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World Bank loan to boost ‘quality infrastructure investment’ in Turkey

Out-Law News | 07 Aug 2014 | 2:38 pm | 1 min. read

The World Bank has approved a loan equivalent to $500 million for Turkey to support initiatives including “creating a regulatory framework to attract long-term, quality investment in the country’s infrastructure”.

The development policy loan (DPL), announced by the bank’s board on 24 July, is the first in a series of two such loans designed to help boost competitiveness and improve transparency.

Policies, strategies and reforms targeted for support under the DPL loan programme include corporate bond issuances and increased private sector investment in new electricity generating capacity as part of ongoing moves to liberalise Turkey’s energy market.

The bank said the loan programme also aims to encourage the licensing “of at least one private sector freight operator” on Turkish railways.

According to the bank, Turkey’s “ambitious privatisation path”, that began in 1984 with the country’s first law on privatisation, has led to a “drastic reduction” in the number of state-owned enterprises (SOEs).

Today, 27 companies “remain in the hands of the state and the government of Turkey remains committed to ensuring that these companies continue to transform into more efficient and more profitable enterprises”, the bank said.

Gross sales revenue from the privatisation of SOEs in Turkey stand at around $60 billion for the period of 1985 to 2014, the bank said.

World Bank country director for Turkey Martin Raiser said: “Turkey’s growth record over the past decade has been inclusive, however, these gains are at risk in a less accommodating international environment. With this DPL, the World Bank supports structural reforms that aim to ensure Turkey’s success in raising incomes, creating jobs and building sustainable infrastructure continues.”

Raiser said: “Thanks to the restructuring, privatisation and other reform efforts, SOE performance has been steadily improving over the years. However, there is growing pressure for further improvements especially as SOEs today face a more demanding environment, including increased competitiveness, budget reforms for fiscal discipline, and the need for access to finance.”