ANKARA (CIHAN) - The World Bank Executive Directors on June 17 approved a one billion US dollar Third Program Financial and Public Sector Adjustment Loan (PFPSAL-III) for Turkey.
The main aim of the PFPSAL III loan is to provide support during 2004 for the Turkish Government's financial and public sector reform priorities and to ensure that social programs are adequately funded and increasingly better targeted.
The loan aims at strengthening the regulatory framework for the banking system, boosting the institutional capacity at the Bank Regulation and Supervision Agency (BRSA) and at the Saving Deposit Insurance Fund (SDIF), restructuring state banks in preparation for privatization, and improving the corporate insolvency regime.
Priorities for social spending include adequate expenditure on health, education and social welfare in the 2004 budget.
The principal benefits of the loan will be to support the government's efforts to create conditions for sustained growth and macroeconomic stability, to ensure adequate social expenditure and better targeted social welfare, to consolidate the current stability of the banking system and positioning it for accession to the European Union (EU), and to establish a better foundation for a more effective government in line with EU directives and the best international practice.
The loan, which consists of two instalments of 500 million US dollars each, was signed today with the first instalment expected to be released within the next two weeks.
Negotiations between the World Bank and Turkey were completed on May 20, 2004. The Turkish State Minister for the Treasury, Ali Babacan clarified details of the agreement on May 21, 2004 in a press conference.