A new World Bank loan is helping promote sustainable and inclusive growth in Turkey by focusing on increasing domestic savings, enhancing economic participation among vulnerable groups, and addressing structural bottlenecks through policy reform.
The €350.9 Million ($400 Million) Inclusion and Growth Development Policy Financing (RIG-DPF) program supports nine priority actions - structured around three pillars - and is grounded in both Turkey’s development program outlined in the Tenth Development Plan and the newly-approved World Bank Group Country Partnership Framework (CPF) for 2018-2021.
Specifically, the policies, strategies, and reform actions supported under the program center on three strategic outcomes:
The first pillar aims to increase domestic savings to help address external imbalances and reduce fiscal risks. Amendments to the Private Pension Savings and Investments Law introducing auto-enrollment will increase private savings and eventually reduce dependence on external financing. This pillar also aims to enhance fiscal discipline by including financial statements in the audit reports of all general budget institutions, thus promoting transparency of fiscal accounts and reducing fiscal risks.
The second pillar aims to support participation of women, youth, long-term unemployed, and Syrians under temporary protection in the labor market, by supporting flexible employment, increasing access to childcare and granting work permits to “foreigners under temporary protection”.
The third pillar aims to remove structural bottlenecks to sustainable growth. This will be achieved by enacting an appropriate legal framework for the protection of industrial property, improving allocation of capital by facilitating access to credit for small and medium enterprises, deregulating network industries through the liberalization of the railways sector, and supporting renewable energy zones to increase their share in total energy supply.
“For Turkey to achieve higher income, it is important for it to sustain its impressive record of inclusive growth,” said Johannes Zutt, World Bank Country Director for Turkey. “Through this DPF, the World Bank is supporting structural reforms that will contribute to Turkey’s continued success in working with the private sector to raise incomes, create jobs, and build the infrastructure that a modern economy needs to bring prosperity to all of its citizens.”