Referring to wide-ranging financial, economic and public sector reforms that Turkey had introduced from 2002-06 to recover from its 2001 banking crisis, the report notes that by 2006, several years of sustained growth had improved public finances (public debt fell from 78 percent to 48 percent of gross domestic product [GDP] in the 2002-06 period) and social indicators (poverty fell from 27 percent to 17 percent for 2003-07).

However, such sustained progress was threatened by ballooning health and social security costs, implementation challenges to public financial management reforms, an investment climate clouded by outmoded codes and regulations and persistent unemployment and a skills shortage in the labor market; added to these challenges was the sharp deterioration in the global economic environment in 2008, the report suggests.

Last year the World Bank approved a Restoring Equitable Growth and Employment Programmatic Development Policy Loan (REGE-DPL) for Turkey in the amount of 931 million euros ($1.3 billion) to support Turkey’s program of financial crisis response and continuing reforms for shared medium-term growth. Speaking at the time about the World Bank’s decision, Ulrich Zachau, country director of the World Bank for Turkey, said the World Bank was pleased to support the Turkish government’s policies and program to promote equitable growth and employment as Turkey emerged from the impact of the global financial crisis and returned to renewed growth in 2010.

“We especially welcome the government’s sound Medium-Term Program and Fiscal Plan, the continued implementation of Turkey’s path-breaking health and social security reform and the strengthening of programs to improve access to education and training and job services. We look forward to continuing our partnership with Turkey to improve the lives of the Turkish people,” Zachau had said.

According to the report, since then the REGE-DPL series has provided financing and technical support toward several outcomes. It assisted with detailed actuarial simulations and trained Turkish officials to update social security reform and universal health insurance models where, ex-ante, a universal health insurance system was established in 2006 and comprehensive social security reform enacted in 2008. As a result, it reports that health insurance coverage increased from 86 percent to 97 percent, while the combined deficit of the two systems, which peaked at 4.2 percent of GDP in 2009 due to the crisis, was held in check and declined thereafter (to about 3.9 percent in 2010).

Another area in which Turkey has shown significant improvement is pre-school and vocational training. As a result of the financial and technical support of the World Bank, vocational training was ramped up from 30,000 beneficiaries in 2008 to more than 200,000 in 2010, and a monitoring and evaluation system was instituted with World Bank technical assistance. According to the result profile report, the Turkish government formally targeted universal pre-school education in the 32 provinces targeted by the first phase of the program, and enrollment of 5-year olds in kindergarten increased from 71 percent in 2008-09 to 92 percent in 2010-11.

On top of improvements in health insurance, pre-school and vocational training in Turkey, the report also touches on improvements made in government efficiency and private sector-led job creation in Turkey. “A series of laws overhauled public financial management and control, external audit and state aid, while systemic operational reforms introduced modern management methods, such as performance budgeting, on which the World Bank organized a series of symposia and provided more detailed technical inputs. Turkey’s Open Budget Index, a measure of budget transparency produced by the Open Budget Initiative, improved from 41 percent in 2006 to 57 percent by 2010,” the report states.

The report attributes an improved climate for private sector-led job creation to enactment of a new Commercial Code and a new Code of Obligations in 2011 that modernized the regulatory environment. As a result of detailed consultations held by the World Bank and the Turkish government on the impact of the 2008 global crisis, financial and employment measures successfully protected employment as unemployment had retreated to 11.9 percent by the beginning of 2011.