2023 / Actual: 1,874,699 (2019-April 2023) Complementary Indicator Achieved Increased number of women placed in jobs by IBRD lending operations (excluding ISKUR placements): 43,591 Mostly Total Indicator Actual Value inc. Complementary indicator: Achieved Increased number of women placed in jobs by IBRD lending operations: 1,918,290 Indicator 2: Increased number of youth placed in jobs by ISKUR Achieved Target: 450,000 male; 400,000 female youth by 2023 / Actual: 1,190,792 (male) and 758,345 (female) (2019-April 2023) Indicator 3: Direct employment supported by IFC clients in less developed regions Partially Target: 45,000 (2023) / Actual: 38,111 (2021) Achieved Objective 6: Strengthened Performance of the Education and Health Sectors Indicator 1: Number of students, teachers and staff having access to schools constructed or retrofitted by IBRD operations Partially Target: 320,000 (2023) / Actual: 49,000 (As of 2023) achieved Indicator 2: Percent of households that receive from health workers counselling or education related to healthy living (to be DROPPED) Mostly Target: 50% in 2022 (at end of IBRD project) / Not Verified. Achieved Achieved Proposed Complementary Indicator: Percent of Turkish population that has been vaccinated against COVID-19: 68.9% Indicator 3: Number of Patients Served through IFC health sector clients Achieved Target: 3.0 million (2023) / Actual: 7,9 million (2022) Description Status at CLR Overall rating Focus Area 3: SUSTAINABILITY (Moderately Satisfactory) Objective 7: Improved Reliability of Energy Supply and Generation of Green Energy Indicator 1: Renewable electricity generation as percentage of total generation (%). Achieved Target: 35% in 2022 / Actual: 45% (As of end 2022) Indicator 2: Total power generation and distribution clients reached (IFC) (millions) Mostly Target: 7,0 (2023) / Actual: 6,86 million (2022) Achieved Mostly Indicator 3: Increased capacity of gas storage (bcm). Achieved Achieved Target: 3.8 bcm in 2021 / Actual: 3.78 bcm in 2021 Indicator 4: Gas imports through TANAP (bcm/annum). Achieved Target: 5 bcm in 2022 / Actual: 6 bcm in 2022 Indicator 5: Cumulative energy savings achieved through WB-financed energy sector projects (MWh). Achieved Target: 11,500,000 in 2022 / Actual: 11,590,181 MWh as of 2023 Objective 8: Improved Sustainability and Resilience of Cities 61 Description Status at CLR Overall rating Indicator 1: Improved service delivery and expanded access to digital land registry and cadaster information. Mostly Increased customer satisfaction at national level Achieved Target: 90% in 2022 / Actual: 83% in 2021 Indicator 2: Number of additional people benefitting from improved urban infrastructure through IBRD and IFC financing (number in millions) Mostly Achieved Partially Target: 1,3 (2023) / Actual: 930,000 (As of May 2023) Achieved Indicator 3: Increased resilience of cities through number of disaster resilient public buildings retrofitted, reconstructed, or newly constructed through IBRD Partially operations. Achieved Target: 300 (2023) / Actual: 57 (As of 2023) Indicator 4: Percentage improvement in the quality of CE as measured through the CE Quality Index Achieved Target: 60% of projects approved for the remainder of the CPF are of high quality. (Average of FY20-FY21-FY22) / Actual: 87.5% (FY20-FY22) Objective 9: Strengthened Results Under Climate Action Agenda Indicator 1: Annual GHG emissions either reduced or avoided through the WB program (tons/year) Target: 1,000,000 IBRD reduced, 350,000 reduced IFC, 750,000 avoided at country-level through adopting GB standards (2023) / Actual: 2,232,525 tons/year Achieved Mostly (2023) Achieved Indicator 2: Area provided with new/improved irrigation or drainage services (Ha) Partially Target: 50,000 ha (2023) / Actual: 9,600 ha (As of April 2022) Achieved 62 CLR Annex 2: Türkiye FY18-23 CPF Results Matrix Evaluation Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF Focus Area 1: GROWTH Objective 1: Indicator 1: Baseline: Achieved Approved IBRD Lending: Contribute to 1.1 Total number 0 (2018) 603 (As of July 2023) P162071 Resilience, Inclusion and Growth DPF Strengthened of bank loans to Target: In the period of October P171448 Long-Term Export Finance Guarantee (FY20) Policies that corporates 200 (2023) 2019-March 2023, a total P174112 Emergency Firm Support Project Boost restructured of 594 companies were Economic under the new included in the scope of Delivered ASA: Stability financial the Financial Restructuring Turkey Economic Monitor restructuring Framework Agreement. Of P166330 Fiscal Reform Program framework39 the companies included in P174648 Financial Sector Stability, the scope, 502 are large Diversification and Inclusion ASA, corporates, and 101 are P148205 Turkey Economic Memorandum SMEs. (CEM) Investment P152918 Turkey Programmatic Trade Task P170306 Drivers of Food Price Inflation in Supplementary In the period of October Turkey Indicators 2019-March 2023, the P169301 Leveraging Global Value Chains for Partially 1.1.1 New total amount of debt Growth in Turkey (CEM) achieved corporate debt restructured is TRY 127.7 restructuring billion TL. framework established to deal with Baseline: Achieved problem assets No (2017) Yes, the framework was in the banking Target: established in 2018 and it system. Yes (2020) is currently in-force. Indicator 2: Baseline: There is Partially Achieved The World Bank’s Approved IBRD Lending: 1.2 Improved no integrated The Integrated Financial contribution and attribution P158799 Public Finance Management Reform transparency of financial Management System is to is limited in the absence Implementation Support Project public sector for management operational but of Development Policy Delivered ASA: contractual system that contractual commitments Financing (DPF) under this P166330 Fiscal Reform Program commitments completely captured only after focus area. For more P167525 Turkey: Enhancing the Impact of the captures processing of first intensive engagement, Bank Turkish Court of Accounts on Good Public contractual payment. need to develop a platform Governance 39 The 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). 63 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF commitments from to discuss procurement and P252339 Deepening the Implementation of public financial management Public Sector Internal Audit Reforms procurements reform discussions through P157656 Turkey Financial Sector Assessment Program (FSAP) (2018) tailor made ASA programs in P166315 Public Financial Management Target: The the absence of a DPF Reform Technical Assistance Integrated Financial program. P152468 Turkey Programmatic Governance Management TA System is fully P169856 Review of National Planning, Policy operational and Formulation and Public Financial Management accessible by Institutions and Performance Central Government institutions to capture the contractual commitments from public procurements Achieved (2022) Background study completed in December Baseline: None 2017. 1.2.2 (2017) Background Target: Roadmap study completed for the monitoring for the of public facilitation of the procurement monitoring and commitments reporting of (2020) government contractual commitments Additional evidence: Objective 2: Indicator 1: Baseline: Achieved IFC Committed Lending: Enhanced 2.1 People, 2.2 million people 5,4 Million (2021) IFC long term funding to banks to be on-lent MSMEs and (2015) to MSMEs Access to Mostly Akbank TK (Project ID: 3381) Finance to Achieved exporters Target: Yapi Kredi Bank (Project ID: 51411) Underserved reached with IFC 3,6 million (2023) QNB Finansbank (Project ID:510236) Segments Garanti Bankasi (Project ID: 511503) 64 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF financial Seker Bank (Project ID: 532405) services40 DenizBank AS (Project ID: 621859) Burgan Turkey (Project ID: 788588) QNB Finansleasing(Project ID: 5023) Turk Ekon Bank (Project ID: 6075) Yapi Kredi Lease (Project ID: 50670) Alternatifbank (Project ID: 51410) Fibabanka (Project ID: 695986) Is Leasing (Project ID: 730624) Odea Bank (Project ID: 746927) Burgan Turkey (Project ID: 788588) IFC Advisory: Business environment and FDI-local firm linkages TA Green Organized Industrial Zones (Green OIZ) advisory project MIGA: Guarantee of non-honoring of a financial obligation of a state-owned enterprise (NHFO- SOE) for Turkish Eximbank (ongoing) Indicator 2: Baseline: 27,000 Mostly Achieved 2.2 Of which (2015) 85,538 (2021) women owned Target: 100,000 SMEs reached (2023) (number) Indicator 3: Baseline: 116,000 Partially Achieved Bank has identified Approved IBRD Lending: 2.3 MSMEs and (2016) 239,000 innovative ways of P156252 Long Term Export Finance exporters served Target: 480,000 supporting the access to P163225 Inclusive Access to Finance P174144 Türkiye Rapid Support for Micro and by banks (2023) finance for underserved Small Enterprises during the COVID-19 Crisis benefiting from segments through P171448 Long-Term Export Finance IBRD financial reimbursable grant and Guarantee (FY20) intermediary grant operations, in addition P174112 Emergency Firm Support Project loans. to financial intermediation. P181068 Türkiye Post-Earthquake Micro,Small Next CPF shall consider and Medium Enterprise Recovery Project Complementary Baseline: 0 (2019) Actual: 58,853 (2023) utilizing full span of Indicator: available instruments and Delivered ASA: MSMEs and client institutions for a P174648 Financial Sector Stability, Diversification and Inclusion, (Ongoing) exporters served broader response to tackle 40 The indicator is defined in the WB Corporate Scorecard (2015). 65 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF by the access to finance for P173979 Turkey Programmatic Public institutions underserved segments. Finance Review benefitting from P160300 Financial Sector Deepening TA IBRD non- financial- Baseline: 116,000 Partially Achieved: intermediary (2016) 297,853 loans. Target: 480,000 (2023) Total Indicator Actual Value inc. Complementary indicator: Total MSMEs and exporters served by the institutions benefitting from IBRD lending operations (including FI and non-FI loans) Indicator 4: Baseline: Achieved 2.4 Number of 0 (2017) 474 (As of May 2023) women- Target: inclusive41 80 (2023) enterprises financed under IBRD lines of credit Additional evidence: Objective 3: Indicator 1: Baseline: 39,400 Achieved Following the multiple IBRD Lending and EU FRiT Grants: Enhanced Mostly 3.1 Employment (2015) 135,857 ( 2022) external shocks impacting P175309 EU- Turkey Customs Union Competitiven Achieved supported by IFC Target: 60,000 the employment, IFC and Modernization Progress Review and Recommendations ess and clients (2023) IBRD have jointly provided 41Women-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. 66 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF Employment (manufacturing, active support for retaining P156252 Long Term Export Finance in Selected telecom, and generating P161670 Employment Support for Syrians Industries technology, employment. These Under Temporary Protection and Turkish Citizens agribusiness) operations have reached P171766 Formal Employment Creation Project high success. Going forward, P171456 Social Entrepreneurship, Complementary Actual: next CPF need to consider Empowerment and Cohesion in Refugee and Indicator: 90,730 these joint efforts for Host Communities in Turkey Project (SEECO) Employment generating and transforming P171543 Agricultural Employment Support for supported by employment under the Refugees and Turkish Citizens through IBRD lending current challenges including Enhance Market Linkages Project operations climate change, natural P174144 Türkiye Rapid Support for Micro and (manufacturing, disasters and forced Small Enterprises during the COVID-19 Crisis P171471 Support for Transition to Labor telecom, displacements region wide. Market Project technology, P179255 Türkiye Green Industry Project agribusiness) P181068 Türkiye Post Earthquake Micro, Small and Medium Enterprises (MSME) Recovery Project Total Indicator Delivered ASA: Actual Value inc. Baseline: 39,400 Achieved P165687 Strengthen Economic Opportunities Complementary (2015) 226,587 (2022) for Syrians under Temporary Protection and indicator: Target: 60,000 Turkish Citizens in Selected Localities P159127 Fiscal Instruments for Regional Total (2023) Imbalances employment P165290 Inequality, Poverty, and Policy in supported by WB Turkey P162266 Helping Turkey Refugee (including IFC Response P152663 Turkey Social Assistance and IBRD lending Review operations) P164181 Engaging At-Risk Youth: School to Work Transition P153794 Turkey Regional Investment Climate Assessment Reimbursable Advisory Service P152536 Business Environment and Innovation Programmatic TA P162339 Turkey Investment Climate and Innovation P159338 Services Trade and GVC analysis P152918 Turkey Programmatic Trade Task P175392 Turkey Firm Competitiveness and Free Zones 67 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF P162693 Turkey Productivity Country Economic Memorandum P175434 Understanding the Drivers of Regional Disparities in Turkey IFC Committed Lending: 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. MIGA: Guarantees in transport, health and energy sectors. Indicator 2: Baseline: Achieved 3.2 o/w Female 7,860 (2015) 40,133 (2022) Employment Target: 14,000 supported. (2023) Indicator 3: Baseline: 15,000 Achieved IFC Committed Investments: 3.3 Employment (2015) 22,025 (As of October Investments in manufacturing, telecom & IT, supported by IFC Target: 20,000 2022) and agribusiness sectors. v Major industrial conglomerates and large Tier equity funds (2021) I corporates investees 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. Indicator 4: Baseline: 69.1 Mostly Achieved 3.4 Improvement (2015) 76.8 (as of 2020) in Composite Target: Doing Business > 78 (2021) Score 68 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF Additional evidence: Focus Area 2: INCLUSION Indicator 1: Baseline: Achieved Approved IBRD Lending: 4.1 Number of 0 (2017) 822,000 (2022) P162071 Resilience, Inclusion and Growth DPF social assistance Target: 800,000 Delivered ASA: beneficiaries (2022) P158207 Improved Equity and Social Services referred to P151212 Turkey Poverty, Equity, and Shared employment Prosperity services. P152663 Turkey Social Assistance Review P162266 Helping Turkey Refugee Response- Supplementary Baseline: Achieved Overview Program Indicator No (2019) Public Finance Review is P163126 Policy Dialogue and Research on 4.1.1 Social Target: published in June 2023. Syrian Displacement in Turkey Assistance Yes (2020) P159127 Fiscal Instruments for Regional Imbalances Assessment is Objective 4: publicly Increased disseminated. Partially Indicator 2: Baseline: Not Achieved Approved IBRD Lending: Effectiveness Achieved 4.2 Social No (2017) The Social Assistance P162071 Resilience, Inclusion and Growth DPF of Social Assistance protection Target: Report was presented to Delivered ASA: performance Yes (2022) the counterpart, and they P158207 Improved Equality and Social indicators started to use the Services related to coverage, targeting and P151212 Turkey Poverty, Equity, and Shared benefit levels, adequacy. However, they Prosperity equity and have not merged their P152663 Turkey Social Assistance Review coverage data with the HBS so they P162266 Helping Turkey Refugee Response- included in cannot calculate these Overview Program MOFLSS M&E indicators on their own. P163126 Policy Dialogue and Research on system for Syrian Displacement in Turkey P159127 Fiscal Instruments for Regional evidence-based Imbalances program management. Additional evidence: Objective 5: Indicator 1: Baseline: 435,317 Achieved Utilization of Bank available Approved IBRD Lending or EU FRiT grant Mostly financing: Increased 5.1 Increased in 2018 lending instruments, Achieved Labor Force number of supported with tailor made 69 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF Participation women placed in Target: 900,000 by Number of women placed ASAs, contributed success P171766 Formal Employment Creation of Women & jobs by ISKUR 2023 in jobs between 2019-April for this objective area. (W/FRiT) (FY20) Vulnerable 2023 is 1,874,699. Going forward, utilization of P171543 Agriculture Employment Support for Refugees and Turkish Citizens through Groups diverse instruments Enhanced Market Linkages Project (FY20) ( Complementary including P4Rs, IPF with DLIs P171456 Social Entrepreneurship, Indicator: Baseline: 0 (2019) might be new door openers Empowerment and Cohesion in Refugee and Increased Actual: for further boosting the Host Communities in Turkey Project (FY20) number of 43,591 (2023) success under this objective P171471 Support for Transition to Labor women placed in area. Market (FY20) (Ongoing) jobs by IBRD P161670 Employment Support Project for lending Syrains Under Temporary Protection and operations Turkish Citizens (excluding ISKUR Delivered ASA: placements) Baseline: 435,317 P178168 Turkey Employment and Jobs in 2018 Country Economic Memorandum Total Indicator Target: 900,000 by Achieved P175434 Understanding of the Drivers Reginal Actual Value inc. 2023 1,918,290 (2023) Disparities in Turkey P156735 SE Skills for Complementary Employalibility in Turkey indicator: P159817 Quality of Jobs: Better Labor Policy Increased and More Innovation (CEM) number of P169756 Jobs Analytics for Technical Assistamce and Labor Market Monitoring women placed in P161159 Qualitative Assessment of Syrians’ jobs by IBRD Employment and Livelihood Opportunities lending and Challenges in Turkey operations. P162266 Helping Turkey Refugee Response- Overview Program P163126 Policy Dialogue and Research on Syrian Displacement in Turkey P168080 Minimum Wage Simulation Tool for Turkey P147432 Turkey Programmatic Jobs- Activation AAA P165903 Turkey Jobs Analytics & Dialogue Technical Assistance P168084 Assessing the effects of the 2016 Minimum Wage increase on formal job creation in Turkey P167372 Evaluation of employment subsidy schemes 70 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF P146215 Women’s Access to Economic Opportunities in Turkey Trust Fund P160625 Policy Note Response to Refugee Crisis Indicator 2: Baseline: 161,035 Achieved IBRD Lending and EU FRiT Grants: 5.2 Increased male; 81,492 Number of youth placed in P171766 Formal Employment Creation for number of youth female youth in jobs between 2019-April Refugees and Turkish Citizens (FY20) P171543Agriculture Employment Support for placed in jobs by 2015 2023 is 1,949,137 Refuges and Turkish Citizens through Enhance ISKUR 258,796 male; (1,190,792 (male) and Market Linkages Project (FY20) 171,817 female 758,345 (female)). P171456 Social Entrepreneurship, youth in 2018 Empowerment and Cohesion in Refugee and Target: 450,000 Host Communities in Turkey Project (FY20) male; 400,000 P171471 Support for Transition to Labor female youth by Market (FY20) 2023 P161670 Employment Support Project for Syrians under Temporary Protection and Turkish Citizens P168731 Development Business and Entrepreneurship for Syrians Under Temporary Protection and Turkish Citizens Project Indicator 3: Baseline: 38,000 Partially Achieved IFC Committed Lending: 5.3 Direct (2015) 38,111 (2021) Turkey Bank Facility for SuTP-impacted employment Target: 45,000 Regions (Project No. 42458); the investment is to four largest privately-owned systemic supported by IFC (2023) banks (Is Bank, Garanti Bank, Akbank, and Yapi clients in less Kredi Bank), used to finance eligible SMEs and developed mid-caps (enterprises employing up to 1,000 regions people) in 22 refugee-hosting provinces. Additional evidence: Objective 6: Indicator 1: Baseline: 0 (2017) Partially Achieved Client implementation Approved IBRD Lending or EU FRiT Grants: Strengthened 6.1 Number of Target: 320,000 49,000 (As of May 2023) capacity is key to achieve P162004 Education Infrastructure for Performance students, (2023) results, particularly for the Resilience Project Mostly of the teachers and results directly linked to Achieved Delivered ASA: Education staff having lending operations. Next P175434Understanding the Drivers of and Health access to schools CPF need to pay attention in Regional Disparities in Turkey Sectors constructed or estimating the client 71 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF retrofitted by capacities, readiness of P165484 Turkey Education and Technical IBRD operations operations and design fit for Assistance P175843 Türkiye purpose while setting some Pandemic Preparedness and Response: Investing in Equity IPF results as CPF level P170524 Turkey Human Capital Project – result indicators. Education P165250 Safer and Greener Schools P153927 Turkey Higher Education Modernization Technical Assistance Indicator 2: Baseline: 10% in Not Verified. Approved IBRD Lending: 6.2 Percent of 2015 (Indicator is no longer P152799 Health Systems Strengthening and households that Target: monitored by Govt during Support Project P173988 Turkey Emergency COVID-19 Health receive from 50% in 2022 (at end and after pandemics) Project health workers of IBRD project) P163937 PHRD Grant on Sustainability of UHC counselling or in Turkey education P163850 Turkey Modeling of Public Health Accurate and realistic design related to Achieved Expenditure of emergency operations healthy living (to 68.9% (2022) can yield very strong results be DROPPED) Baseline: 0 (2019) Delivered ASA: even in shorter timeframes. Turkey obesity case study Target: Next CPF shall built upon P163937 Building an Improved Primary Health Proposed 50% in 2022 (at end this experience while Care System in Turkey through Care Complementary of IBRD project) planning emergency Integration (Japan Policy and Human Indicator: response operations. Resources Development (PHRD) grant) Percent of Documenting Turkish experience in tobacco Turkish use control population that P175843 Türkiye Pandemic Preparedness and has been Response: Investing in Equity vaccinated against COVID- 19 Indicator 3: Baseline: Achieved IFC Committed Investments: 6.3 Number of 0 (2015) 7,9 million (2022) Patients Served Target: Kayseri Health, (Project ID: 693344) MNT, (Project ID: 705744) through IFC 3.0 million (2023) Adana Health, (Project ID: 775144) health sector Recordati Ilac, (Project ID: 779886) clients Elazig Health, (Project ID: 1005523) MIGA 72 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF Adana Integrated Health Campus (Project ID:12118) Yozgat Education and Research Hospital (Project ID:12870) Elazig Integrated Health Campus (Project ID:12871) Bursa Integrated Health Care Center (Project ID:13543) Ikitelli Hospital (Project ID:13861) Additional evidence: Focus Area 3: SUSTAINABILITY Indicator 1: Baseline: 31.5% in Achieved MIGA 7.1 Renewable 2015 45% (As of end 2022) Political Risk Insurance in support of electricity Target: investment in electricity distribution (Uludag Power) generation as 35% in 2022 percentage of MIGA guarantees: total generation Political risk insurance offered to cross-border (%). investments in electricity distribution (ongoing) Supplementary Indicators Approved IBRD Lending Objective 7: Achieved P172827 Turkey Geothermal Development Improved 7.1.1 Installed Baseline: 254 MW in 2023 and Project Reliability of renewable 0 in 2016 1,513,027 MWh in 2023 P144534 Renewable Energy Integration Mostly Project Energy energy capacity Target: Achieved P179867 Public and Municipal Renewable Supply and financed through 250 MW in 2023 Generation of Energy Project IBRD Projects and 1,500,000 P151934 EU/IPA Energy Sector Technical Green Energy (MW) and MWh in 2023 Assistance Program generated P162762 Energy Efficiency in Public Buildings through IBRD (MWh) Indicator 2: Baseline: 4,33 Mostly Achieved IFC Committed Investments: 7.2 Total power (2015) 6,86 millions (2022) Power Distribution: generation and Target: SEDAS (Project ID:672104) OEDAS (Project ID: 1027417) distribution 7,0 (2023) Power Generation: clients reached Enerjisa, (Project ID: 50781) (IFC) (millions) Unit Investment, (Project ID: 727451) 73 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF Kremna Elektrik, (Project ID: 1004739) ACWA Guc, (Project ID: 792909) Rotor Elektrik, (Project ID: 621808) Gama Enerji, (Project ID: 730929) Akfen Energy, (Project ID: 627269) Indicator 3: Baseline: Achieved Approved IBRD Lending: 7.3 Increased 2.8 bcm in 2016 3.78 bcm in 2021 P093765 Gas Sector Development Project ( capacity of gas Target: P162727 Gas Storage Expansion ProjectP157416 Trans Anatolian Natural Gas storage (bcm). 3.8 bcm in 2021 Pipeline Project Indicator 4: Baseline: Achieved Approved IBRD Lending: 7.4 Gas imports 0 bcm in 2016 6 bcm in 2022 P157416 Trans Anatolian Natural Gas Pipeline through TANAP Target: Project (bcm/annum). 5 bcm in 2022 Indicator 5: Baseline: 1,116,000 Achieved 7.5 Cumulative in 2016 11,590,181 MWh as of Approved IBRD Lending: energy savings Target: 11,500,000 2023 P122178 Turkey SME Energy Efficiency. Project achieved in 2022 P162762 Public Building Energy Efficiency through WB- financed energy P175894 Seismic Resilience & Energy sector projects Efficiency in Public Buildings (MWh). P179867 Public and Municipal Renewable Energy Project Additional evidence: Indicator 1: Baseline: 40% in Mostly Achieved Approved IBRD Lending: 8.1 Improved 2016 83% in 2021 P106284 Turkey Land Registration and service delivery Target: Cadastre Modernization Project and expanded 90% in 2022 Objective 8: access to digital Improved land registry and Sustainability Partially cadaster and Achieved information Resilience of Increased Cities customer satisfaction at national level Indicator 2: Baseline: Mostly Achieved This Objective has reached Approved IBRD Lending and EU Frit Grants: 0 (2017) 930,000 (As of May 2023) the highest number of P128605 Sustainable Cities 1, 74 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF 8.2 Number of Target: lending approvals (31 P170612 Sustainable Cities 2, Additional additional 1,3 (2023) percent of all IBRD CPF Financing projects people period lending); however, P169996 Municipal Services Improvement Project benefitting from implementation was not at P172562 Turkey Resilient Landscape improved urban the speed of delivery. Thus, Integration Project infrastructure this area, in terms of P176608 Turkey Earthquake, Floods and through IBRD reaching the results, has the Wildfires Emergency Reconstruction Project and IFC financing lowest rating. Next CPF shall P180849 Türkiye Earthquake Recovery and (number in Achieved focus on boosting the Reconstruction Project millions) Baseline: The Sustainable Urban implementation capacity 0 (2018) Mobility Plans (SUMPs) and speed, particularly Delivered ASA: Target: were adopted in İzmir and under this objective area. Sustainable urban transport planning (FY21); AA has been signed with the EU side and the 8.2.2 Sustainable 2 Kocaeli in April 2019. ASA is under progress. urban transport cities/municipalitie P157550 Sustainable Efficient and Safe planning s (2021) Transport in Turkey Urban mobility, intelligent adopted in transport system and promotion of multi- selected model transport system (FY18); under cities/municipalit progress, mostly delivered and planned to be ies completed by November 2022. Housing study TA under the DRM GFDRR Grants City-wide risk assessments for resilient urban transformation and infrastructures were prepared in Kahramanmaras, Tekirdag, and Rize municipalities. The fourth assessment for Manisa Metropolitan Municipality is being prepared. Capacity building training for 4 municipalities were conducted, aiming at: (a) disaster risk assessment for urban transformation and infrastructures, and (b) the use of GIS for this purpose. A Guidance Note on Financing Urban Resilience for Turkish Cities was prepared. Guidance note and tool for mainstreaming climate and disaster risk into Ilbank's portfolio of municipal infrastructure investment was completed. EU/IPA Grant for Sustainable Cities 75 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF P156161 IBRD-IFC Joint Implementation Program for Sustainable Cities in Turkey P162543 Turkey: Housing the Bottom 40% P164922 Turkey Land Sector - Improving State Land Management and Assessing the Feasibility of TDRs P165757 Support Effective Logistics Services through Improved Connectivity in Turkey P170099 Resilient Urban Regeneration P165508 Turkey Subnational Technical Assistance: Creditworthiness Support for Metropolitan Municipalities P153694 Building Resilience in Turkey P168356 Support to Building Urban Resilience in Turkey P170103 Building Institutional Capacity for Risk Informed Decision Making and Urban Resilience in Turkey P174656 Policy dialogue on the digital economy in Turkey P157550Sustainable, Efficient and Safe Transport for Turkey IFC Committed Lending: Municipal infrastructure investments in metropolitan cities including Istanbul and Izmir. IFC Advisory: Cities platform (ongoing) RETF: GFDRR Grant for Supporting Critical Infrastructure Resilience and Disaster-Risk Awareness in Turkey (FY21) MIGA Guarantee of non-honoring of a financial obligation of a sub-sovereign (NHFO-sub- sovereign) for City of Istanbul and City of Izmir in support of transport projects (Ferry, Tramway, Light rail and Metro) 76 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF Indicator 3: Baseline: Partially Achieved Approved IBRD Lending and EU Frit Grants: 8.3 Increased 0 (2019) Achieved figure is 57 (As P157683 Disaster Risk Management in Schools resilience of Target: of 2023) P162004 Education Infrastructure for Resilience Project (Edu FRIT) cities through 300 (2023) P175894 Seismic Resilience and EE Project number of P172562 Turkey Resilient Landscape disaster resilient Integration Project public buildings P176608 Turkey Earthquake, Floods and retrofitted, Wildfires Emergency Reconstruction Project reconstructed, or newly Delivered ASA: constructed P175806 Sustainable UrbanMobility in Turkey through IBRD (FY21); AA has been signed with the EU side and the ASA is under progress. operations. P157550 Sustainable, Efficient and Safe Transport . RETF: GFDRR Grant for Supporting Critical Infrastructure Resilience and Disaster-Risk Awareness in Turkey (FY21) GFDRR grant for Seismic Resilience and EE Project (FY22) MIGA guarantees: Non-honoring sub-sovereign financial obligation guarantees supporting cross-border investments in municipal infrastructure projects for the municipality of Istanbul and the municipality of Izmir (4 projects) (ongoing) 77 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF Indicator 4: Baseline: 33% (in Achieved 8.4 Percentage FY19) 87.5% (FY20-FY22) improvement in Target: the quality of CE 60% of projects as measured approved for the through the CE remainder of the Quality Index CPF are of high quality. (Average of FY20-FY21-FY22) Additional evidence: Objective 9: Indicator 1: Baseline: 40,000 in Achieved Approved IBRD Lending: Strengthened 9.1 Annual GHG 2016 2,232,525 tonnes/year P144534 Renewable Energy Integration Results emissions either Target: 1,000,000 (2023). Project P122178 Turkey SME Energy Efficiency Under reduced or IBRD reduced, Project Climate avoided through 350,000 reduced P162762 Turkey Energy Efficiency in Public Action the WB program IFC, 750,000 Buildings Project Agenda (tonnes/year) avoided at country- P175011 Turkey Climate Smart and level through Competitive Agricultural Growth Project adopting GB P179345 Türkiye Climate Resilient Forests standards (2023) P179867 Public and Municipal Renewable Mostly Energy Project Achieved Delivered ASA: P152877 Support to Updating Forest Sector Review (Forestry Study) P162693 Turkey Country Economic Memorandum(CEM) on Productivity P177479 Turkey Country Climate and Development Report P178260 Technical Assistance to Support Turkey's NDC Update P178561 Turkey- Support for Partnership for Market Implementation Proposal 78 Lessons Learned & Overall Baseline/ Objective Indicator Status at CLR Suggestions for the New WB Program instruments Rating target CPF P169743 Turkey Water Sector Engagement Note: Water Security Issues and Outlook P169824 Support to Air Quality Management in Turkey P151227 Turkey: Environmental and Natural Resources Management Programmatic P152876 Natural Capital Accounting 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) Indicator 2: Baseline: Partially Achieved Approved IBRD Lending: 9.2 Area 0 (2019) 9600 ha (As of April 2022) P158844 Türkiye Irrigation Modernization provided with Target: 50,000 ha new/improved (2023) irrigation or drainage services (Ha) Additional evidence: 79 CLR Annex 3. CPF Period (FY17-23) IBRD Lending Approvals (Planned and Actual)   CPF FY17-23 Planned IBRD US$m   CPF FY17-23 Actual IBRD US$m Long Term Finance   Long Term Export Finance 300 Education (FRiT)   Education Infrastructure and Resilience (FRiT) 157.8 Labor Market Integration (FRiT)   Delivered in FY18 as Employment Support Project for SUTPs (RETF)   FY17 FY17 Geothermal Development   Geothermal Development 250 Trans-Anatolian Natural Gas Pipeline Project   Trans-Anatolian Natural Gas Pipeline Project 400 Sustainable Cities Series of Projects   Sustainable Cities Series of Projects (1) 132.8   Sub-total 1,000 - 1,500   IBRD Sub-total 1,082.8 Grant Sub total 157.8 Education: Youth-at-Risk (IPA)   Dropped   SuTPs Employment Support & Entrepreneurship (FRIT)   SuTPs Employment Support & Entrepreneurship (FRiT) 48.2 Sustainable Cities Series of Projects   Sustainable Cities Series of Projects (2) 91.5 FY18 Gas Storage Expansion Project   FY18 Gas Storage Expansion Project 600 Türkiye - Resilience, Inclusion and Growth DPF   Türkiye - Resilience, Inclusion and Growth DPF 400   Inclusive Access to Finance 400 Sub-total 1,000 - 1,500 IBRD Sub-total 1,491.5 Grant Sub total 48.2 Financial Sector   Delivered in FY18 as Inclusive Access to Finance   Social Inclusion   Dropped   Disaster Risk Mgmt.   National Disaster Risk Management Project – Safe Schools 300 Türkiye Irrigation Modernization 252 Irrigation   Türkiye Irrigation Modernization (GEF) 2 FY19 Energy Efficiency   FY19 Pipelined for FY20     Development of Businesses and Entrepreneurship for SUTPs (FRiT) 2   Partnership for Market Readiness 2 Project (RETF) 2   Sustainable Cities 2 AF 560.6 Sub-total 1,000 - 1,500 IBRD Sub-total 1,112.6 Grant Sub total 6         Total Actual IBRD (FY17-18-19) 3,686.9 80    CPF FY17-23 Planned  IBRD US$m   CPF FY17-23 Actual IBRD US$m  Energy Efficiency in Public Buildings   Energy Efficiency in Public Buildings 150 Renewable Energy Integration Additional Finance   Renewable Energy Integration Additional Finance 325 Municipal Services Improvement Project in Refugee Municipal Services Improvement Project in Refugee Affected Affected Areas Areas   IBRD IBRD 148.8 FRiT FRiT 162.0 Improving Rail Connectivity   Rail Logistics Improvement Project 350 FY20 Formal Employment Creation for Refugees and FY20 Formal Employment Creation for Refugees and Turkish Turkish Citizens Citizens   IBRD IBRD 347.4 FRiT FRiT 91.9 Long-term Export Finance Guarantee Long-term Export Finance Guarantee 273.6 Türkiye Emergency COVID-19 Health Project (P173988) 100 Safe Schooling (P173997) 160 Sub-total 1,000 - 1,500 IBRD Sub-total 1,854.8 Grant Sub total 253.9 Green Organized Industrial Zones   Türkiye Organized Industrial Zones Project (P171645) 300 Türkiye Resilient Landscape Integration Project (TULIP) Integrated Landscape Mgmt (Bolaman Basin)   135 (P172562) Geothermal Additional Finance   Delivered in FY22 Rooftop Solar Energy   Pipelined for FY23 Seismic Resilience and Energy Efficiency in Public Buildings Urban Resilience   265 FY21 Project (P175894) DPF-1 Dropped FY21 Emergency Firm Support Project (P174112) 500 Türkiye Rapid Support for Micro and Small Enterprises during 300 the COVID-19 crisis (P174144) Social Entrepreneurship, Empowerment and Cohesion in Refugee and Host Communities in Türkiye Project (P171456) 48 (FRiT) Agricultural Employment Support for Refugees and Turkish 54.7 Citizens through Enhanced Market Linkages (P171543) (FRiT) IBRD Sub-total 1,500 Sub-total 1,000 - 1,500 Grant Sub total 102.7 81    CPF FY17-23 Planned  IBRD US$m   CPF FY17-23 Actual IBRD US$m  Türkiye Climate Smart and Competitive Agricultural Growth Climate Smart Agriculture 341.3 Project (TUCSAP) (P175011) Institutional Efficiency Dropped Human Capital Project Dropped Water Conservation Pipelined for FY23 Türkiye Geothermal Development Project Additional FY22 FY22 300 Financing (P172827) Türkiye Emergency COVID-19 Health Project Additional 500 Financing (P178462) Türkiye Earthquake, Floods and Wildfires Emergency 449.3 Reconstruction Project (P176608) Employment Support Project for Syrians Under Temporary 84.9 Protection and Turkish Citizens (P171471) IBRD Sub-total 1,590.5 Sub-total 1,000 - 1,500 Grant Sub total 84.9 Integrated Landscape Mgmt 2 (Black Sea Basins) Dropped Energy Efficiency in Public Buildings Add. Finance Public and Municipal Renewable Energy Project* 549.15 DPF-2 Dropped Capital Market/LT Finance/Pension Reform Dropped Water Circularity and Efficiency 434.65 Land Administration Infrastructure for Green and Sustainable 85.45 Development Green Industry Project 450 FY23 FY23 Climate Resilient Forests 400 Earthquake Recovery and Reconstruction 1000 MSME Recovery 450 Türkiye Climate and Disaster Resilient Cities Project 512.15 (P173025) Türkiye - EU IPA Energy Sector Program Phase IV Project - 8.77 Offshore Wind Support (P179235) IBRD Sub-total 3881.4 Sub-total 1,000 - 1,500 Grant Sub total 8.77 Total Actual IBRD (FY20-21-22-23) 8826.7   Total Planned 4,000 - 6,000   Total IBRD CPF Envelope 12,513.6 82 CLR Annex 4: IBRD Portfolio Indicators over the CPF Period (FY17‐FY23) PORTFOLIO AND DISBURSEMENTS (FY17 -FY23)* Fiscal year 2017 2018 2019 2020 2021 2022 2023 IBRD # Projects 11 15 13 18 22 23 28 IBRD Net Commitment Amt ($ Mn) 3,071.60 4,563.20 4,525.80 5,905.90 7,091.40 7,956.90 10,874.20 Undisbursed Balance at FY Beginning ($ Mn) 1,241.70 1,498.20 1,730.30 2,523.90 3,718.90 4,659.20 5,429.7 Disbursement Ratio (%) 33.6 54.8 17.8 15 13.9 16.6 17.3 IBRD Disbursements in FY ($ Mn) 416.9 1,230.00 307.8 378.9 517.6 773.1 941.7 IBRD Disbursements to Date ($ Mn) 1,507.90 2,739.40 1,924.30 2,113.60 2,334.60 2,425.70 2,477.8 IBRD Undisbursed Balance ($ Mn) 1,505.90 1,766.90 2,535.10 3,718.90 4,701.50 5,481.40 8,325.5 Flag: Slow Disbursing # Projects 0 1 0 1 1 5 7 PORTFOLIO RISKINESS (FY17 - FY23) Fiscal year 2017 2018 2019 2020 2021 2022 2023 # Problem Projects 2 1 2 0 3 2 4 # Potential Problem Projects 0 0 0 0 0 0 1 # Projects At Risk 2 1 2 0 3 2 5 Commitments At Risk ($ Mn) 401 134.3 859.3 0 1,034.30 432.8 1,093.8 Commitments At Risk (%) 13.1 2.9 19.0 0.0 14.6 5.4 10 Proactivity Actions   2 1 2   3 2 IEG RATINGS (FY17 - FY23) Exit FY FY17 FY18 FY19 FY20 FY21 FY22 # Projects 2 1 3 2 2 1 Outcome % Satisfactory 100 100 100 100 100 100 ICR Quality % Sat 100 100 100 100 100 100 Net Disconnect 0 0 0 0 0 0 Bank Performance at Entry % Sat 50 100 100 100 100 100 Bank Performance at Supervision % Sat 100 100 100 100 100 100 Bank Overall Performance % Sat 100 100 100 100 100 100 % Substantial or Better M&E Quality 50 0 0 100 50 0 * IBRD financing only. Regional Projects (TANAP), Guarantees, GEF, IDF, Montreal Protocol financed projects and Special Financing are excluded. 83 CLR Annex 5: IFC’s Committed and Outstanding Portfolio over the CPF FY17‐FY23 Period (Amounts in US Dollar Millions) LN Commitment Institution LN ET QL + QE GT RM ALL ALL LN ET QL + QE GT RM ALL ALL Fiscal Year Short Name Repayment Out - IFC Out - IFC Out - IFC Out - IFC Out - IFC Out - IFC Cmtd - IFC Cmtd - IFC Cmtd - IFC Cmtd - IFC Cmtd - IFC Cmtd - IFC Cmtd - Part Out - Part - IFC 1990/1967/1993/1964/1980/1983/1972/ TSKB 134.09 280.91 0 0 43.25 0 177.34 0 134.09 0 0 43.25 0 177.34 0 1992 NASCO 0 15.00 0 0 0 0 0 0 0 0 0 0 0 0 0 1993/2002/2003/2021/2023/1997/2013 Sise ve Cam 67.64 124.22 9.70 0 0 0 77.34 164.44 67.64 9.70 0 0 0 77.34 164.44 1996/2001/2003/2005/2023/1997 Arcelik 127.31 57.88 0 0 0 0 127.31 0 127.31 0 0 0 0 127.31 0 1999/1990/2009/1996/1993/1979/1991/ Trakya Cam 0 108.32 0 0 0 0 0 0 0 0 0 0 0 0 0 1999/1995/2003/2008/2017/2019/2021/ Turk Ekon Bank 0 47.50 0 0 90.80 0 90.80 0 0 0 0 90.80 0 90.80 0 1999/2011/2014/2015/2017/2019/2021/ Alternatifbank 40.00 197.56 0 0 102.10 0 142.10 0 40.00 0 0 94.17 0 134.17 0 2007 Turkven II 0 0 0.01 0 0 0 0.01 0 0 0 0 0 0 0 0 2007 Unitim 7.25 8.33 0 8.00 0 0 15.25 0 7.25 0 8.00 0 0 15.25 0 2009/2010/2017 Assan Aluminyum 16.50 73.33 0 0 0 0 16.50 0 16.50 0 0 0 0 16.50 0 2009/2011/2014/2010/2008/2012/2015/ Seker Bank 0 232.13 0 0 0 0 0 0 0 0 0 0 0 0 0 2009/2016 Istanbul MMI 38.19 82.37 0 0 0 0 38.19 31.83 38.19 0 0 0 0 38.19 31.83 2011/1998/2010/2008/2015/2021/2023/ Yapi Kredi Lease 115.71 210.46 0 0 0 0 115.71 22.24 115.71 0 0 0 0 115.71 22.24 2011/2008/2021 Enerjisa 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2011/2010/2003/2004/2019/2021/2017/ Akbank TK 248.39 230.00 0 0 86.50 0 334.90 0 248.39 0 0 86.50 0 334.90 0 2011/2021/2022/2023 DenizBank AS 138.46 115.41 0 0 29.05 0 167.51 0 138.46 0 0 29.05 0 167.51 0 2013 Mediterra I 0 0 0.55 0 0 0 0.55 0 0 0.02 0 0 0 0.02 0 2014 Astra Dorms 0 0 8.84 0 0 0 8.84 0 0 8.84 0 0 0 8.84 0 2014/2012/2015/2017/2016/2023/2013/ Fibabanka 0 70.00 42.86 0 89.59 0 132.45 0 0 42.86 0 89.59 0 132.45 0 2014/2012/2015/2017/2019/2021/2016/ Yapi Kredi Bank 0 103.44 0 0 152.54 0 152.54 0 0 0 0 152.54 0 152.54 0 2014/2015/2013 Izmir Muni 38.97 61.85 0 0 0 0 38.97 0 38.97 0 0 0 0 38.97 0 2014/2015/2017/2019/2016/2018/2020 Odea Bank 0 94.50 69.40 0 0 0 69.40 0 0 69.40 0 0 0 69.40 0 2014/2020 Mersin Port 0 0 0 59.74 0 0 59.74 0 0 0 59.74 0 0 59.74 0 2015 ACWA Guc 59.16 16.08 0 0 0 0 59.16 41.38 59.16 0 0 0 0 59.16 41.38 2015 Adana Health 28.12 7.66 0 0 0 1.89 30.00 33.08 28.12 0 0 0 1.89 30.00 33.08 2015 CI Hepsiburada 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2015 Etlik Health 77.68 12.66 0 0 0 3.00 80.68 81.82 77.68 0 0 0 2.10 79.78 81.82 2015 Gama Enerji 0 0 126.05 0 0 0 126.05 0 0 104.03 0 0 0 104.03 0 2015 Templeton Türkiye 0 0 24.65 0 0 0 24.65 0 0 13.26 0 0 0 13.26 0 2015/2021 Kayseri Health 14.43 12.05 0 0 0 2.00 16.43 0 14.43 0 0 0 0.54 14.98 0 2015/2021/2013 Izsu 30.04 27.15 0 0 0 0 30.04 0 30.04 0 0 0 0 30.04 0 2016 AKCEZ 42.44 41.17 0 0 0 3.00 45.44 27.76 42.44 0 0 0 0.57 43.01 27.76 2016 Akfen Energy 0 0 50.00 0 0 0 50.00 0 0 50.00 0 0 0 50.00 0 2016 Kremna Elektrik 39.61 3.23 0 0 0 3.00 42.61 0 39.61 0 0 0 0.87 40.48 0 2016 Revo Capital 0 0 0.30 0 0 0 0.30 0 0 0.08 0 0 0 0.08 0 2016 Taxim Capital I 0 0 14.01 0 0 0 14.01 0 0 12.27 0 0 0 12.27 0 2016/2018 Ronesans Holding 0 0 0 162.78 0 0 162.78 0 0 0 162.78 0 0 162.78 0 2017 Elazig Health 71.20 14.51 0 0 0 0 71.20 0 71.20 0 0 0 0 71.20 0 2017 Mediterra II 0 0 16.70 0 0 0 16.70 0 0 15.50 0 0 0 15.50 0 2017/2019/2022/2023/2018/2020 RSF SMBC ECA 250.00 0 0 0 250.00 0 500.00 0 0 0 0 247.50 0 247.50 0 2017/2020 Martur 0 0 31.92 0 0 0 31.92 0 0 31.92 0 0 0 31.92 0 2018 Antalya Mun 61.30 25.06 0 0 0 0 61.30 0 61.30 0 0 0 0 61.30 0 2018 TUPRAS A-S 44.00 55.00 0 0 0 0 44.00 0 44.00 0 0 0 0 44.00 0 2019/2013 EarlyBird I 0 0 18.11 0 0 0 18.11 0 0 0 0 0 0 0 0 2019/2021 Actera III 0 0 65.00 0 0 0 65.00 0 0 30.69 0 0 0 30.69 0 2019/2021/2017/2022/2023/2018/2020 Garanti Bankasi 108.33 98.23 0 0 131.87 0 240.20 14.67 108.33 0 0 131.87 0 240.20 14.67 2020 Turkven IV 0 0 50.00 0 0 0 50.00 0 0 11.91 0 0 0 11.91 0 2021/2018 NOBEL ILAC 22.83 11.15 0 0 0 0 22.83 0 22.83 0 0 0 0 22.83 0 2021/2022 MUFG ECA GTLP 175.00 12.75 0 0 0 0 175.00 0 146.50 0 0 0 0 146.50 0 2021/2023 CI Revo 0 0 6.94 0 0 0 6.94 0 0 6.91 0 0 0 6.91 0 2021/2023 Otosan AS 264.34 29.60 0 0 0 0 264.34 0 264.34 0 0 0 0 264.34 0 2022 Ege Endustri 42.44 0 0 0 0 0 42.44 0 42.44 0 0 0 0 42.44 0 2022 ISC-500 Istanbul 0 0 2.18 0 0 0 2.18 0 0 0.89 0 0 0 0.89 0 2022 Kordsa Teknik 110.00 0 0 0 0 0 110.00 0 110.00 0 0 0 0 110.00 0 2022 OEDAS 87.75 10.47 0 0 0 0 87.75 0 42.45 0 0 0 0 42.45 0 2023 GTLP Citi Türkiye 100.00 0 0 0 0 0 100.00 0 37.50 0 0 0 0 37.50 0 2023 Marport 105.50 0 0 0 0 0 105.50 44.50 52.75 0 0 0 0 52.75 22.25 2023/2018 Isbank 180.00 25.00 0 0 0 0 180.00 0 180.00 0 0 0 0 180.00 0 2023/2020 FIGO 0 0 3.55 0 0 0 3.55 0 0 3.55 0 0 0 3.55 0 Netafim Türkiye 2.64 3.19 0 0 0 0 2.64 0 2.64 0 0 0 0 2.64 0 Grand Total: 2,889.33 2,518.18 540.78 230.52 975.70 12.89 4,649.22 461.72 2,450.28 411.84 230.52 965.27 5.98 4,063.89 439.47 84 CLR Annex 6: MIGA Guarantee Portfolio over the CPF Period (FY17-23) Effective Expiry Investor Business Project ID Project Name Cover FY17 FY18 FY19 FY20 FY21 FY22 FY23 Date Date Country Sector 9416 Turkish Eximbank 03/31/2015 03/28/2025 United Kingdom Financial NH-SOE 298.3 261.1 219.6 179.4 144.2 101.1 66.9 12360 Orfin Finansman A.S. 12/31/2014 12/30/2021 France Financial PRI 54.2 55.3 54.1 53.2 56.5 - - 13471 Turkish EximBank II 06/30/2016 06/29/2026 United States Financial NH-SOE 991.7 981.6 954.7 817.7 692.2 522.7 394.9 14295 Turk EximBank III 07/02/2018 06/27/2028 United Kingdom Financial NH-SOE - - 589.4 574.7 589.8 525.3 529.6 NH - Sub 9401 Istanbul Municipality 04/21/2011 10/14/2020 United Kingdom Infrastructure 117.3 83.9 48.3 15.5 - - - Sovereign NH - Sub 11781 IMM Ferry Project 06/27/2013 05/12/2023 Germany Infrastructure 46.7 39.0 29.9 21.6 15.0 6.4 - Sovereign The Municipality of NH - Sub 12240 06/05/2014 02/26/2027 Germany Infrastructure 71.8 64.6 55.0 46.4 41.3 29.5 24.1 Izmir Sovereign NH - Sub 12516 Uskudar Metro 02/12/2015 02/05/2028 France Infrastructure 187.8 185.5 160.3 137.7 125.2 91.9 78.3 Sovereign NH - Sub 12580 IMM Light Rail 06/30/2015 05/31/2030 Germany Infrastructure 33.0 31.6 27.8 24.5 23.0 17.5 15.7 Sovereign 14306 Ulug Enerji 03/04/2022 09/26/2028 United Kingdom Infrastructure PRI - - - - - 128.3 122.3 Limak Uludag 14919 Perakende Elektrik Satis 03/04/2022 03/03/2039 United Kingdom Infrastructure PRI - - - - - 20.7 20.7 A.S. Uludag Elektrik Dagitim 14920 03/04/2022 03/03/2039 United Kingdom Infrastructure PRI - - - - - 82.8 82.8 A.S. Türkiye Gaziantep 11754 04/21/2017 04/20/2037 Korea, Republic of Services PRI 61.4 62.9 61.5 60.5 64.2 56.2 190.5 Hospital BLT Project Adana Integrated 12118 12/18/2014 12/17/2034 Luxembourg Services PRI 145.8 148.8 145.5 143.3 152.0 133.0 138.8 Health Campus Yozgat Education and 12870 06/19/2015 06/18/2035 Luxembourg Services PRI 52.4 53.3 51.5 50.1 52.4 45.2 46.3 Research Hospital Elazig Integrated Health 12871 11/17/2016 11/16/2036 Luxembourg Services PRI 342.4 349.5 337.5 321.9 328.8 277.3 277.6 Campus Bursa Integrated Health 13543 05/11/2017 05/10/2032 Luxembourg Services PRI 109.3 111.6 111.1 109.4 116.0 101.5 105.9 Care Center 13861 Ikitelli Hospital 07/19/2017 07/18/2037 Netherlands Services PRI - 118.0 121.2 121.1 118.1 95.7 90.2 Total 2,512.0 2,546.6 2,967.4 2,677.3 2,518.7 2,234.9 2,184.5 85 CLR Annex 6a: MIGA’s new guarantee issuance during the CPF Period Issued Effective Expiration Product Line Project Id Project Name Business Sector Name Gross Exposure ($US$) Month Date Date Code FY17 July 13471 Turkish EximBank II 06/30/2016 11/07/2026 Financial NH -SOE 231,124,912 July 1 Project 231,124,912 November 12871 Elazig Integrated Health Campus 11/17/2016 12/12/2036 Services PRI 77,416,991 13471 Turkish EximBank II 06/30/2016 11/07/2026 Financial NH- SOE 150,931,161 November 2 Projects 228,348,152 December 12871 Elazig Integrated Health Campus 11/17/2016 12/12/2036 Services PRI 248,501,666 December 1 Project 248,501,666 April 11754 Türkiye Gaziantep Hospital BLT Project 04/21/2017 04/25/2038 Services PRI 57,613,970 April 1 Project 57,613,970 May 13543 Bursa Integrated Health Care Center 05/11/2017 05/10/2032 Services PRI 104,184,466 May 1 Project 104,184,466 FY18 July 13861 Ikitelli Hospital 07/19/2017 07/18/2037 Services PRI 118,676,077 July 1 Project 118,676,077 FY19 July 14295 Turk EximBank III 07/02/2018 06/27/2028 Financial NH-SOE 606,114,219 July 1 Project 606,114,219 November 13543 Bursa Integrated Health Care Center 05/11/2017 05/10/2032 Services PRI 1,982,272 November 1 Project 1,982,272 FY22 March 14306 Ulug Enerji 03/04/2022 09/26/2028 Infrastructure PRI 128,250,000 14919 Limak Uludag Perakende Elektrik Satis A.S. 03/04/2022 03/03/2039 Infrastructure PRI 20,700,000 14920 Uludag Elektrik Dagitim A.S. 03/04/2022 03/03/2039 Infrastructure PRI 82,800,000 March 3 Projects 231,750,000 FY23 April 11754 Türkiye Gaziantep Hospital BLT Project 04/21/2017 04/25/2038 Services PRI 134,196,750 April 1 Project 134,196,750 Total 1,962,492,483 86 CLR Annex 7: Data Verification Sources Description  Status at CLR  Overall rating  Focus Area 1: GROWTH (Moderately Satisfactory) Objective 1: Contribute to Strengthened Policies that Boost Economic Stability  Partially Achieved  Indicator 1: Total number of bank loans to corporates restructured under the new financial restructuring framework.  Target: 200 (2023) / Actual: 603 (As of July 2023)  Achieved  https://www.tbb.org.tr/en/banking-legislation/professional-codes-/91 Indicator 2: Improved transparency of public sector for contractual commitments  Target: The Integrated Financial Management System is fully operational and accessible by Central Government institutions to capture the contractual commitments from public procurements (2022)  Actual: The Integrated Financial Management System is operational but contractual commitments captured only after processing of first payment.   ICR of P158799 Public Finance Management Reform Implementation Support Project Partially https://worldbankgroup.sharepoint.com/sites/P158/P158799/Shared%20Documents/Forms/AllItems.aspx?id=%2Fsites%2FP158%2FP158799%2FShared%20 Achieved  Documents%2FProject%2FImplementation%20Completion%20and%20Results%20Report%20%28ICR%29%20%2D%20Turkey%20Public%20Finance%20Man agement%20Reform%20Implementation%20Support%20Project%20%2D%20P158799%5F1%2Edocx&parent=%2Fsites%2FP158%2FP158799%2FShared%20 Documents%2FProject%2F Ministry of Treasury and Finance’s website dedicated to the IFMIS Project https://muhasebat.hmb.gov.tr/bkmybs-projesinin-amaci Objective 2: Enhanced Access to Finance to Underserved Segments  Mostly Achieved  Indicator 1: People, MSMEs and exporters reached with IFC financial services  Target: 3,6 million (2023) / Actual: 5,4 million (2021)  Achieved  Data can be aggregated from AIMM Navigator: https://aimm.ifc.org/?projectId=null Indicator 2: Of which women owned SMEs reached IFC (number) Target: 100,000 (2023) / Actual: 85,538 (2021)  Partially Achieved  Data can be aggregated from AIMM Navigator: https://aimm.ifc.org/?projectId=null Indicator 3: MSMEs and exporters served by banks benefiting from IBRD financial intermediary loans  Target: 480,000 (2023) / Actual: 239,000  Complementary Indicator MSMEs and exporters served by the institutions benefitting from IBRD non-financial-intermediary loans: 58,853 Proposed New Indicator: Total MSMEs and exporters served by the institutions benefitting from IBRD lending operations (including FI and non-FI loans): 297,853. Partially Achieved  Based on ISRs of Inclusive Access to Finance Project (P163225) https://documentsinternal.worldbank.org/Search/34040394 Long Term Export Finance Guarantee (P171448) https://documentsinternal.worldbank.org/Search/34095187 Turkey Rapid Support for Micro and Small Enterprises during the COVID-19 crisis (P174144) 87 Description  Status at CLR  Overall rating  https://documents1.worldbank.org/curated/en/099725011242229533/pdf/P1741440c1a6d20430aaf00ccda2901f989.pdf Emergency Firm Support Project (P174112) https://documents1.worldbank.org/curated/en/099072023090542708/pdf/P174112026363d0c00af4a07db8a084d9cc.pdf Formal Employment Creation Project (P171766) https://documents1.worldbank.org/curated/en/099150005212215634/pdf/P171766091fa3900d09b6109c3bcc9cb98e.pdf Indicator 4: Number of women-inclusive enterprises financed under IBRD lines of credit  Target: 80 (2023) / Actual: 474 (As of May 2023)  Based on ISR of Inclusive Access to Finance Project (P163225) https://documentsinternal.worldbank.org/Search/34040394 Long Term Export Finance Guarantee (P171448) Achieved  https://documentsinternal.worldbank.org/Search/34095187 Emergency Firm Support Project (P174112) https://documents1.worldbank.org/curated/en/099072023090542708/pdf/P174112026363d0c00af4a07db8a084d9cc.pdf Turkey Rapid Support for Micro and Small Enterprises during the COVID-19 crisis (P174144) https://documents1.worldbank.org/curated/en/099725011242229533/pdf/P1741440c1a6d20430aaf00ccda2901f989.pdf Formal Employment Creation Project (P171766) https://documents1.worldbank.org/curated/en/099150005212215634/pdf/P171766091fa3900d09b6109c3bcc9cb98e.pdf Objective 3: Enhanced Competitiveness and Employment in Selected Industries  Mostly Achieved  Indicator 1: Employment supported by IFC clients (manufacturing, telecom, technology, agribusiness)  Target: 60,000 (2023) / Actual: 135,857 (2022)  Data can be aggregated from AIMM Navigator: https://aimm.ifc.org/?projectId=null Complementary Indicator Employment supported by IBRD lending operations (manufacturing, telecom, technology, agribusiness): 90,730 Proposed New Indicator: Achieved  Total employment supported by WB (including IFC and IBRD lending operations): 226,587 Based on ISRs of Formal Employment Creation Project (P171766) https://documents1.worldbank.org/curated/en/099150005212215634/pdf/P171766091fa3900d09b6109c3bcc9cb98e.pdf Turkey Rapid Support for Micro and Small Enterprises during the COVID-19 crisis (P174144) https://documents1.worldbank.org/curated/en/099725011242229533/pdf/P1741440c1a6d20430aaf00ccda2901f989.pdf Long Term Export Finance Guarantee (P171448) https://documentsinternal.worldbank.org/Search/34095187 Indicator 2: o/w Female Employment supported IFC Target: 14,000 (2023) / Actual: 40,133 (2022)  Achieved  Data can be aggregated from AIMM Navigator: https://aimm.ifc.org/?projectId=null Indicator 3: Employment supported by IFC equity funds investees  Achieved  Target: 20,000 (2021) / Actual: 22,025 (As of October 2022)  88 Description  Status at CLR  Overall rating  Data can be aggregated from AIMM Navigator: https://aimm.ifc.org/?projectId=null Indicator 4: Improvement in Composite Doing Business Score  Target: > 78 (2021) / Actual: 76.8 (2020)  Mostly Achieved Based on https://archive.doingbusiness.org/en/data/exploreeconomies/turkey Description  Status at CLR  Overall rating  Focus Area 2: INCLUSION (Moderately Satisfactory) Objective 4: Increased Effectiveness of Social Assistance  Mostly Achieved  Indicator 1: Number of social assistance beneficiaries referred to employment services.  Target: 800,000 (2022) / Actual: 822,000 (2022)  Based on the official website of the Ministry of Family and Social Services Activity Reports (2018-2019-2021-2022) https://www.aile.gov.tr/media/81736/2018-yili-faaliyet-raporu.pdf (page 263) – 2018 data https://www.aile.gov.tr/media/49934/acshb_2019_yili_faaliyet_raporu.pdf (page 149) – 2019 data https://www.aile.gov.tr/media/142243/ashb_faaliyet_raporu_22092023.pdf (page 202)- 2021-2022 data Strategic Plan of the Ministry of Family and Social Services Achieved  (http://www.sp.gov.tr/upload/xSPStratejikPlan/files/SdeFs+Aile_Calisma_ve_Sosyal_Hizmetler_Bakanligi_19-23_SP.pdf In the years 2018-2019, 2021, and 2022, the total data obtained from the activity reports prepared by the ministry is 794,937. According to the 2019-2023 strategic plan prepared by the ministry, the target for the year 2020 was set at 140,000. However, due to COVID, the actual achievement has not been measured or reported. Additionally, during the CLR report period in the first 6 months of 2023, the ministry has not published any data. In discussions with colleagues in the ministry, it has been communicated that as of the end of the year 2022, the cumulative value for the years 2018-2022 is reported to be 822,000. Therefore, we evaluated the target as achieved and should be reported as 822,000 as of the end of 2022. Indicator 2: Social protection performance indicators related to benefit levels, equity and coverage included in MOFLSS M&E system for evidence-based program management. Target: Yes (2022) / Actual: No  Not Achieved  There is no official/publicly disclosed report claiming achievement of this indicator. Objective 5: Increased Labor Force Participation of Women & Vulnerable Groups  Mostly Achieved  Indicator 1: Increased number of women placed in jobs by ISKUR  Target: 900,000 by 2023 / Actual: 1,874,699 (2019-April 2023) Complementary Indicator Increased number of women placed in jobs by IBRD lending operations (excluding ISKUR placements): 43,591 Achieved  Proposed New Indicator: Increased number of women placed in jobs by IBRD lending operations: 1,918,290 Based on ISR Support for Transition to Labor Market Project (P171471) 89 Description  Status at CLR  Overall rating  https://documents1.worldbank.org/curated/en/099162503272328495/pdf/P1714710de168d0390a61e073e8b7505e55.pdf Based on ICR Employment Support for SuTP and Turkish Citizens (P161670) https://documents1.worldbank.org/curated/en/099081623140040996/pdf/BOSIB157129d0d1e3431403318145177920f8a7900.pdf Official Website of Turkish Employment Agency (ISKUR) https://www.iskur.gov.tr/kurumsal-bilgi/istatistikler/ ISKUR sometimes can update data from the previous periods to correct any errors. The currently available data from the website for 2019-2023 (April) is 1,892,746. This can be reached by summing over the values of job placements for women across 2019-20-21-22, using 2022 annual statistics files (please follow the shared link, find “Istatistik Yillari” folder, then see “Tablo 4” of the “2022 Yillik Tablolari” file in the folder), and adding to that the information obtained from the April 2023 monthly statistics file (please follow the shared link, find “Aylik Istatistik Bultenleri” folder, see “Tablo 5” of “Nisan 2023 Aylik Tablolari” file under 2023 folder). Indicator 2: Increased number of youth placed in jobs by ISKUR  Target: 450,000 male; 400,000 female youth by 2023 / Actual: 1,190,792 (male) and 758,345 (female) (2019-April 2023)  Based on ISR of Support for Transition to Labor Market Project (P171471) https://documents1.worldbank.org/curated/en/099162503272328495/pdf/P1714710de168d0390a61e073e8b7505e55.pdf https://worldbankgroup-my.sharepoint.com/:w:/r/personal/mozatesgurbuz_worldbank_org/_layouts/15/Doc.aspx?sourcedoc=%7BDED1E031-37E6-4C61- 9AB6-FE717C7A9FAA%7D&file=0_master_CLR_Annex7.docx&action=default&mobileredirect=true Based on ICR Employment Support for SuTP and Turkish Citizens (P161670) Achieved  https://documents1.worldbank.org/curated/en/099081623140040996/pdf/BOSIB157129d0d1e3431403318145177920f8a7900.pdf Official Website of Turkish Employment Agency (ISKUR) https://www.iskur.gov.tr/kurumsal-bilgi/istatistikler/ ISKUR sometimes can update data from the previous periods to correct any errors. The currently available data suggests 1,190,792 for male and 758,345 female youths. This can be reached by summing over the values of job placements by age groups across 2019-20-21-22, using the associated annual statistics files (please follow the shared link, find “Istatistik Yillari” folder, then see “Tablo 5” of each of the “2019-20-21-22 Yillik Tablolari” files in the folder), and adding to that the information obtained from the April 2023 monthly statistics file (please follow the shared link, find “Aylik Istatistik Bultenleri” folder, see “Tablo_9_10” of “Nisan 2023 Aylik Istatistik Tablolari” file under 2023 folder). Indicator 3: Direct employment supported by IFC clients in less developed regions  Target: 45,000 (2023) / Actual: 38,111 (2021)  Not Achieved  Data can be aggregated from AIMM Navigator: https://aimm.ifc.org/?projectId=null Objective 6: Strengthened Performance of the Education and Health Sectors  Mostly Achieved  Indicator 1: Number of students, teachers and staff having access to schools constructed or retrofitted by IBRD operations  Target: 320,000 (2023) / Actual: 49,000 (As of 2023)   Based on ISR of Not achieved  Disaster Risk Management in Schools Project (P157683) https://documents1.worldbank.org/curated/en/099071123172519464/pdf/P157683087a6370bd0837c007183871c2cc.pdf Education Infrastructure for Resilience (EU Facility for SuTP) (P162004) https://documents1.worldbank.org/curated/en/099041223175522415/pdf/P1620040cf8a380cc0a1f40e1764a2d322e.pdf 90 Description  Status at CLR  Overall rating  Indicator 2: Percent of households that receive from health workers counselling or education related to healthy living (to be DROPPED) Target: 50% in 2022 (at end of IBRD project) / Not Verified.  Proposed New Indicator: Percent of Turkish population that has been vaccinated against COVID-19: 68.9% Achieved Based on ISR of Health System Strengthening and Support Project (P152799), https://documents1.worldbank.org/curated/en/099061923125037807/pdf/P15279902535db04a0b8740b7671c775007.pdf Indicator 3: Number of Patients Served through IFC health sector clients  Target: 3.0 million (2023) / Actual: 7,9 million (2022) Achieved  Data can be aggregated from AIMM Navigator: https://aimm.ifc.org/?projectId=null Description  Status at CLR  Overall rating  Focus Area 3: SUSTAINABILITY (Moderately Satisfactory) Objective 7: Improved Reliability of Energy Supply and Generation of Green Energy  Mostly Achieved  Indicator 1: Renewable electricity generation as percentage of total generation (%).  Target: 35% in 2022 / Actual: 45% (As of end 2022)   Achieved  Based on the data received from TEIAS https://www.teias.gov.tr/aylik-elektrik-uretim-tuketim-raporlari Indicator 2: Total power generation and distribution clients reached (IFC) (millions)  Target: 7,0 (2023) / Actual: 6,86 million (2022)  Mostly Achieved  Data can be aggregated from AIMM Navigator: https://aimm.ifc.org/?projectId=null Indicator 3: Increased capacity of gas storage (bcm).  Target: 3.8 bcm in 2021 / Actual: 3.78 bcm in 2021  Achieved  Based on ISR of Gas Storage Expansion Project (P162727) https://documents1.worldbank.org/curated/en/099071723085095888/pdf/P1627271ac9ca7b51540e1479a19699160f3ff767a53.pdf Indicator 4: Gas imports through TANAP (bcm/annum).  Target: 5 bcm in 2022 / Actual: 6 bcm in 2022  Based on ICR of Trans-Anatolian Natural Gas Pipeline Project (P157416) Achieved  https://worldbankgroup- my.sharepoint.com/personal/aanil_worldbank_org/_layouts/15/onedrive.aspx?id=%2Fpersonal%2Faanil%5Fworldbank%5Forg%2FDocuments%2FMicrosoft %20Teams%20Chat%20Files%2FImplementation%20Completion%20and%20Results%20Report%20%28ICR%29%20Document%20%2D%20Trans%2DAnatoli an%20Natural%20Gas%20Pipeline%20Project%20%2D%20P157416%2Epdf&parent=%2Fpersonal%2Faanil%5Fworldbank%5Forg%2FDocuments%2FMicros oft%20Teams%20Chat%20Files&ga=1 Indicator 5: Cumulative energy savings achieved through WB-financed energy sector projects (MWh).  Target: 11,500,000 in 2022 / Actual: 11,590,181 MWh as of 2023 Achieved  Based on ICR of 91 Description  Status at CLR  Overall rating  SME Energy Efficiency Project https://documents1.worldbank.org/curated/en/904171586198902878/pdf/Turkey-Small-and-Medium-Enterprises-Energy-Efficiency-Project.pdf Based on ISR of Turkey Energy Efficiency in Public Buildings (P162762) https://documents1.worldbank.org/curated/en/099060623191583662/pdf/P1627620f00b690950999900b1244e39071.pdf Objective 8: Improved Sustainability and Resilience of Cities  Partially Achieved  Indicator 1: Improved service delivery and expanded access to digital land registry and cadaster information.  Increased customer satisfaction at national level  Target: 90% in 2022 / Actual: 83% in 2021   Mostly achieved  Based on ISR of Turkey Land Registration and Cadastre Modernization Project (P106284) https://documents1.worldbank.org/curated/en/099010012162140840/pdf/Disclosable0Ve0284000Sequence0No029.pdf Indicator 2: Number of additional people benefitting from improved urban infrastructure through IBRD and IFC financing (number in millions)  Target: 1,3 (2023) / Actual: 930,000 (As of May 2023) IBRD Based on ISR of Mostly Achieved  SUSTAINABLE CITIES (P128605) https://documents1.worldbank.org/curated/en/099082223031524998/pdf/P12860500a666502f09e690e61380936a0d.pdf Sustainable Cities Project 2 (P161915) https://documents1.worldbank.org/curated/en/099061323144031021/pdf/P16191505876d40680b6250acdc4e626529.pdf Indicator 3: Increased resilience of cities through number of disaster resilient public buildings retrofitted, reconstructed, or newly constructed through IBRD operations.  Target: 300 (2023) / Actual: 57 (As of 2023)  Not Achieved  Based on ISR of Education Infrastructure for Resilience (EU Facility for SuTP) (P162004) https://documents1.worldbank.org/curated/en/099041223175522415/pdf/P1620040cf8a380cc0a1f40e1764a2d322e.pdf Indicator 4: Percentage improvement in the quality of CE as measured through the CE Quality Index  Target: 60% of projects approved for the remainder of the CPF are of high quality. (Average of FY20-FY21-FY22) / Actual: 87.5% (FY20-FY22)  Achieved  Based on monthly data provided by Social Sustainable and Inclusion Global Practice Based on MMR of Türkiye, June 2023 Objective 9: Strengthened Results Under Climate Action Agenda  Mostly Achieved  Indicator 1: Annual GHG emissions either reduced or avoided through the WB program (tonnes/year)  Target: 1,000,000 IBRD reduced, 350,000 reduced IFC, 750,000 avoided at country-level through adopting GB standards (2023) / Actual: 2.232.525tonnes/year (2023)   Achieved  Based on ISR of Turkey Energy Efficiency in Public Buildings (P162762) https://documents1.worldbank.org/curated/en/099060623191583662/pdf/P1627620f00b690950999900b1244e39071.pdf Turkey Geothermal Development Project (P151739)1 92 Description  Status at CLR  Overall rating  https://documents1.worldbank.org/curated/en/099062823062085026/pdf/P15173906ac3b304709f040ab17154575b4.pdf Renewable Energy Integration (P144534) https://documents1.worldbank.org/curated/en/099185503122312346/pdf/P14453406f7f030c609c1a0d12228612eb6.pdf Based on ICR of Turkey SME Energy Efficiency Project (P122178, P132189) https://documents1.worldbank.org/curated/en/904171586198902878/pdf/Turkey-Small-and-Medium-Enterprises-Energy-Efficiency-Project.pdf Indicator 2: Area provided with new/improved irrigation or drainage services (Ha)  Target: 50,000 ha (2023) / Actual: 9600 ha (As of April 2022)  Not Achieved  Based on ISR of Turkey Irrigation Modernization Project (P158418) https://documents1.worldbank.org/curated/en/099062223135522916/pdf/P158418044f13c0fe09d530894a1c64cfbc.pdf 93 Annex 4: Selected Indicators of Bank Portfolio Performance and Management As of Date 02/07/2024 Indicator FY21 FY22 FY23 FY24 Portfolio Assessment Number of Projects Under Implementation ᵃ 22.0 23.0 29.0 29.0 Average Implementation Period (years) ᵇ 3.5 3.6 2.9 3.3 Percent of Problem Projects by Number ᵃ˒ ͨ 13.6 8.7 13.8 17.2 Percent of Problem Projects by Amount ᵃ˒ ͨ 14.6 5.4 8.8 13.6 Percent of Projects at Risk by Number ᵃ˒ ͩ 13.6 8.7 17.2 17.2 Percent of Projects at Risk by Amount ᵃ˒ ͩ 14.6 5.4 10.1 13.6 Disbursement Ratio (%) ͤ 13.9 17.0 18.0 11.8 Portfolio Management CPPR during the year (yes/no) Supervision Resources (total US$) Average Supervision (US$/project) Memorandum Item Since FY80 Last Five FYs Proj Eval by IEG by Number 161 5 Proj Eval by IEG by Amt (US$ millions) 31,882.6 1,410.7 % of IEG Projects Rated U or HU by Number 24.1 0.0 % of IEG Projects Rated U or HU by Amt 14.2 0.0 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 94 Annex 5: Operations Portfolio (IBRD/IDA and Grants) As of 12/31/2023 Closed Projects 200 IBRD/IDA* Total Disbursed (Active) 3,294.40 of which has been repaid(1) 90.52 Total Disbursed (Closed) 35,177.91 of which has been repaid 26,504.14 Total Disbursed (Active + Closed) 38,472.31 of which has been repaid 26,594.66 Total Undisbursed (Active) 7,481.17 Total Undisbursed (Closed) 0.00 Total Undisbursed (Active + Closed) 7481.169 Active Projects Difference Between Expected and Last PSR Actual Supervision Rating Original Amount in US$ Millions Disbursements ͣ ̷ Project ID Project Name DO IP FY IBRD Grants Cancel. Undisb. Orig. Frm Rev'd P175011 Agriculture climate-smart project S MS 2022 341.3 0.0 340.2 52.6 0.0 P157683 DRM in Schools MU MU 2019 300.0 0.0 298.9 228.8 53.1 P174112 Emergency Firm Support Project S S 2021 500.0 0.0 89.4 -144.8 36.4 P162762 Energy Efficiency in Public Buildings S S 2020 150.0 0.0 78.5 0.7 8.1 P171766 Formal Employment Creation Project S S 2020 347.4 0.0 55.1 44.4 16.9 P162727 Gas Storage Expansion Project MS MS 2018 600.0 0.0 251.5 251.5 0.0 P158418 GEF Turkey Irrigation Modernization MS MS 2019 252.0 0.0 143.5 38.3 0.0 95 P167363 GEF Turkey Irrigation Modernization # MS 2019 0.0 2.0 0.0 1.0 -0.8 0.0 P178274 Green Finance Project # # 2024 155.0 0.0 155.0 3.2 0.0 P179217 Land Management Infrastructure S S 2023 85.4 0.0 85.4 3.0 0.0 P169996 Municipal Services Improvement Project MU MU 2020 148.8 0.0 136.0 62.2 0.0 P181068 Post-Earthquake MSME Recovery Project S S 2023 450.0 0.0 0.9 -324.4 0.0 P179867 Public and Municipal RE Project # # 2023 549.2 0.0 549.2 9.9 0.0 P170532 Rail Logistics Improvement Project MS MU 2020 350.0 0.0 346.1 180.0 0.0 P144534 Renewable Energy Integration S S 2014 625.0 0.0 122.4 -94.1 191.5 P173025 Resilient Cities Project MS MS 2023 512.1 0.0 511.1 63.9 0.0 P173997 Safe Schooling MS MS 2020 160.0 0.0 102.4 102.4 38.1 P175894 Seismic Resilience & Energy Efficiency S MS 2021 265.0 0.0 259.9 69.1 0.0 P128605 Sustainable Cities MS MS 2017 132.8 0.0 0.0 -4.7 0.0 P161915 Sustainable Cities Project 2 MS MS 2018 652.1 0.0 554.0 -31.3 305.4 P173988 Turkey Emergency COVID-19 Health Project S S 2020 600.0 0.0 0.0 -484.7 -584.2 P151739 Turkey Geothermal Development Project MS MU 2017 550.0 0.0 299.3 39.1 89.3 P172562 Turkey Integrated Landscape Project MS MU 2021 135.0 0.0 126.4 16.8 0.0 P171645 Turkey OIZ Project MS MS 2021 300.0 0.0 295.7 202.6 0.0 P179345 Türkiye Climate Resilient Forests S S 2023 400.0 0.0 400.0 1.0 0.0 P180849 Türkiye Earthquake ERL S S 2023 1,000.0 0.0 949.7 143.3 0.0 P176608 Türkiye ERL S MS 2022 449.3 0.0 446.7 94.1 0.0 P179255 Türkiye Green Industry Project S S 2023 450.0 0.0 448.7 19.4 0.0 P174915 Türkiye Water Circularity and Efficiency S S 2023 434.6 0.0 434.4 6.5 0.0 Overall Result 10,894.9 2.0 0.0 7,481.2 548.0 154.6 * 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. 96 Annex 6: Statement of IFC’s Held and Disbursed Portfolio As of 12/31/2023 (In USD Millions) Committed Disbursed Outstanding FY **Quasi **Quasi Company Loan Equity *GT/RM Participant Loan Equity *GT/RM Participant Approval Equity Equity FY19 ACTERA III 0.00 66.03 0.00 0.00 0.00 0.00 34.89 0.00 0.00 0.00 FY15 ADANA HEALTH 27.31 0.00 0.00 1.89 29.72 27.31 0.00 0.00 1.89 29.72 FY17 AKBANK TK 90.00 0.00 0.00 0.00 0.00 90.00 0.00 0.00 0.00 0.00 FY23 AKBANK TK 0.00 0.00 75.00 0.00 0.00 0.00 0.00 75.00 0.00 0.00 FY16 AKFEN ENERGY 0.00 100.00 0.00 0.00 0.00 0.00 100.00 0.00 0.00 0.00 FY19 ALTERNATIFBANK 13.33 0.00 0.00 0.00 0.00 13.33 0.00 0.00 0.00 0.00 FY18 ANTALYA MUNI 59.08 0.00 0.00 0.00 0.00 59.08 0.00 0.00 0.00 0.00 FY22 ARCELIK 166.16 0.00 0.00 0.00 0.00 166.16 0.00 0.00 0.00 0.00 FY16 ASSAN ALUMINYUM 5.50 0.00 0.00 0.00 0.00 5.50 0.00 0.00 0.00 0.00 FY23 ASSAN ALUMINYUM 90.00 0.00 0.00 0.00 0.00 90.00 0.00 0.00 0.00 0.00 FY14 ASTRA DORMS 0.00 7.50 0.00 0.00 0.00 0.00 7.50 0.00 0.00 0.00 FY15 CI HEPSIBURADA 0.00 8.02 0.00 0.00 0.00 0.00 8.02 0.00 0.00 0.00 FY21 DENIZBANK AS 92.31 0.00 0.00 0.00 0.00 92.31 0.00 0.00 0.00 0.00 FY23 DENIZBANK AS 125.00 0.00 0.00 0.00 0.00 125.00 0.00 0.00 0.00 0.00 FY13 EARLYBIRD I 0.00 40.16 0.00 0.00 0.00 0.00 22.80 0.00 0.00 0.00 FY22 EGE ENDUSTRI 44.31 0.00 0.00 0.00 0.00 44.31 0.00 0.00 0.00 0.00 FY17 ELAZIG HEALTH 72.22 0.00 0.00 0.00 0.00 72.22 0.00 0.00 0.00 0.00 FY15 ETLIK HEALTH 78.94 0.00 0.00 0.00 83.15 78.94 0.00 0.00 0.00 83.15 97 FY16 ETLIK HEALTH 0.00 0.00 0.00 3.00 0.00 0.00 0.00 0.00 2.10 0.00 FY10 EURASIA CAPITAL 0.00 0.01 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.00 FY15 FIBABANKA 0.00 17.34 0.00 0.00 0.00 0.00 17.34 0.00 0.00 0.00 FY23 FIGO 0.00 2.20 0.00 0.00 0.00 0.00 2.20 0.00 0.00 0.00 FY18 FORIBA 0.00 3.50 0.00 0.00 0.00 0.00 3.50 0.00 0.00 0.00 FY23 FRAPORT TAV ANTA 166.16 0.00 0.00 0.00 0.00 166.16 0.00 0.00 0.00 0.00 FY15 GAMA ENERJI 0.00 126.05 0.00 0.00 0.00 0.00 104.03 0.00 0.00 0.00 FY18 GARANTI BANKASI 75.00 0.00 0.00 0.00 0.00 75.00 0.00 0.00 0.00 0.00 FY24 IKAS 0.00 7.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 FY18 ISBANK 65.00 0.00 0.00 0.00 0.00 65.00 0.00 0.00 0.00 0.00 FY23 ISBANK 100.00 0.00 0.00 0.00 0.00 100.00 0.00 0.00 0.00 0.00 FY16 ISTANBUL MMI 33.23 0.00 0.00 0.00 27.69 33.23 0.00 0.00 0.00 27.69 FY15 IYZICO 0.00 2.86 0.00 0.00 0.00 0.00 2.86 0.00 0.00 0.00 FY17 IYZICO 0.00 2.00 0.00 0.00 0.00 0.00 2.00 0.00 0.00 0.00 FY19 IYZICO 0.00 0.50 0.00 0.00 0.00 0.00 0.50 0.00 0.00 0.00 FY13 IZMIR MUNI 17.80 0.00 0.00 0.00 0.00 17.80 0.00 0.00 0.00 0.00 FY14 IZMIR MUNI 10.42 0.00 0.00 0.00 0.00 10.42 0.00 0.00 0.00 0.00 FY15 IZMIR MUNI 6.62 0.00 0.00 0.00 0.00 6.62 0.00 0.00 0.00 0.00 FY13 IZSU 9.54 0.00 0.00 0.00 0.00 9.54 0.00 0.00 0.00 0.00 FY15 IZSU 4.53 0.00 0.00 0.00 0.00 4.53 0.00 0.00 0.00 0.00 FY21 IZSU 7.87 0.00 0.00 0.00 0.00 7.87 0.00 0.00 0.00 0.00 FY24 KARSAN 38.77 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 FY15 KAYSERI HEALTH 11.06 0.00 0.00 2.00 0.00 11.06 0.00 0.00 0.54 0.00 FY22 KORDSA TEKNIK 110.00 0.00 0.00 0.00 0.00 110.00 0.00 0.00 0.00 0.00 FY16 KREMNA ELEKTRIK 38.66 0.00 0.00 3.00 0.00 38.66 0.00 0.00 1.75 0.00 FY23 MARPORT 105.50 0.00 0.00 6.00 44.50 84.57 0.00 0.00 1.90 35.67 98 FY17 MARTUR 0.00 31.92 0.00 0.00 0.00 0.00 31.92 0.00 0.00 0.00 FY12 MEDITERRA I 0.00 4.62 0.00 0.00 0.00 0.00 4.11 0.00 0.00 0.00 FY17 MEDITERRA II 0.00 16.88 0.00 0.00 0.00 0.00 16.10 0.00 0.00 0.00 FY12 MNT 0.00 29.15 0.00 0.00 0.00 0.00 29.15 0.00 0.00 0.00 FY24 MUFG ECA GTLP 160.00 0.00 0.00 0.00 0.00 143.50 0.00 0.00 0.00 0.00 FY18 NOBEL ILAC 9.11 0.00 0.00 0.00 0.00 9.11 0.00 0.00 0.00 0.00 FY21 NOBEL ILAC 8.62 0.00 0.00 0.00 0.00 8.62 0.00 0.00 0.00 0.00 FY16 ODEA BANK 0.00 37.60 0.00 0.00 0.00 0.00 37.60 0.00 0.00 0.00 FY22 OEDAS 56.49 0.00 0.00 0.00 0.00 11.19 0.00 0.00 0.00 0.00 FY20 OTOSAN AS 94.15 0.00 0.00 0.00 0.00 94.15 0.00 0.00 0.00 0.00 FY23 OTOSAN AS 260.77 0.00 0.00 0.00 0.00 166.16 0.00 0.00 0.00 0.00 FY16 REVO CAPITAL 0.00 8.00 0.00 0.00 0.00 0.00 7.79 0.00 0.00 0.00 FY16 RONESANS 0.00 11.17 0.00 0.00 0.00 0.00 11.17 0.00 0.00 0.00 HOLDING FY23 RSF SMBC ECA 250.00 0.00 0.00 0.00 0.00 232.50 0.00 0.00 0.00 0.00 FY24 SANKO HOLDING 100.00 0.00 0.00 0.00 35.00 0.00 0.00 0.00 0.00 0.00 FY10 SEKER BANK 0.00 17.20 0.00 0.00 0.00 0.00 17.20 0.00 0.00 0.00 FY14 SEKER BANK 0.00 1.65 0.00 0.00 0.00 0.00 1.65 0.00 0.00 0.00 FY15 SEKER BANK 0.00 0.62 0.00 0.00 0.00 0.00 0.62 0.00 0.00 0.00 FY21 SISE VE CAM 70.63 0.00 0.00 0.00 0.00 70.63 0.00 0.00 0.00 0.00 FY23 SISE VE CAM 0.00 0.00 0.00 0.00 193.85 0.00 0.00 0.00 0.00 193.85 FY15 SODA SANAYII 0.00 24.52 0.00 0.00 0.00 0.00 24.52 0.00 0.00 0.00 FY15 TAXIM CAPITAL I 0.00 19.14 0.00 0.00 0.00 0.00 18.09 0.00 0.00 0.00 FY15 TEMPLETON 0.00 39.98 0.00 0.00 0.00 0.00 28.91 0.00 0.00 0.00 TURKEY FY18 TSKB 20.45 0.00 0.00 0.00 0.00 20.45 0.00 0.00 0.00 0.00 FY22 TSKB 100.00 0.00 0.00 0.00 0.00 100.00 0.00 0.00 0.00 0.00 FY18 TUPRAS A-S 22.00 0.00 0.00 0.00 0.00 22.00 0.00 0.00 0.00 0.00 99 FY01 TURKVEN I 0.00 -0.26 0.00 0.00 0.00 0.00 -0.26 0.00 0.00 0.00 FY07 TURKVEN II 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 FY20 TURKVEN IV 0.00 54.41 0.00 0.00 0.00 0.00 20.87 0.00 0.00 0.00 FY07 UNITIM 4.28 0.00 4.72 0.00 0.00 4.28 0.00 4.72 0.00 0.00 FY15 UNIT INVESTMENT 0.00 112.65 0.00 0.00 0.00 0.00 112.65 0.00 0.00 0.00 FY24 YAPI KREDI BANK 125.00 0.00 0.00 0.00 0.00 125.00 0.00 0.00 0.00 0.00 FY20 YAPI KREDI LEASE 28.57 0.00 0.00 0.00 0.00 28.57 0.00 0.00 0.00 0.00 FY23 YAPI KREDI LEASE 80.00 0.00 0.00 0.00 22.24 80.00 0.00 0.00 0.00 22.24 FY24 YAPI KREDI BANK 0.00 0.00 0.00 272.20 0.00 0.00 0.00 0.00 272.20 0.00 FY24 ALTERNATIFBANK 0.00 0.00 0.00 197.50 0.00 0.00 0.00 0.00 197.50 0.00 FY24 GARANTI BANKASI 0.00 0.00 0.00 176.70 0.00 0.00 0.00 0.00 176.70 0.00 FY24 TURK EKON BANK 0.00 0.00 0.00 108.00 0.00 0.00 0.00 0.00 108.00 0.00 FY24 AKBANK TK 0.00 0.00 0.00 98.60 0.00 0.00 0.00 0.00 98.60 0.00 FY24 DENIZBANK AS 0.00 0.00 0.00 58.00 0.00 0.00 0.00 0.00 58.00 0.00 FY24 FIBABANKA 0.00 0.00 0.00 30.10 0.00 0.00 0.00 0.00 30.10 0.00 FY24 TSKB 0.00 0.00 0.00 12.60 0.00 0.00 0.00 0.00 12.60 0.00 FY24 SEKER BANK 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Portfolio: 3,054.39 792.43 79.72 969.59 436.15 0.00 2,720.78 667.74 79.72 961.88 392.32 100 Annex 7: MIGA’s Guarantee Portfolio As of December 31st, 2023 Outstanding Effective Expiry Investor Project ID Project Name Business Sector Exposure Date Date Country ($US Million) 12516 Uskudar Metro 2/12/2015 2/5/2028 France Infrastructure 71,136,164 14919 Limak Uludag Perakende Elektrik Satis A.S. 3/4/2022 3/3/2039 United Kingdom Infrastructure 20,700,000 14920 Uludag Elektrik Dagitim A.S. 3/4/2022 3/3/2039 United Kingdom Infrastructure 82,800,000 14306 Ulug Enerji 3/4/2022 9/26/2028 United Kingdom Infrastructure 99,047,557 9416 Turkish Eximbank I 3/31/2015 3/28/2025 United Kingdom Financial 49,928,965 11754 Turkey Gaziantep Hospital BLT Project 4/21/2017 4/25/2038 France Services 194,401,350 13543 Bursa Integrated Health Care Center 5/11/2017 5/10/2032 Luxembourg Services 108,101,685 12240 IMM - Tramway 6/5/2014 2/26/2027 Germany Infrastructure 21,239,894 12870 Yozgat Education and Research Hospital 6/19/2015 6/18/2035 Luxembourg Services 46,934,851 12580 IMM - Light Rail 6/30/2015 5/31/2030 Germany Infrastructure 14,772,159 13471 Turkish EximBank II 6/30/2016 11/7/2026 United States Financial 330,619,174 14295 Turk EximBank III 7/2/2018 6/27/2028 United Kingdom Financial 481,042,719 13861 Ikitelli Hospital 7/19/2017 7/18/2037 Netherlands Services 92,199,589 12871 Elazig Integrated Health Campus 11/17/2016 12/12/2036 Luxembourg Services 277,022,068 12118 Adana Integrated Health Campus 12/18/2014 12/17/2034 Luxembourg Services 141,626,371 Total 2,031,572,546 101