ANKARA - The World Bank Executive Directors approved a 1 billion U.S. dollars of Third Programmatic Financial and Public Sector Adjustment Loan (PFPSAL III) for Turkey, Turkey`s Office of Treasury Undersecretary said on Friday.
The loan agreement was signed between officials of the Office of Treasury Undersecretary and the World Bank.
A statement of the Treasury Undersecretary`s Office said that the first tranche of the loan worth of 500 million U.S. dollars would be released at the end of June and the second at the end of 2004.
A statement of the World Bank said that the main objective of PFPSAL III was to provide support during 2004 to the Government of Turkey`s financial and public sector reform priorities while ensuring that social programs were adequately funded and increasingly better targeted.
The statement listed key reform priorities in the financial sector as strengthening the regulatory framework for banking, building institutional capacity at the Bank Regulation and Supervision Agency (BRSA) and Saving Deposit Insurance Fund (SDIF), further restructuring of state banks in preparation for their privatization, and improving the corporate insolvency regime.
Key reform priorities in the public sector included deepening of structural fiscal policies in support of sustainable fiscal adjustment, implementing public expenditure management reforms covering budget planning and execution, financial accountability, and public liability management, and strengthening public sector governance and continuation of civil service reform, the statement pointed out.
The statement listed priorities for social spending as adequate expenditure for health, education and social protection in the 2004 budget and better targeting of social protection.
The statement said, ``the principal benefits of the Loan will be to support the Government`s efforts to create conditions for sustained growth and macroeconomic stability, ensure adequate social expenditure and better targeted social protection, consolidate the current stability of the banking system and positioning it for accession to the European Union (EU); and establish a better foundation for more effective government in line with EU directives and international best practice.
Andrew Vorkink, World Bank`s Country Director for Turkey, released a statement in which he said that approval by the World Bank of the Loan on the 1 billion U.S. dollars of PFPSAL III operation represented a major step forward for Turkey on its reform path.
Vorkink stated that the program supported by this loan, many of the components of which had already been put in place, represented significant efforts by the Government over the past year to implement structural reforms in the economy of Turkey which would help lead to sustained growth and economic stability as well as better social protection.
``PFPSAL III is visible evidence of the Government`s commitment to structural reforms and of international support to the Government`s program which will have a lasting and positive impact on economic and social standards in Turkey in the years ahead. The Loan also represents the World Bank`s confidence in Turkey, the Government`s reform program and the prospects for growth and stability in Turkey,`` Vorkink added.
The loan terms to Turkey for the proposed 1 billion U.S. dollars of PFPSAL III are a maturity of 17 years and 4 years grace with interest at a fixed spread of 50 basis points over LIBOR.
(BRC-AÖ) 18.06.2004