EFFECTIVE USE OF FINANCIAL RESOURCES FOR PRIORITY INFRASTRUCTURE PROJECTS: THE ROLE OF DONOR COORDINATION

Transcription

1 EFFECTIVE USE OF FINANCIAL RESOURCES FOR PRIORITY INFRASTRUCTURE PROJECTS: THE ROLE OF DONOR COORDINATION December 06, 2010 ÖZGÜR R PEHLİVAN Deputy Director General Undersecretariat of Turkish Treasury

2 OUTLINE I. Turkey at a Glance II. Overview of Infrastructure Sector in Turkey III. Setting Priorities for Infrastructure Investments IV. Key Challenges for Effective Use of Financial Resources V. Donor Coordination 2

3 I. TURKEY AT A GLANCE 16 th largest economy in the world and 6 th largest economy of Europe with GDP of 7307 bn. $ in 2010 Turkey is an upper- middle income country with 8,578 USD GDP per capita in 2009 EU candidate country An active member of G20, multilateral institutions and platforms 3

4 World s s Biggest Economies (GDP based on Purchasing Power Parity, Trillion Dolar, 2009) 4

5 Main Targets for One of the top ten largest economy in the world (approximate GDP USD 1.9 trillion) - Third largest economy in the Europe - Exports over USD 500 billion 5

6 II. OVERVIEW OF INFRASTRUCTURE SECTOR IN TURKEY 6

7 II. OVERVIEW OF INFRASTRUCTURE SECTOR IN TURKEY Huge Infrastructure Investment Needs to Sustain High Growth Rates Due to: Economical and technological changes Population growth Rapid urbanization Uncontrolled depletion of natural resources * Population (million) Urbanization Rate (%) GDP Growth Rate (%) * projection

8 II. OVERVIEW OF INFRASTRUCTURE SECTOR IN TURKEY Environment Sector Sewerage Network and Wastewater Treatment Systems in Municipalities Population Groups Connection to Sewerage Network (%) INVESTMENT NEED (million $) Water Supply Sector 15,374 Wastewater Sector 21,817 Waste Sector 11,534 % of Population served with Wastewater Treatment Plant Services >100,000 95,9 70,5 49,999-10,000 81,1 17,1 < ,4 1,5 Total in Turkey 85,6 45,2 Total in Northwestern Europe Source: Strategic Coherence Framework,2007 TOTAL 48,725 Source: SPO 8

9 II. OVERVIEW OF INFRASTRUCTURE SECTOR IN TURKEY Transportation Sector Highways Utilization Passanger Transport Freight Transport Turkey 95% 90% EU-25 Countries 84,90% 43,50% Source: Strategic Coherence Framework, 2007 Railway Densities km of railway/ 1000km 2 km of railway/ million population Turkey EU-15 Countries EU-25 Countries Road and Motorway Densities km of highway/ million population km of motorway/ million population Turkey ,7 EU-15 Countries EU-25 Countries ,3 Source: Strategic Coherence Framework, 2007 Source: Strategic Coherence Framework,

10 II. OVERVIEW OF INFRASTRUCTURE SECTOR IN TURKEY Financing of Infrastructure Investments in Turkey LOCAL SOURCES Transfers from central government budget Loans from local banking market User fees Limited PPP practice IPA FUNDS FOREIGN BORROWINGS Multiletaral development institutions Bilateral development agencies Commercial bank loans INVESTMENTS 10

11 II. OVERVIEW OF INFRASTRUCTURE SECTOR IN TURKEY Financing of Infrastructure Investments in Turkey Foreign Borrowings (million Euro) * Total Environment Transportation 2,318 2,196 1,319 1,088 6,921 *end of November 2010 IPA Funds (million Euro) Total ( ) Environment Transportation Operational Programme

12 III. SETTING PRIORITIES FOR INFRASTRUCTURE INVESTMENTS 12

13 III. SETTING PRIORITIES FOR INFRASTRUCTURE INVESTMENTS The 9th Development Plan ( ) The 9th Development Plan is based on five strategic areas: Increasing Competitiveness Improving transportation and energy infrastructure Increasing Employment Improving Human Resources and Strengthening Social Solidarity Ensuring Regional Development Increasing Quality and Effectiveness of Public Services 13

14 III. SETTING PRIORITIES FOR INFRASTRUCTURE INVESTMENTS 9th Development Plan Medium Term Programme Preliminary National Development Plan (pndp) Annual Program Pre-Accession Economic Program sectoral strategy documents Lisbon Strategy European Employment Strategy Community Strategic Guidelines for MIPD ( ) Accession Partnership Progress Reports Strategic Coherence Framework ( ) IPA III-Regional Development IPA IV-Human Resources Development Environment Operational Programme (MoEF) Transport Operational Programme (MoT) Human Resources Development Operational Programme (MoLSS) Regional Competitiveness Operational Programme (MoIT) 14

15 III. SETTING PRIORITIES FOR INFRASTRUCTURE INVESTMENTS Operational Programmes Priorities Environment Operational Programme (MoEF) Priority 1: Improved water supply, sewerage and wastewater treatment services Priority 2: Improved integrated solid waste management Priority 3: Technical Assistance Transport Operational Programme (MoT) Priority 1: Improvement of railway infrastructure Priority 2: Improvement of port infrastructure Priority 3: Technical Assistance 15

16 IV. KEY CHALLENGES FOR EFFECTIVE USE OF FINANCIAL RESOURCES 16

17 IV. KEY CHALLENGES FOR EFFECTIVE USE OF FINANCIAL RESOURCES Key challenges faced while using the financial resources including IPA Funds: Lack of Feasible Project Portfolio Poor Project Design Lack of Ownership in Program Management Complex Implementation Arrangements Late Contracting and Weaknesses in Implementation Duplication of Efforts in Research, Analytical Work and Funding Inadequate Technical and Administrative Capability of Project Executing Agencies High Turnover Rate of Staff and, Insufficient Donor Coordination and Competition between Donors 17

18 V. DONOR COORDINATION 18

19 V. DONOR COORDINATION To address key challenges Adopting a joint initiative Adopting a Joint Initiative may... play an important role for channeling the resources effectively to the most appropriate projects contribute significantly to the technical and financial effectiveness of the projects maintain policy dialogue and collaboration for supporting structural reforms 19

20 V. DONOR COORDINATION Main pillars of the Joint Initiative: Sectoral Policy Dialogue Platform Joint Studies and Technical Assistance Joint Training Activities Joint Consultancy Services Optimizing the Use of Parallel and Co-financing & Creating synergy by exploiting each donor s competitive advantage 20

21 V. DONOR COORDINATION Activities of the Joint Initiative I Organize regular periodical donor coordination meetings with the participation of relevant government institutions. Match the qualifications of the project with the priorities of donor institutions. Consider integrating structures for IPA and other external financing sources more closely. 21

22 V. DONOR COORDINATION Activities of Joint Initiative II Enhancing Project Pipeline: Make the feasibility studies in an internationally acceptable quality with the technical support of donors including EU, in order to make the project preparation process healthier and the studies more reliable. Based on these feasibility studies, prepare a priority list of projects in line with the priorities at national documents with all related governmental institutions such as related Ministries, SPO. Make all donors have an access to the pool of priority projects. 22

23 V. DONOR COORDINATION Expected Outcomes of Joint Initiative Improve local absorption capabilities Strong coordination amongst all stakeholders, including multilateral and bilateral donors and government bodies as well Effective utilization of funds Optimal composition of financing sources (domestic funds, IPA and other foreign sources) To improve infrastructure by materializing the investment necessary for socioeconomic development and compliance with EU standards 23

24 THANK YOU 24