A Case Study of World Bank Projects in Turkey: An Evaluation of Borrowed Funds and Project
Implementation
Project Advisor
Sandraluz Lara-Cinisimo
Project Members
Project Manager
Victoria Long
Aykut Erdogdu
Communications Analysts
James Wilson, Team Leader
Ashley Brown
Mete Demirci
Financial Analysts
Pinar Berk, Team Leader
Ergul Haliscelik
Mihir Iyer
Joshua Kunin-Goldsmith
Marko Zivanov
Project Implementation Analysts
Nicholas Fraser, Team Leader
Karumuna Kaijage
Paula Maguina Ugarte
Executive Summary
The World Bank and the Government of Turkey have a long-lasting relationship, which
remains critically important as Turkey strives towards European Union (EU) accession.
To date, World Bank loans to Turkey total approximately $19 billion. In 2006, Turkey
received approximately $1.5 billion in loans from the World Bank, which represents
1.25% of the estimated 2006 Turkish budget expenditure. These loans have funded
projects in several sectors, including basic education, emergency relief, and privatization
of state-owned enterprises. Beyond funding, the World Bank has offered Turkey
extensive advice and recommendations regarding development. As Turkey’s economy
has grown and its development goals have evolved, it is important to reevaluate the role
of World Bank financing within the country and, moreover, how to use this funding most
efficiently.
In this study, three main research questions were addressed:
(1) How can Turkey better
evaluate the cost of borrowing from the World Bank?
(2) What are some of the
challenges and obstacles commonly observed in project implementation? (3) Based on
our findings, how can the Turkish government improve project execution?
These questions were answered from both financial and managerial perspectives. World
Bank loan terms and conditions were compared to other international funding
organizations, which revealed that more flexible terms may be available from the
European Investment Bank versus the International Fund for Agricultural Development.
We also closely evaluated nine recent World Bank funded projects. Based on data from
these projects, we developed a method to calculate the true costs of the loans and
developed additional criteria to use when evaluating projects. Finally, the nine projects
were evaluated based on six categories that we created to identify managerial strengths
and weaknesses.
Our analysis was supplemented with external research and the expertise of our team to
develop substantive recommendations for the Turkish government. The overarching
finding was that World Bank funding continues to contribute to Turkey’s development
and is an important contributor to Turkey’s economic growth. However, there are
tangible ways through which Turkey can improve the use of funds to have a greater
impact, benefiting Turkey both socially and economically. Based on the comprehensive
findings, the four main recommendations are:
• More effective planning can improve the implementation of World Bank
funded projects in Turkey.
• Evaluation of loan disbursements and repayments in real terms will provide a
clearer picture of loan costs and interest rates.
• Increased transparency in the selection, execution, and evaluation of projects
can lead to gains in efficiency.
• Greater accountability has the potential to improve multiple phases of
projects, and thereby, influence the overall effectiveness of project
implementation.
These recommendations are intended to be feasible and practical, enabling Turkey to take
full advantage of World Bank funding.
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