Title page

REPUBLIC OF TÜRKİYE

STAFF REPORT FOR THE 2024 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX

September 12, 2024

Prepared By

Contents

• FUND RELATIONS

• RELATIONS WITH THE WORLD BANK GROUP

Fund Relations

(Data as of July 31, 2024)

There is no outstanding Fund credit.

Membership Status: Türkiye became a member of the Fund on March 11, 1947.

General Resources Account

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Outstanding Purchases and Loans: None.

Latest Financial Arrangements

	Approval Date	Expiration Date	Amount Approved	Amount Drawn
			In million	s of SDRs
Stand-By	05/11/05	05/10/08	6,662.04	6,662.04
Stand-By	02/04/02	02/03/05	12,821.20	11,914.00
Stand-By	12/22/99	02/04/02	15,038.40	11,738.96
Of Which: SRF	12/21/00	12/20/01	5,784.00	5,784.00

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	Approval Date	Expiration Date	Amount Approved	Amount Drawn
			In million	s of SDRs
Stand-By	05/11/05	05/10/08	6,662.04	6,662.04
Stand-By	02/04/02	02/03/05	12,821.20	11,914.00
Stand-By	12/22/99	02/04/02	15,038.40	11,738.96
Of Which: SRF	12/21/00	12/20/01	5,784.00	5,784.00

Projected Payments to the Fund¹

(In millions of SDRs; based on existing use of resources and present holdings of SDRs).

	Forthcoming
2024 Principal -- Charges/Interest 0.51 Total 0.51	2025 2026 2027 2028 -- -- -- - 1.04 1.04 1.04 1.04 1.04 1.04 1.04 1.04

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	Forthcoming
2024 Principal -- Charges/Interest 0.51 Total 0.51	2025 2026 2027 2028 -- -- -- - 1.04 1.04 1.04 1.04 1.04 1.04 1.04 1.04

Safeguard Assessments: An assessment of the central bank’s safeguards framework was conducted under the last SBA and completed on June 29, 2005. While it uncovered no material weaknesses in the central bank’s safeguard framework, a few recommendations were made to address some remaining vulnerabilities in the areas of internal audit and controls. Those recommendations have been implemented.

Exchange Rate Arrangements: The currency of Türkiye is the Turkish lira. The de jure exchange rate arrangement is free floating; while the de facto exchange rate arrangement is classified as crawl-like. Türkiye has accepted the obligations of Article VIII, Sections 2 (a), 3, and 4 of the IMF’s Articles of Agreement and maintains an exchange system free of multiple currency practices and restrictions on the making of payments and transfers for current international transactions, except for those maintained solely for the preservation of national or international security, which have been notified to the Fund in accordance with Executive Board Decision No. 144–(52/51).

Article IV Consultations: Board discussion of the last Article IV staff report took place on January 18, 2023. The Article IV staff report (IMF Country Report No. 23/303) was published on January 18, 2023.

FSAP: Financial stability assessments under the Financial Sector Assessment Program (FSAP), every five years, are a mandatory part of Article IV surveillance. Three FSAP missions to Türkiye took place in 2022, and the Aide Memoire was presented to the authorities. The FSAP findings were summarized in the accompanying Financial System Stability Assessment (FSSA), which was discussed at the Board together with the Article IV staff report, on January 18, 2023.

Resident Representative:

The IMF currently has a resident representative office in Ankara. Mr. Gabriel Di Bella has been the senior resident representative since January 2023.

ROSCs

^1/ Report on Observance of Standards and Codes (ROSC). ^2/ Basel Core Principles for Effective Banking Supervision (BCP). ^3/ International Association of Insurance Supervisors (IAIS).

Standard or Code Assessed	Date of Issuance	Document Number
Fiscal Transparency	June 27, 2000	N/A
Corporate Governance	December 11, 2000	Prepared by the World Bank
Data ROSC1/	March 14, 2002	Country Report No. 02/55
Fiscal ROSC	November 25, 2003	Country Report No. 03/363
Fiscal ROSC	March 24, 2006	Country Report No. 06/126
FSSA and related ROSC	November 9, 2007	Country Report No. 07/361
Data ROSC	September 3, 2009	Country Report No. 09/286
FSSA and related ROSC	September 7, 2012	Country Report No. 12/261
BCP2/	March 7, 2014	N/A
IAIS3/	March 7, 2014	N/A
FSSA and related ROSC	February 3, 2017	Country Report No. 17/35
BCP	February 8, 2017	Country Report No. 17/46
CPMI IOSCO	February 8, 2017	Country Report No. 17/45
IAIS	February 8, 2017	Country Report No. 17/47

^1/ Report on Observance of Standards and Codes (ROSC). ^2/ Basel Core Principles for Effective Banking Supervision (BCP). ^3/ International Association of Insurance Supervisors (IAIS).

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Standard or Code Assessed	Date of Issuance	Document Number
Fiscal Transparency	June 27, 2000	N/A
Corporate Governance	December 11, 2000	Prepared by the World Bank
Data ROSC1/	March 14, 2002	Country Report No. 02/55
Fiscal ROSC	November 25, 2003	Country Report No. 03/363
Fiscal ROSC	March 24, 2006	Country Report No. 06/126
FSSA and related ROSC	November 9, 2007	Country Report No. 07/361
Data ROSC	September 3, 2009	Country Report No. 09/286
FSSA and related ROSC	September 7, 2012	Country Report No. 12/261
BCP2/	March 7, 2014	N/A
IAIS3/	March 7, 2014	N/A
FSSA and related ROSC	February 3, 2017	Country Report No. 17/35
BCP	February 8, 2017	Country Report No. 17/46
CPMI IOSCO	February 8, 2017	Country Report No. 17/45
IAIS	February 8, 2017	Country Report No. 17/47

^1/ Report on Observance of Standards and Codes (ROSC). ^2/ Basel Core Principles for Effective Banking Supervision (BCP). ^3/ International Association of Insurance Supervisors (IAIS).

Recent Technical Assistance

Dept.	Timing	Purpose
MCM	February 2012	Stress testing framework for the financial sector supervisor
FAD	September 2012	G–20 budget institutions
MCM	October 2012	Early warning system and stress testing
FAD	November 2012	Measurement of structural fiscal balances
STA	January 2013	National account statistics
MCM	December 2013	Stress testing
STA	December 2013	Monetary and financial statistics
STA	March 2014	Government finance statistics
STA	March 2014	National accounts statistics
FAD	April 2014	Performance-based budgeting
FAD	May 2014	Tax revenue modeling
STA	May 2014	Financial sector accounts
STA	July 2014	Government finance statistics—public sector debt statistics
STA	April 2015	National accounts statistics
FAD	June 2015	Fiscal transparency evaluation
STA	January 2016	Compilation system for independent annual estimates of GDP
STA	April 2016	Government finance statistics—GFSM2014 and ESA10
FAD	December 2017	Public-Private Partnerships (PPP)
FAD	January 2018	VAT Policy Issues
MCM	September 2018	Stress testing (follow up)
STA	November 2019	Commercial Property Price Index
STA	November 2019	Consumer Price Index
FAD	June 2024	Tax Compliance and tax administration

View Table

Dept.	Timing	Purpose
MCM	February 2012	Stress testing framework for the financial sector supervisor
FAD	September 2012	G–20 budget institutions
MCM	October 2012	Early warning system and stress testing
FAD	November 2012	Measurement of structural fiscal balances
STA	January 2013	National account statistics
MCM	December 2013	Stress testing
STA	December 2013	Monetary and financial statistics
STA	March 2014	Government finance statistics
STA	March 2014	National accounts statistics
FAD	April 2014	Performance-based budgeting
FAD	May 2014	Tax revenue modeling
STA	May 2014	Financial sector accounts
STA	July 2014	Government finance statistics—public sector debt statistics
STA	April 2015	National accounts statistics
FAD	June 2015	Fiscal transparency evaluation
STA	January 2016	Compilation system for independent annual estimates of GDP
STA	April 2016	Government finance statistics—GFSM2014 and ESA10
FAD	December 2017	Public-Private Partnerships (PPP)
FAD	January 2018	VAT Policy Issues
MCM	September 2018	Stress testing (follow up)
STA	November 2019	Commercial Property Price Index
STA	November 2019	Consumer Price Index
FAD	June 2024	Tax Compliance and tax administration

Relations With the World Bank Group

International Bank for Reconstruction and Development (IBRD)

1. The partnership between Türkiye and the World Bank Group (WBG) is outlined in the Country Partnership Framework (CPF). The current CPF covers the FY24–28 period and it is fully aligned with the WBG mission of ending extreme poverty and promoting shared prosperity on a livable planet and with the Government of Türkiye’s 12th National Development Plan (NDP) 2024– 28. It aims to accelerate progress toward the SDGs and support recovery and reconstruction from recent shocks. The CPF outlines how the WBG will further scale up impact in one of its largest country portfolios to meet priority country and global challenges. As of July 2024, Türkiye is in the top two IBRD countries by active portfolio size, the third largest country exposure for the International Finance Corporation (IFC), and the third largest country portfolio for the Multilateral Investment Guarantee Agency (MIGA). IBRD, IFC and MIGA plan to further scale up impact in Türkiye, working as One WBG through purposeful collaboration, coordination, and deployment of collective knowledge and instruments.

2. There are 34 active IBRD operations for US$13.6 billion. The portfolio includes one Global Environment Facility (GEF)-financed project and six trust-funded projects, including almost $600 million in European Union trust funds through the Facility for Refugees in Türkiye. Portfolio indicators are strong with a moderate level of risk, disbursements on par with peers, satisfactory closing of operations, no effectiveness lag, and no disconnect with Independent Evaluation Group (IEG) reviews. The CPF proposed IBRD financing for the FY24–28 period is set at $6 billion, although the amount is likely to increase as over $2 billion of this envelope has already been delivered to date.

3. The WB Program for FY24 supported the Government’s goals on: (i) support for the recovery and reconstruction of the February 6, 2023 earthquakes affected areas; (ii) the country’s energy transition; and (iii) enhancing resilience (earthquakes, climate change and pandemics). The climate response related lending pipeline in FY24 has been particularly rich and focused on both adaptation and mitigation projects that are directly linked to the implementation of Türkiye’s Nationally Determined Contribution (NDCs), achieving 96% climate co-benefits in all FY24 operations approved by the Board.

4. The WB Program continues to support the Government’s strategy to boost human capital, expand opportunities for vulnerable population, and prepare and respond to pandemics. The WBG portfolio has expanded significantly to support to firm-led job creation in vulnerable regions impacted by a high influx of refugees; mitigating learning loss through hybrid and online education to address COVID and future shocks; and boosting the Government’s health system response to COVID. The Bank is in discussions with authorities regarding boosting investments on skills and jobs, particularly for vulnerable youth and women.

5. As part of the EU’s response to the Syrian refugee crisis, the WBG was entrusted with managing a total of US$650 million of the EU-funded Facility for Refugees in Türkiye (FRiT). In the first tranche agreed in 2016, three projects for a combined total of US$205 million were targeted towards education, employment and entrepreneurship. The second tranche (US$395 million) of the FRiT supported socio-economic and municipal services projects. In addition, the Trust Fund portfolio includes projects funded by GEF funds.

6. The advice and analytics (ASA) portfolio is strategically consolidated and is an essential part of the WB program. This will contribute upstream to informing the Government’s thinking on national plans and policies in areas such as unemployment, clean energy transition and green growth, social inclusion, refugees, skills and entrepreneurship, and seismic, disaster and climate resilience. Ongoing core ASAs inform on the causes of high and increasing unemployment rate despite high growth and recent upward trends in poverty and inequality. In addition, extended core ASAs provide an overarching framework for greening the recovery of Türkiye’s economy from the pandemic and earthquakes, and an assessment of labor policies that shape human capital utilization. around core and extended core ASAs.

International Finance Corporation

7. IFC portfolio implementation continued to perform satisfactorily. IFC’s own-account investment program reached US$4,495 million between FY20 and FY24 in line with the expected CPF deliverables. In addition, IFC mobilized a cumulative US$3,268 million during the same period, bringing IFC’s long term finance commitments to US$7,764 between FY20 and FY24 (total LongTerm Finance (LTF) commitments, FY20: US$973m, FY21: US$1,062m, FY22: US$1,079m, FY23: US$1,963m, FY24: US$2,687). IFC also committed a cumulative US$3.9 billion (FY20-FY24) to Turkish banks under its Global Trade Finance Program (GTFP), broadening access to finance for private companies. IFC continues to maintain a high level of exposure to Türkiye at around US$5.1 billion at end FY24, representing its 3rd largest country exposure globally.

Multilateral Investment Guarantee Agency

8. Türkiye is Multilateral Investment Guarantee Agency’s (MIGA) third largest country by gross exposure, representing about 6 percent of MIGA’s gross portfolio. As of end-FY24, MIGA’s gross exposure in Türkiye totaled about US$1,815 million across 15 projects in the infrastructure, financial, and services sectors. Approximately 40 percent of the portfolio stems from MIGA non-honoring guarantees to state-owned enterprises and sub-sovereigns, with the remainder being political risk insurance guarantees, in support of PPPs in the healthcare sector and electricity distribution. MIGA’s exposure in Türkiye remains significant, and going forward MIGA will seek to deploy its political risk insurance and trade finance guarantees to de-risk investment projects in the earthquake-affected areas aiming to re-build better and promote sustainable economic activity.