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CURRENCY EQUIVALENTS

Currency Unit - Turkish Lira (TL)

June 1992 - TL6885 = US$1.00August 1992 - TL7094 = US$1.00Novenber 1992 - TL8110 = US$1.00

ABBREVIATIONS AND ACRONYMS

BMM - Bursa Metropolitan MunicipalityBUSKI - Bursa Water Supply and Sewerage AuthorityDM = District MunicipalityDSI - State Hydraulic WorksEBFs - Extra Budgetary FundsIB - Iller Bankasi (Bank of the Provinces)IBRD - International Bank for Reconstruction and DevelopmentIFC = International Finance CorporationIMF = International Monetary FundGDP = Gross Domestic ProductGEF = Global Environment FacilityGNP = Gross National ProductMETAP - Mediterranean Environmental Technical Assistance ProgramMIGA = Multilateral Investment Guarantee AgencyOECD = Overseas Economic Community DevelopmentPSBR - Public Sector Borrowing RequirementSALs = Structural Adjustment LoansSECALs = Sector Adjustment LoansSIS = State Institute of StatisticsSOEs = State-Owned EnterprisesSPO - State Planning Organization

TURKEY - FISCAL YEAR

January I - December 31

FOR OMCIL USE ONLY

JhU3IC OF MM

BURSA WATER AND SANITATION PROJECT

ILan and Pro ect Summary

Borrowers: Bursa Water Supply and Sewerage Authority (DUSKI)Bursa Metropolitan Municipality (BMM)

Guarantor: Republic of Turkey

Loan Amount: US$117.0 million equivalent to BUShIUS$12.5 million equivalent to BMTotal of US$129.5 million equivalent

Terms: Seventeen years, including five years grace, at the standardvariable interest rate.

Financing Plans

(US$ million equivalent) BUSRI Total

IBRD Loans 117.0 12.5 129.5

Internal Cash Generation 118.4 10.S 128.9

Total 235.4 23.0 258.4

The proposed loans would finance the foreign exchange cost of the project.

Internal Rate of Return:

On Water Supply & Sewerage Part: 8.2%

Staff A=oraisal ReDort: No. 11252-TU

Mazs: IBRD Nos. 24150R, 24151R, 24152R, and 24153R

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authoristion.

MEMORANDUM AND RECOMMENDATION OF THE PRESIDENTOF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

TO THE EXECUTIVE DIRECTORSON PROPOSED LOANS

TO THE BURSA WATER SUPPLY AND SEWERAGE AUTHORITYAND THE BURSA METROPOLITAN MUNICIPALITY

PART I: INTRODUCTION

1. The following memorandum and recommendation on a proposed loan to theBursa Water Supply and Sewerage Authority (BUSKI) for US$117.0 millionequivalent, and a proposed loan to the Bursa Metropolitan Municipality (9MM) forUS$12.5 million equivalent, with the Guarantee of the Republic of Turkey aresubmitted for approval. The loans would be made on standard Bank terms toassist in the construction and implementation of sewerage, stormwatee drainage,water supply and solid waste management systems in the Greater Bursa. area, andassist in the institutional development of the agencies in charge of operatingthe systems.

PART IIt COUNTRY POLICIES AND THE BANK GROUP'S ASSISTANCE STRATEGY

A. Trends in Policies and Performance

2. Back_round. In 1980, following a serious external crisis, Turkey embarkedon a stabilization and reform program which represented a major break with pastpolicies favoring import substitution, market intervention and reliance on stateenterprises. Between 1980 and 1986, economic growth averaged about 5 percentper year, inflation was reduced to 28 percent per annum, and, as a result of anoutward-oriented strategy, exports as a share of GDP increased threefold,substantially improving Turkey's creditworthiness. After 1986, there wasfurther progress in integrating Turkey into the world economy, Dut most of theprevious gains In reducing inflation were lost with the reemergence of seriousfiscal imbalances. External liberalization continued as import restrictionswere reduced, export subsidies curtailed, and controls on capital transactionssubstantially diminished. The process culminated in a reform of the exchangerate system which left it Iorgely free of restrictions on external transactions.

3. These achievements have been overshadowed by persistently high deficitsand inflation. After being lowered successfully from a three-digit level of1980, inflation starting rising again from 1987 to reach 60 percent in 1990.The fundamental cause was the public sector deficit. Fueled by the poorperformance of state-owned enterprises (SOEs), the public sector borrowingrequirement (PSBR) reached 11.6 percent of GNP by 1990. On the external front,the performance remained strong, with the current account shifting into surplusin the late 1980s, aided by growing revenues from tourism and workers'remittances and continued export growth. Foreign direct investment also surged,and Turkey was able to diversify its sources of foreign financing while repayingthe last of its IMF and rescheduled commercial debt.

4. The 1980s also witnessed substantial political changes. After three yearsof military government, an elected civilian Government took over in 1983. Sincethe political liberalization, economic policy has had to operate in anincreasingly complex environment. The Motherland Party stayed in power tillOctober 1991, with Mr. Ozal taking over as President in 1989 after a

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presidential election held through a parliamentary vote. In general electionsheld in October 1991, the Motherland Party lost and a coalition government wasannounced between Mr. Demirel'e True Path Party and Mr. Inonu's Social DemocratPopulist Party. Prime Minister Demirel's Government announced its intention tostabilize the economy and maintain the outward-looking and market-orientedpolicy stance of the 1980s. The coalition has shown resilience, enduring aweakening of the Social Democrat Populist Party due to the defection of severalof its leaders. Foreign policy issues, ethnic unrest at home and in neighboringcountries, and the need to quell terrorism, continue to preoccupy theleadership. Public support for the Government will be tested in March 1994,when nationwide local elections will be hald.

Recent Developments

5. mconomig. Economic performance in 1991 was influenced by three majoreventss the Gulf war, a change in Government in mid-year, and national electionsin October. These events heightened uncertainty, depressed investment andeconomic activity and disrupted the exchange and financial markets. Afterexpanding by 9.2 percent in 1990, GNP grew by only 0.3 percent in 1991. Asdomestic political events unfolded, electoral considerations dominated thepolicy agenda, and the fiscal deficit widened. The PSER rose to 16.9 percent ofGNP and consumer price inflation increased to reach an average of 66 percent(Table 1). The underlying causes of the fiscal deterioration, which stemmedfrom the pol4tical agenda, includeds generous wage increases for civil servantsand public sector workers, agricultural support policies, and the poorperformance of the 803E.

6. Prime Minister Demirel's Government, which took office in late 1991, thusinherited an economy with a high fiscal deficit and rising inflation. TheGovernment's program was aimed at reducing the PSBR by accelerating taxcollection coupled with a partial tax amnesty, implementing a centralized cashmanagement scheme for the Extra Bud atary Funds (BBFs), acceleratingprivatization and improving the financial performance of SOEs. Theimplementation of the anti-inflationary strategy was, and continues to be,complicated by some real wage rigidity, a large domestic debt burden, a publicinvestment program which had already been substantially cut since 1987, andsignificant tax evasion by individuals and corporations.

7. In 1992, little progress was made in dealing with key structural issues,including subsidies, in particular for agriculture; 80E divestiture andrestructuring; and tax reform. Economic activity picked up and GNP growth isestimated at 5.4 percent, but this was a consumption-led growth reflecting largewage increases which took place in the second half of 1991. Private investmentremained weak. The ElB were subjected to financial discipline and some fiscaladjustment took place. The P8BR is estimated to have declined from 16.9 percentof GNP in 1991 to 13.4 percent. Inflation remained high at 70 percent, as laborsettlements continued to reflect past inflation rates, and inflationaryexpectations embodied in interest rates remained high. Without the neededfiscal adjustment, Central Bank credit to the public sector expanded rapidly,and the authorities concentrated on maintaining stability in the foreigncurrency markets. A reduction of the fiscal deficit is crucial to facilitatethe recovery of private investment and provide an environmc.nt to improveproductivity and competitiveness. Unless the problems of the major loss-makingSOEs are addressed, the sector will remain a major drain on the public finances.With nationwide local elections scheduled for March 1994, there is a risk that

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the Government's political agenda will exacerbate the difficulties of improvingthe fiscal deficit.

8. Thus, in many respects, Turkey iL in a similar position at the start of1993 ae that of a year ago. The reduction of the fiscal deficit remains the toppriority. However, the conditions under which the adjustment will have to beimplemented have charged. Past policy sl,ppage has increased the rigidity ofinflationary expectations. The process of currency substitution, whichaccelerated in the last two years, has not reverse and has reduced the room fornon-inflationary financing of the deficit through monetary expansion. Given theopenness of Turkey's capital account, attempts to reduce the Government'sinterest burden by resorting to Central Bank financing and by interfering withinterest rate determination, had an adverse effect on capital flows andreinforced currency substitution. As Central Bank reserves declined in early1992, tne authorities were forced to raise interest rates to reverse theprocess.

Table 1: KEY MACROECONOMIC INDICATORS 1982-92(Percent except as indicated)

1982-86 1987-91 1990 1991 1992 1/

GROWTH RATES

GNP per capita 3.0 2.2 6.8 -1.8 3.2

GNP e.S 4.4 9.2 0.3 5.4Consumption 5.2 5.2 11.2 2.0 9.5

Investment 7.4 1.7 31.6 -14.6 0.7Exports GNFS 16.2 14.0 9.1 11.4 3.5Imports GNFS 14.4 13.3 35.4 -2.1 10.5

GOP f.c. 5.1 4.2 8.2 1.1 4.9

Agriculture 4.1 1.6 11.1 -0.8 3.5Industry 7.4 5.6 8.1 3.2 6.6Services 4.6 4.4 6.5 0.8 4.6

INFLATION (per;od average)Wholesale Prices 35.9 53.8 52.3 55.3 62.1

Consumer Prices 37.9 60.3 60.3 66.0 70.1PUBLIC SECTOR BORROWING REQUIREMENT (PSBR)

PSBR/GNP 2/ 6.0 10.3 11.6 16.9 13.4

EXTERNAL DEBT

Stock of Debt (USS Bitl) 24.1 44.5 49.2 50.3 50.9

Debt / GNP 46.5 53.7 46.2 48.1 46.0Debt t Export 3/ 211.5 206.4 195.1 194.7 180.1Debt Service / Export 32.2 33.2 29.1 30.5 25.8

Interest Payment / Export 16.5 14.2 13.4 12.8 10.0Interest Payment / GNP 3.6 3.7 3.2 3.2 2.6

Current Account / GNP -2.6 0.0 -2.5 0.3 -1.1

CENTRAL RANK RESERVES (USS biLl) 2.6 5.6 7.6 6.6 7.6

Sources: SIS, SPO, Treasury, World Debt TablesI/ Estimates2/ Average for 1984-1986. For the 199012 period, Gulf crisis related grants are excluded.3/ Exports of goods and services

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9. Turkey's external debt in 1992 was estimated at US$50.9 billion.Creditworthiness indicators have improved since the mid-1980s. The debt serviceratio has fallen from an average of 32.2 percent during 1982-86 to 25.8 percentin 1992, and the ratio of interest payments to exports has declined from about16.5 percent to about 10 percent in 1992 (Table 1). External intereat paymentsnow absorb about 15 percent of government revenues, a smaller share than in themid-1980s. As explained in paragraph 12 below, there has been a reduction inthe average maturity of long-term debt. Short-term debt as a pexcentage oftotal debt increased from about 15 percent in 1988-89 to about 20 percent in1992. About two-thirds of the debt is at fixed interest rates.

10. Social. Turkey's social indicators have improved considerably over thelast two decades. The average life expectancy of both men and women has goneup; mortality rates have declined; fertility has dropped; and literacy rateshave increased appreciably. For example, infant mortality has declined from 169per 1,000 live births in 1965 to 60 by 1990. The fertility rate has droppedfrom 5.7 in 1965 to 3.5 in 1990; and the literacy rate has improved from about60 percent to abor3 81 percent. However, Table 2 below shows Turkey is behindother middle income countries for selected social indicators. This is true, forexample, with respect to life expectancy, infant mortality, as well as literacyrates. In addition, there are significant disparities among regions, especiallyin basic health and education services, and in particular for women and girls.The population growth rate, averaging about 2.4 percent, remains high.

Table 2: SELECTED SOCIAL INDICATORSComqaratiVe Data

Turkey Chile Colombia Mexico Poland Tunisia

Population Grouth Rate CX) (1980-90) 2.4 1.7 2.0 2.0 0.7 2.3

Crude Birth Rate (per 1,000 inhabitants) 28 22 24 27 15 28

Crude Death Rate (per 1,000 inhabitants) 7 6 6 5 10 7

Life Expectancy at Birth (years) 67 72 69 70 71 67,

Infant Mortality (per 1,000 lfve births) 60 17 37 39 16 44

Iuuminization children under one (X)

OPT 74.0 99.0 87.0 66.0 98.0 93.0

tleasles 67.0 98.0 82.0 78.0 96.0 82.0

Fearles as X of Labor Force (1990) 30.0 20.7 14.4 18.6 45.6 16.2

Literacy Rate 80.7 93.4 86.7 87.3 na 65.3

Primary Pupil/Teacher Ratio (1989) 30 29 30 31 16 30

Primary Net Enrotlment (X, 1989) 84.0 89.0 69.0 100.0 97.0 95.0

GNP per capita (USS, 1990) 1630 1940 1260 2490 1690 1440

Sources: World Development Report, 1992Social Indicators of Development, 1991-92

B. The External Environment

11. The spillover effects of domestic imbalances on the exter:%al accounts havebeen mitigated by a flexible exchange rate policy which helped to maintain the

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competitiveness of Turkish goods. In 1990-9.a. the Gulf Crisis had an importantimpact on the external sector, but its effects were compensated by large grantinflows. All..ough in 1990, domestic policies and the Gulf Crisis led to amarked deterioration in the externa. accounts, in 1991 sizeable Gulf Crisis-related grants (1.8 percent of GNP) and a decline in the trade deficit, mostlydue to a slowdown in private demand, compensated for the decline in tourismrevenues anc. workers' remittances and led to a small current account surplus.Overall, the external sector adjusted well to the shocks. The loss oftraditional export markets, such as Iraq, was compensated by inroads into othermarkets. The same resilience was apparent in the service sector where newmarkete were explored, and service contractors aggressively and successfullytapped new business opportunities.

12. In 1992, in spite of the good performance of the export and tourismsectors, large import growth and lower inflows from Gulf crisis-related grantsled to a current account deficit which is estimated to have reached US$1.1billion compared to a US$0.3 billion surplus in 1991. Foreign direct investmentrose from around US$100 million (net) per annum in the mid- and late-1980s toUS$783 million in 1991, and a further increase is estimated for 1992. Higherdirect foreign investment has contributed to reducing Turkey's external borrow-ing requirements. In 1992, Turkey was very active in the bond markets,successfully tapping the German, U.S., and Japanese markets after Standard andPoors gave Turkey a triple B rating. Treasury issued US$2.1 billion in bondswith maturities ranging from 5 to 7 years. Turkey's success over the past threeyears in attracting private capital from a variety of sources, despite financialinstability, indicates considerable resilience and external confidence in thecountry's prospects. However, the falling share of bilateral and multilateralfinancing and the uncertainty attached to private flows has meant that Turkey'sfinancing arrangements are seldom assured over any significant time period.This trend has also shortened the average maturity of debt. Continuedmacroeconomic instability could diminish the willingness of domestic investorsto finance Government borrowing and have an adverse impact on workers' remit-tances and foreign creditor perceptions, necessitating a major downwardadjustment of growth.

13. Turkey has gained substantial market access and has succeeded indeveloping strong and broad-based trading links with its European and MiddleEastern trading partners. The OECD countries are Turkey's main tradingpartners, representing about two-thirds of both exports and imports. Amongthem, Germany is the largest trading partner accounting for one-fourth ofTurkey's exports and about 15 percent of its imports. Turkey is also activelyexploring trade links with the new republics in Central Asia.

14. As the Gulf war experience showed, Turkey is vulnerable to a shock comingfrom one of its major trading partners. However, it has sizeable foreignexchange reserves and its exporters of goods and services (mainly construction),have proven adept at shifting trade to other countries. A major shock stemmingfrom a slowdown in world trade or a decline in the terms of trade could becushioned for a time by drawing down reserves or through increased borrowing.Turkey's ability to maintain reserve levels or external borrowing capacity whichit can call upon in difficult times depende greatly on its following appropriatedomestic policies. The persistence of such shocks, however, would lead to aneed to compress imports and, hence, growth. In contrast, moderate interestrate shocks would increase the payments required by a relatively small amountand could readily be met from reserves.

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Medium-Term Prosnacts

15. The Government has announced its commitment to reducing the fiscal deficitand inflation in the medium term. The 1993 budget, if fully implemented, willbe a signjificant step towards this goal. The deficit reduction will have to beanchored on tax reforms, preparatory studies for which are now underway; arevision of agricultural support policies, currently being reviewed by theauthorities; and public enterprise reform. There is now a growing acceptance bythe Turkish public that in the absence of public enterprise reform, it will bevery difficult to permanently lower the PSBR and inflation. This may reduce thepolitical obstacles to the reform of the sector. But the fiscal retrenchment islikely to be gradual. This is likely to reduce growth in the 1994-95 periodbelow the average of the last decade. Yet, for the 1996-2001 period, GDP growthis projected to average 5.2 percent per annum, as a recovery of privateinvestment is unleashed by bringing down the fiscal deficit to about 5 percentof GN: by 1997 and inflation is substantially reduced. In this scenario,creditworthiness will continue to improve. The continuation of the tradepolicies of the last decade should support a healthy export growth that willkeep the current account deficit to less than one percent of GNP. By the year2001, the debt-to-GDP ratio would decline to 29.3 percent while the interest-to-exports ratio would fall to 7.2 perc-nt.

16. There is also the possibility that Turkey would be decidedly slower inadopting reform measures and, therefore, current deficit levels and inflationrates would persist. Continued macroeconomic instability would diminish thewillingness of domestic investors to finance gover.=ment borrowing and reduceexternal capital inflows. Growth would be lower than in the scenario abovebecause of the stop-go fiscal and monetary measures needed to prevent inflationfrom accelerating, the adverse effect of uncertainty on private investment, anddifficulties in attracting flows of foreign capital and workers' remittances.

17. Past Bank Assistance. The Bank's assistance during the 1980s supportedthe Government's objectives of placing greater reliance on market forces andadopting a more outward-oriented strategy. During the first half of the decade,the main vehicle for the Bank's assistance was a series of structural adjustmentloans (SALs) totalling US$1.6 billion. These were followed in the second halfof the decade by Bank support for the broadening and deepening of the adjustmentprocess at the sectoral level. Sector adjustment loans (SECALs) to supportreforms in the agricultural, energy, and financial sectors totalled US$1.3billion together with four B-loans amounting to US$112 million. Since 1989,Bank lending has focussed on inv3stment, with an emphasis on the rehabilitationand expansion of Turkey's economic infrastructure (Table 3). Commitments duringFY90-92 averaged about US$520 million annually. A Bank loan for an earthquakerehabilitation and reconstruction project in eastern Turkey was approved earlierthis fiscal year.

18. Progress in instituting policy reforms under the SALs was uneven,particularly in public sector reform. One of the lessons learned is that theadjustment operations should have been accompanied by stronger structural andinstitutional changes to achieve a sustained reduction of the public sectordeficit. Restructuring of the public enterprise sector in particular, theperformance of which deteriorated sharply in recent years becoming a source ofinstability, should have been an integral part of the reform package.Experience under the SECALs was also mixed; most of the specific sectoral reformmeasures were put in place, but it often took longer than originally

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anticipated, as the implementation period coincided with the slowing down of thedomestic reform process. Although quite euccessful initially, more recently,the performance of credit operations has deteriorated. The underlying caueasinclude a general slowdown in investment, high intezest rates, and investors'expectations that plane for subsidised cred4t schemes announced by theGovernment would materialize. Under the circumstances, the cancellation of theundisbureed balances of two loans was agreed between the Government and theBank.

Table 3I IBRD CONMITNENTS BY SECTOR FOR FY8I-93(USS mi illtion)

Sector FY81-83 FY84-86 FY87-89 FY9O-92 FY93

Agriculture 230.4 442.5 400.0 118.0 77.0

Power 163.0 544.0 132.0 570.0

Oil, Gas & Coal 142.2

Transport & Telecom. 71.1 320.9 197.0 300.0

Urban & Water 88.1 9.2 522.0 173.0 129.5

Industry & Finance 364.1 162.7 504.5 309.2

Health 75.0

Education 94.5 174.3 90.2 67.0

Disaster Rellef 285.0

Adjustment Operations 980.3 976.0 837.6

TOTAL 2039.2 2549.8 2842.4 1560.4 558.5

19. Credit from the Bank Group comprised the largest single source of medium-and long-term financing for Turkey during the 1980.. Through December 31, 1992,Bank and IDA lending tc Turkey amounted to US$11.4 billion, through 133operations (the last IDA credit was approved in 1973). As a result, IBRD'sshare of long-term debt disbursed and outstanding increased from 7.4 percent in1980 to 15 percent in 1991. IBMD's share of total debt service increased from12.1 percent in 1980 to 15.9 percent in 1991. Of total IBRD commitments, aboutUS$3.1 billion remained undisbursed as of December 31, 1992. IFC commitmentsthrough December 31, 1992 totalled about US$1.1 billion.

20. As of the end of FY92, of the 34 projects in the portfolio, 10 had anoverall rating of 3, 14 had a rating of 2, and the remainder had a rating of 1.The overall portfolio rating of 2 for FY92 reflects a modest improvement ascompared to the rating of 2.2 for the previous year. Gross disbursements,however, are low and, despite systematic efforts to improve performance, haveworsened in recent months. Disbursements for investment lending declined fromUS$443 million in FY91, to US$341 million in FY92, and only US$129 million inthe first half of FY93. Or. a net basis, total disbursements turned negative inFY90, reaching minus US$309 million by FY92. Both the Government and the Bankare extremely concerned about this deterioration. The underlying causes for thedecline Ln gross disbursements, and solutions to them, will be a major focus ofa Country Strategy and Implementation Review scheduled for mid-February 1993

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21. Project implementatio. in Turkey continues to be constrained by weakproject management capacity, rapid turnover of key senior officials,coiplexities in Government decision-making processes, and cumbersome and lengthyprocurement procedures. Another important constraint in recent years has beenGovernment budgetary cuts, causing performance to fall below technicalimplementation capacity. Inadequate understanding of the Bank's procurementguidelines has also been a source of implementation delays. our strategy forportfolio management is summarized in paragraphs 41 to 43 below.

C. The-Bank Grotn's Country Assistance Stratecg

Development lssues

22. Following the success of the adjustment program of the 1980s, the majoreconomic challenges fac'ng Turkey in the decade of the 1990w includestabilization, and a focus on sectoral issues which retard productivity growth.In parallel, after a decade of relative neglect, the elimination of poverty, amore even distribution of the benefits of growth, and the environmental impactof growth need to be tackled urgently. In the ahort term, hcwever, fiscal andmonetary stability are the highest priorities. on the positive side, a muchmore robust and outward-oriented economy, with restored internationalcreditworthiness and a dynamic private sector, puts Turkey in a strong positionto meet these challenges.

23. The Immediate Acenda. The Government needs to take strong and effectiveaction to reduce the fisca deficit on a permanent basis. It requires therestructuring of the SOB sector through commercialization and/or privatiza -nof SoBs, and increasing rovenues through tax reforms and improved taxadministration. Although the Government has confirmed its commitment tocommercializ'ng and/or privatizing SOEs, the political and legal environment hasnot been supportive. The share of SOBs in sectoral value added isdisproportionately larger in mining (60 percent), energy (40 percent), andtransportation and communication (38 percent), but has been declining inmanufacturing since the mid-1980s (from 18 percent to 14 percent) because of theGovernment's decision to restrict expansion in the sector. Overall, the 30largest SOEs account for some 10 percent of GDP at factor cost and employapproximately 3 percent of the labor force. In recent years, productivity hasdeclined, and the financial performance of some major utilities--electricity andrailways--has deteriorated. SOBs accounted for about one-half of the fiscaldeficit in 1990-91. Of the total SOB borrowing requirement for 1991, about 40percent is attributable to the Government's agricultural support programs whichare administered through SOEs.

24. An effective fiscal program calls for significant institutional changes inthe SON sector, including an effective divestiture agenda and a transformationin governance. For SOEs unlikely to be privatised (e.g., the railways and someutilities), the Government needs to clarify their mandate and commercializetheir operations. Although the Government is reviewing the laws regulating theoperation of the SOBs, the tim being to take them out of the political ambit,they remain subject to political interference. The depoliticization of SOBoperations (including puLlic utilities and SOEs which administer theGovernment's agricultural price support programs), is an imperative if thefiscal deficit is to be reduced on a permanent basis. A Bank review of the SOEsector requested by the Government is being fi.,alized. In addition, theGovernment and the Bank are jointly studying the possible design of a social

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safety net, including income and employment support. and a social securitysystem. This is a prerequisite if the process of reforming the SON sector is tosucceed.

25. The relatively low yield of the tax system in Turkey is contributing tothe fiecal imbalance. In spite of high statutory tax rates on corporate andpersonal income, Turkey's tax burden In 1990 was the lowest among OECDcountries. Inadequate administration, tax evasion, and a large number ofexemptions and rebates are among the underlying problems. Measures to improvethe efficiency of the tax system and ensure a sustainable increase in revenuesincludes a revision of the corporate tax to account for the effects of inflationand to r'duce exemptions and rebates; the gradual elimination of expenditurerebates in the personal income tax system; a rationalization of the system ofinvestment incentives; and improvements in tax administration. In the short-term, tax reform measures may need to be supplemented with increases in VATrates.

26. The Medium-Term Acenda. Accelerating Turkey's productivity growth in the1990s will also require investment to develop its human capital base.Simultaneously, comprehensive measures are needed to alleviate poverty,particularly in the eastern parts of the country, reduce regional disparities,and prot!-ct the environment from the adverse impact of growth. Turkey still hasalmost half of its labor force in the agricultural sector, an unemployment rateclose to 10 percent of the civilian labor force, and a rapidly growingpopulation. The Government is faced with the complex task of upgrading thequality and availability of education and vocational training, health and basicservices, as well as implementing specific poverty alleviation measures. TheGovernment recognizes this need and has given renewed emphasis to human resourcedevelopment in the Sixth Five-Year Plan (1990-94). Finally, while populationgrowth is expected to decline gradually (from 2.4 percent currently, to 2percent by the year 2000), increasing education enrollments, especially forwomen and for people in the rural areas, provide an opportunity to furtherreduce population growth.

27. The Government needs to address the issue of the disparities in theeconomic productivity and the differences in per capita incomes among theregions. The underlying causes includes differences in natural resources, inthe human capital base, and in the levels of infrastructure and supportingservices. To date, progress has been insufficient in redressing these problems,in particular with respect to basic education and health services. The maininstruments adopted by the Government consist of disincentives for industriallocation in the three main metropolitan areas (Istanbul, Ankara, Izmir) andsubstantial incentives for locating enterprises in the less-developed reglons.However, these instruments have not thus far succeeded in stimulating investmentin the priority regions to an appreciable extent. The Government's effortsshould be redirected, shifting away from large infrastructure investments andtax incentives, to smaller, economically viable, and well-focussed investmentsto fill critical gaps in infrastructure, and placing greater emphasis thanhitherto on the equitttle development of the human capital base.

28. Rapid population growth, urbanization, industrialization, tourism, andintensification of agriculture have placed increasing strains on Turkey'satmosphere, waterways, ground water, land resources, and cultural heritage.Public awareness about the costs of environmental degradation and the resolve ofthe central Government and local authorities to develop positive responses which

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ensure sustainable growth have risen dramatically in Turkey in recent years.Accordingly, environmental concerns rank high on the public policy agenda, andthere is a growing consensus that the economic and social returns from pollutionabatement and environmental protection justify public investment.

29. Technological progress is also important for accelerating Turkey'sproductivity growth and strengthening its International competitiveness.Experience in other countries suggests that, in addition to establishingtechnology standards and providing advice, Government actions to correctimperfections in technology information and provide infrastructure, generatehigh social returns. The Government is in the process of determining its broadstrategy for technology development and the supporting institutionalinfrastructure. A first phase is being implemented under a Bank-financedTechnology Development Project.

Ihe Bank's Prooram

30. The Bank's assistance strategy for Turkey is shaped by the Government'spolicy agenda. But our ability to provide more comprehensive support isconstrained by the difficulties the Government is experiencing in implementingnecessary policy measures. The political sensitivities associated with theneeded reforms, particularly in the public sector, are compounding thedifficulties. The Bank's program would reflect a graduated response, with thelevel and composition of future lending depending on Turkey's macroeconomicperformance, sectoral policies and financing requirements. Lending levels couldrange from a low of about US$350 million a year to US$1 '-l1lion, depending onprogress in implementing public sector reforms, improving portfolio management,and upgrading administrative capacity.

31. For the next two to three years, unless there are significant policyshifts, and unless the Government forcefully implements macroeconomic andsectoral policies which succeed in reducing the fiscal deficit and loweringinflation, Bank lending levels are expected to remain at the low end of therange. Based on our discussions with the Government and portfolio performance,we expect that in a low case scenario, Bank assistance will be limited mostly tourban infrastructure (primarily water supply and sanitation), human capitaldevelopment, and environmental protection. Such assistance would, of course, bepredicated on the Government's willingness to tackle relevant policy andinstitutional issues in these sectors. In this scenario, given anunsatisfactory macroeconomic situation, we would expect to continue to play atechnical and advisory role with respect to structural reforms required toreduce the fiscal deficit. In addition, to help lay the basis for publlc sectorreforms, we would build upon recently initiated E8W on labor restructuringissues associated with SOE reforms and the design of a social safety not.

32. Under the low case, our program would emphasize institutional and policyimprovements in urbL. infrastructure, education, and health. The program wouldalso address environmental concerns. In investment le,vaing operations, reformswould include the streamlining and strengthening of institutions, measures toincrease financial and operational efficiency, and policies to ensure thatimprovements in urban and social infrastructure are sustained. The latter wouldbe critical for enhancing the enabling environment for private investment. Alsoimportant is support for improved management of natural resources and increasedprivate sector involvement in urban infrastructure investments. GivenGovernment capaclty constraints, a central objective of our assistance strategy

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is to help strengthen management and implementation capacity to enable theGovernment to effectively utilize the financial resources it has mobilized.

33. Efforts are underway to tackle the massive backlog in the provision ofpriority infrastructure. The severe strains on the infrastructure resultingfrom rapid urbanization and industrialization have been compounded by the rapidgrowth in tourism. In our sectoral dialogue on water, sanitation and solidwasti management issues, the focus is on the need to upgrade the technical andmanagerial capabilities of sectoral agencies, to shift expenditures tomaintenance of existing assets, to reduce the budgetary costs of infrastructurethrough increased commercialization and improved local resource mobilization, tostrengthen implementing institutions, and to facilitate the entry of the privatesector. In addition to assisting with the establishment of semi-autonomouswater supply and sewerage agencies in Ankara, Istanbul, and Izmir under ongoingoperations, and starting-up assistance for Bursa as proposed in this report, theBank is helping to prepare projects to upgrade water supplies and sanitation inmunicipalities along the coast. These activities are being supported by theEnvironmental Program for the Mediterranean. Transport bottlenecks are alsoinhibiting Turkey's continuing development as a dynamic, export-orientedeconomy. Continued high levels of maintenance of the road network (whichcarries the major share of all traffic) are being supported by the Bank. FutureBank support for railway restructuring and the reform of ports administration,essential for dynamic growth, are constrained by the Government's reticence totackle critical issues.

34. In the education sector, the Bank would continue support for theGovernment's efforts to upgrade the formal education system as well as non-formal vocational training. Future operations envisage support to upgrade thequality of and access to primary and secondary education, and improve regionalequity. Similarly, in health, the main challenge is to expand basic servicesand reduce inequalities in the health status, especially between the western andeastern regions with emphasis on women and girls. Projects under preparationaim to expand to additional provinces ongoing improvements in equity, qualityand access to primary health care. Concerned about the need to upgrade socialservices, the Government has recently requested Bank assistance to help developeffective and sustainable health insurance schemes.

35. The Bank's support for environmental assistance emphasizes improvements inthe management of natural resources including soil conservation andreforestation, urban environmental management and industrial pollution control.Future Bank assistance would also support the adoption of appropriateenvironmental policies and regulations, improved monitoring and enforcement ofenvironmental laws and regulations, and institutional strengthening to helpensure effective environmental planning and management. Building on a recentlycompleted agricultural environment study, and the experience gained under theproposed Eastern Anatolia Watershed project, we expect to continue to focus onenvironmental issues in the eastern region, where subsistence farmingpredominates and natural resources are under pressure.

36. should there be a significant change in the Government's policiesresulting in an sustainable reduction in the fiscal deficit, Bank lending levelswould increase accordingly. In that event, the Bank's program would, inaddition, include support for the restructuring and privatization of the SO0s;the provision of a social safety net accompanying SOE reform; the development ofcapital markets, creating increasingly fine-tuned instruments for corporate

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finance; and, as private investment accelerates, the development of technologyinfrastructure, thus promoting faster productivity growth and internationalcompetitiveness in industry. Furthermore, as explained in paragraphs 37 and 38below, depending on the strength of the Government's sectoral policies, the Bankcould provide more comprehensive assistance for the development of theagricultural and energy sectors.

37. The Government's agricultural pricing policies remain a central problembecause they shift incentives away from high value crops and place a largeburden on the Government deficit. Also, agricultural interest rates continue tobe subsidized. Given current policies, the 8ank's ability to support theagricultural sector is constrained. While continuing to seek the reformsneeded, the Bank would explore how best to strengthen support services, inparticular for smallholder farmers, and increase productivity.

38. In the energy sector, the Government has been trying to improve demandmanagement and stimulate the growing interest of private investors, with somesuccess. Although some progress has been made in improving cost recovery forelectricity, improvements in the operational and managerial efficiency and -financial accountability of TEX, the largest public power utility, are provingharder to achieve than expected. Any further Bank assistance for the sectorwould depend on the satisfactory implementation of a financial and operationalrestructuring program for TEX which has been agreed with the Bank. The Bank'sobjectives are to help increase the participation of private investors andlenders, both domestic and foreign, in the sector (a Bank-financed study to helpupdate the regulatory framework is underway); to decentralize and eventuallyprivatize power and gas distributiont and to reduce pollution.

39. IYC and_HIGA. IFC continues to maintain a strong pipeline of newinvestment projects. It expects to continue to support investments for theexpansion and modernization of existing enterprises, as well as new jointventures designed to bring in foreign capital and know-how. In addition, IFCwill continue to explore opportunities to support companies that arefundamentally efficient, but because of inappropriate debt strategies are inneed of financial restructuring to regain commercial health. IFC also intendsto continue to explore opportunities for the privatization of SOEs, and for thefinancing of local private sector power generation and transmission facilities.In the area of capital markets, tIC will help create institutions to deependomestic debt and equity markets and will help Turkish companies accessinternational capital markets. Turkey joined NIGA in 1988, and has been one ofthe more active countries for MIGhA' guarantee program. MIGh has insured fourprojects in Turkey in the airline catering, banking, and tobacco industries.The airline catering project was a privatization, and one of the bankingprojects constituted the first time the HIGA issued insurance to an investorfrom a Category 2 country (Saudi Arabia). To date, NIGA has registered sixprojects in Turkey, including the aforementioned projects. Includingcommitments, MIGA's exposure in Turkey - US$84.5 million - is the second highestafter Argentina.

40. IMF. Between 1980 and 1985, Turkey's economic program was supported bythe IMF through a series of stand-by arrangements. Repayments to the IMF werecompleted in 1990. Following the liberalization of the capital account in 1989,Article VIII consultations for full convertibility were successfully concludedin March 1990. Discussions with the Government for the last Article IVconsultations were held in November 1992.

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Portfolio Manaoament

41. Implementation problems in Turkey are reflected in both the build-up ofthe undisburoed portfolio of Bank loans and the weakness of the project pipelinean the thrust of the program has shifted away from fast-disbursing adjustmentoperations to investment lending. Improvements in implementation and managementcapacity are essential if the sectoral interventions included in the Bank'sprogram are to materialize. At the general level, we are engaging theGovernment through regular country implementation reviews, covering both genericportfolio issues as well as project specific issues, highlighting the need tostreamline time-consuming Government procedures and focussing on preparationwork upstream to strengthen the project pipeline. Given the impact ofprocurement delays on Bank-financed activities, we are working with theGovernment to streamline procurement procedures. Improvements in public sectormanagement will continue to be an integral element of our lending activities.In providing support to improve the capabilities of sectoral agencies, care isbeing taken to ensure that the technical assistance is tailored to the agencies'needs. We intend to further intensify supervision, building on the success inthis area through the recruitment of local staff with the relevant technicalskills in the Resident Mission. In addition to supporting sectoral agencies'efforts to build up a project pipeline, we will minimize project complexity toensure that the capacities of implementing agencies are not overburdened, andreduce the proliferation of project agencies.

42. Drawing on the annual country implementation review process which is nowin its third year, the Government and the Bank are taking steps to improve thehealth of the existing portfolio. Problem projects, with continued non-compliance with agreed policy and institutional measures and minimal prospectsfor improvement, have been restructured or cancelled. Extensions of closingdates are subject to more rigorous criteria than previously. Procurementproblems are being dealt with more expeditiously than hitherto, in part becausewe have built up requisite expertise in the field.

43. In the process of strengthening portfolio management, we are placingemphasis on the following actions:

o continuing to press for the standardization of bid documentstogether with translations (currently the cause of inordinateimplementation delays) t

o working together with core and line agencies to ensure theavailability of adequate levels of counterpart funding on a timelybasis (this problem has become more acute in recent years becauseof the persistence of large fiscal deficits);

o continuing to tailor technical assistance to upgrade themanagement and administrative capabilities of implementing unitsand agencieol

o instituting the increasing use of mid-term reviews underindividual projects to benefit from experience on the ground andfacilitate any course correction which might be needed;

o promoting the practice of developing annual work programs andprocurement plans;

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o for future projects, allowing longer lead times as necessary tosynchronize Bank processing with Government preparation andprocessing.

Areas of Special EmDhasis

44. Private Sector Develonment. The continued development of Turkey's privatesector remains a central objective of the Bank's operational strategy. TheGovernment needs to facilitate private investment, while at the same time,improving the efficiency and effectiveness of public investment. Accordingly,in our policy dialogue, as well as our analytical support and lendingactivities, we will continue to focus on the need to enhance the enablingenvironment for private investment. This would require the consistent pursuitof policies designed to achieve macroeconomic stability, efficient financialintermediation, and the disengagament of the Government from directly productiveactivities while utilizing the public expenditure program to alleviateinstitutional and infrastructure constraints to sustained private sector-ledgrowth.

45. Human Canital Development and Poverty Alleviation. The Government isconcerned that insufficient attention has been given to human resourcedevelopment in the past qiven policy-makers' preoccupation with difficulteconomic issues. There is also growing recognition that sustained high growthwill ultimately depend on the extent to which there is an enduring reduction inpoverty. The strategy which the Bank is advocating and supporting includes:raising the demand for labor through high economic growth; increasing theproductive assets of the poor by directing a larger proportion of publicexpenditures for human capital development, in particular, by restructuringsocial spending in favor of primary education and health services; and byproviding an effective social services system (including income and employmentsupport services, social security mechanisms, and a carefully targeted socialsafety net), especially for those most adversely affected by the reform process.

46. Women In Develonment. To provide the Government with a basis for anagenda to enhance the participation of women in Turkey's economic developmentprocess, the Bank has just completed a report on Women in Development. The mainfocus of the report is on increasing and raising the quality of women'sparticipation in the labor force. Recommendations include measures to enhancewomen's labor skills and income-earning potential through education, technicaltraining and credit; and to open their access to higher paying jobs. Beyond thesector work, we plan to engage the Government on the need to formulate andimplement a sufficiently broad agenda for action to help women avail themselvesof development oi_portunities. Meanwhile, in addition to ongoing and proposedprojects to upgrade primary education and basic health services (which benefitwomen), a recently approved Employment and Training project includes a pilotaction and research program specifically designed to promote women's productiveemployment.

47. Environment. The Government and the public are concerned that Turkey isfacing serious and increasing environmental challenges. To lay the basis forsustainable development, the newly created Ministry of Environment is drawing upa program of institutional and policy reforms and initiating action to integrateenvironmental issues and associated investment needs fully into the publicinvestment program. The Ministry's efforts are being supported by a METAP-financed environmental institutions study. In addition, the first cycle of

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METaP-supported activities includes coastal zone management, environmentalfinance, maritime and municipal pollution control, and the management of naturaland cultural resources at a regional level. Support for the preparation of anational environmental strategy and action plan is envisaged in the second cycleof METAP. The Bank's financial support for the onvironment encompasses a widerange of activities including soil and land management, forest conservation andmanagement, and measures to control pollution, particularly in the urban andindustrial sectors. An innovative project for the conservation of geneticresources under GEF, and a project to phase out ozone depleting substances underthe Montreal Protocol are also being launched. Turkey is also an activeparticipant in a regional GEF program for the protection of the Black sea inline with the Bucharest Convention.

Summary

48. Success in realizing the potential of Turkey's dynamic private sector, andsetting the economy firmly on the path of private sector-led growth, requiresthe sustained implementation of stabilization and adjustment measures. Thefirst step would be & significant reduction of the budget deficit through long-term structural measures, in particular, with respect to the divestiture andrestructuring of SOEs. Second, the Government needs to broaden anJ deepen itsimplementation capacity in readiness for the more management intensive sectoralreforms as the program matures beyond macroeconomic reforms. Finally, theGovernment needs to address human resource development, poverty, regionaldisparities, and environmental issues, which will ultimately determine theeconomic and social sustainability of the program.

49. The Bank's strategy aims to promote the dialogue regarding the need for asustained reduction of the fiscal deficit and inflation. Unless significant upfront action is taken to reduce the budget deficit as part of a crediblestabilization program to restore domestic macroeconomic balances, the focus ofthe Bank's program would be narrowed to include mostly the following sectors:urban infrastructure (primarily water supply and sanitation), human resources,and the environment. At the same time, through well-focussed economic andsector work, we plan to be in readiness for a build-up of Bank lending in theevent that the Government introduces policies to create the conditions necessaryfor sustained growth.

50. Progress will be imeasured against the following criteria: the adoption,and successful implementation, by the Government of policies to restore asatisfactory macroeconomic framework, especially as it affects the privatesector investment response and a reduction of the role of the state in directlyproductive investmentsl progress in reducing poverty and providing basic socialservices to the poor; progress in tackling environmental issues; and the successof efforts to strengthen management capacity and improve implementationperformance.

PART IIIs THE PROJECT

51. Background. Greater Bursa is the fifth largest Turkish city with apopulation of 840,000 in 1990, and has the highest rate of population growth(5*S percent per year). The city is a large industrial center with establishedindustries based on agriculture and textiles, and new industries such as vehiclematufacture, machinery production and food processing. It is also a tourist

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attraction because of its rich historical past, its natural hot springs andwinter sport facilities. In 1989, total bed capacity reached 9,000.

52. Water supply and sewerage services in Bursa are provided by a municipalauthority (BUSKI), with moderate private sector involvement (meter reading andbilling, and meter repair and installation). 90 percent of the population isserved by water supply connections, and 70 percent by sewerage connections.Domestic and industrial wastewater is currently discharged without any treatmentinto the nearest streams, which empty into the Sea of Marmara (20 km away fromBursa), which is already under environmental pressure as a result of rapidindustrialization in the area (Istanbul, Izmit, Bursa). Pollutants have degradedwater quality in surface and ground water and have contributed to degrade theSea of Marmara. This has had negative impacts on water supply, fisheries,health, and recreation. The efficiency in the provision of water and sewerageservices is low. This is highlighted by the excessively high level (63 percent)of non-revenue water due to physical leaks, administrative losses (illegalconnections, under-registration of meters, etc.), and free water for certainpublic uses. This results in the excessive and uneconomic use of water and putspressure for premature development of new water resources.

53. Solid waste services are provided by the Municipality. Domestic solidwaste is disposed in an open dump site where garbage is left uncovered; andindustrial and clinical solid wastes are disposed with poor regard to theenvironment or to public safety.

54. Proiect Obiectives. The main objectives of the proposed project are tos(i) improve environment conditions and reduce health hazards in Greater Bursa;(ii) improve the management of municipal water supply, sewer services, and ofdomestic, industrial and clinical solid wastes; (iii) meet the demand for watersupply, sewerage, flood protection and solid waste services, including thedemand from the poor, living on the fringes of the city; (iv) postpone the needto develop new water resources by increasing the efficiency of water usage byreducing the volume of non-revenue water; and, (v) implement appropriate costrecovery policies.

55. Proiect Description. The project has two distinct parts. The water supply,sewerage and storm water part with: (i) water supply works needed to renovate,rehabilitate, and extend the existing systeml (ii) sewerage works needed toextend the collection networks, reconstruct sewer connections, and treatwastewater in two plants; (iil) storm water drainage works needed torehabilitate the existing networks, and extend the collection system in floodareas; and (iv) technical assistance for project implementation (engineeringservices and Project Management) and for institutional development (reduction ofunaccounted-for water, training, asset management system, management andinformation system, tariff study and feasibility of leasing arrangements).

56. The solid waste part consists of: (i) rehabilitation of the existing dumpsite, development of a new landfill site, construction of a waste transferstation; (ii) vehicles and containers to collect waste, including incinerationof clinical waste; and (iii) technical assistance for project implementation(engineering services) and for institutional development (establishment of aregulatory unit, separate management of solid waste, separate collection andtreatment of clinical and industrial waste, and contracting out of part ofdomestic waste collection).

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57. The combined cost of the two parts of the project is estimated at US$258.4million equivalent (exoluding Interest during construction); US$235.4 millionfor the water supply, storm drainage and sewerage part, and US$23.0 million forthe solid waste part. A breakdown of costs and the financing plan are shown inSchedule A. Amounts and method of procurement and of disbursements, and thedisbursement schedule are shown in Schedule B. A timetable of key processingevents and the status of Bank Group operations in Turkey are given in SchedulesC and D, respectively. Maps are also attached. The Staff Appraisal Report isbeing distributed separately.

58. Proiect Implementation. The Project will be managed by a ProjectManagement Unit (P1U) headed by a high level expert already hired since thebeginning of the implementation of the feasibility studies. The PMU Director isexperienced in project Management and with Bank's procedures and guidelines.The PMU will be assisted in BUSKI by the Planning and Investment Departmentwhich is planning and managing directly BUSKI's routine investments and in theSolid Waste Department of the Bursa Metropolitan Municipality (BMM) by the NewWorks Division. These Departments have never implemented large investments andthey would not be able to attract qualified experts because of the low level ofsalary offered by the institutions. The PMU was recently reinforced by aqualified engineer and a qualified financial professional. The role of thesespecialists will be to assist BUSKI's and B5M1s management in following upprogress made in implementing the measures required for the entity's operationaland financial improvement, and to recommend specific actions to achieve thetargets.

$9. Lessons Learned from Previous Bank Involvement. The Bank has collaboratedsuccessfully with the municipal authority of Istanbul for water supply andsewerage projects (Loans 844-TU and 2159-TU), and is presently assisting watersupply and sewerage authorities in Istaalbul, Ankara, and rzmir. Bankinvolvement in the sector has been generally successful in meeting the physicaltargets for the projects, and in encouraging the Government to establishmunicipal water companies. The proposed project, building on the experience ofprevious projects, contains a major institutional development component. Otherlessons learned from the previous projects are the need for technical assistancefor project management, less optimistic projections of water sales andimplementation schedules, full political commitment to necessary tariffincreases, timely availability of detailed designs, and better audit of theauthority's financial accounts. The proposed project takes into account theabove lessons.

60. Rationale for Bank Involvement. Major environmental inadequacies in thelargest rapidly growing cities of Turkey are lack of sewage treatment,inadequate water supply and poor air quality. Air quality will be improved sincecoal is being gradually replaced by gas for heating. Water and sanitation remaina top urban priority as present quality of service severely constrains urbanproductivity (health, industry, tourism, commerce) and entails majorenvironmental damage.

61. The semi-autonomous status of the Water Supply and Sewerage Authorities inIstanbul, Ankara and Izmir, established with Bank support, provides a validinstitutional model for Bursa. This approach maximizes the self-financingeffort of the utilities, their sense of ownership and responsibility, theirautonomy, their efficiency, and results in a rapid diminution, in each of thesecities, of the role of Central Government agencies such as Iller Bank and the

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State Hydraulic Works (DSI) which remain encumbered with a wide range offinancial, manageoment and institutional problems.

62. Continued Bank support to the sector is required on several accounts.Lirst, to ensure that the newly created water companies enjoy adequate supportto develop their managerial, technical and financial capabilities to levelswhich allow them to provide adequate services at economic costs and affordableprices. The experience in Turkey shows that this is a major undertaking andthat the Bank is in a position to provide effective support to priority agenciesfor institutional development. second, the Bank in its country assistancestrategy has agreed with the Government on the need to support projects whichprotect the environment, promote sustainable use of natural resources, andstrengthen local institutions' capacity to achieve these objectives in afinancially sustainable way. Because of its emphasis on critical environmentalissues, sustainability of municipal institutions and urban health and povertyissues, this project was accorded highest priority by the Government and theBank.

63. Aareed Actions. The following principal agreements have been reachedt

a. BUSKI and the BMM will maintain an experienced Project Management UnitDirector and two specialists in the Project Management Unit;

b. BUSKI will maintain a system of automatic quarterly tariff adjustmentsto compensate for inflation of the past quarter and ensure asatisfactory pace of project implementation.

c. BUSi will carry out an action l.lan, with and agreed timetable,covering the 1993-2000 period, for the implementation of the projectcomponents aiming at improving the entit7's managerial, operational andfinancial performance. The plan consists ofs (i) annual updatingBUSKVIs operational and financial projections for the 1993-2000 period;(ii) designing and implementing a training program for BUSKI's managersand staff; (iii) designing and implementing a program to increase thevolume of water billed as a proportion of water produced; (iv)designing and implementing an Asset and Capital Investment NanagementSystems (v) designing and implementing a Management Information System;(vi) designing and implementing a now water and sewerage tariffschedule; and (vii) implementing the feasibility study for acontractual arrangement, after bidding, with a private firm for partialor full operation of Bursa's water supply and sewerage systems. Notlater than May 31, 1993 BUSKI will exchange views with the Bank on theprogress made toward implementation of the action plan, and not laterthan July 1, 1993, take all necessary measures to meet the requirementsfor the 1993 capital expenditures. Then, not later than September 30 ofeach year, BUSKI will exchange views with the Bank on the progress madetoward implementation of the action plan and BUSKXIs initial proposalfor updating the plan. Not later than November 30 of each year, DUSKIwill provide to the Bank a new proposal for an updated plan, if theinitial proposal was not satisfactory and thereafter carry out theupdated plan as modified in agreement with the Bank. The updated planwill in particular indicate any tariff increases in real terms -- i.e.over and above the quarterly adjustment -- needed to be implemented atthe beginning of each of the next four quarters in order to achieve therevenue covenants indicated below in (Q) and (f)p

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d. The aMM will carry out an action plan, with timetable, covering the1993-2000 period, for a major restructuring of the organizationalarrangements for solid waste management. The plan includes: (i) thecreation of a regulatory body within the Metropolitan Municipality tooversee and enforce environmental laws and regulations relating to thesafe and proper disposal of solid and liquid wastes; (ii) the creationof a municipal operational corporation responsible for providingservices for the management of household waste collections, clinicalwaste collections, industrial waste collections, and landfill siteoperations; and (iii) the contracting out of at least part of thecollection service. Not later than September 30 of each year, the BMMwill exchange views with the Bank on progress made toward itsimplementation.

e. BUSKI will produce funds for investment internally generated during thecurrent year, the previous year, and the f^'.lowing year equivalent tone' less than 50 percent of BUSKI's aggregate capital expendituresincurred during the current, the previous year, and expected to beincurred during the following year.

f. BUSKI and the BMN will take measures acceptable to the Bank to mitigatethe project's environmental impact.

g. As a condition of effectiveness of the Loans, the consultants forprovision of technical assistance regarding institutional developmentthrough twinning arrangements would have to be selected by BUSKI andthe Municipalities. This is progressing well and is presentlyestimated to be achieved by the end of May 1993.

64. Envirgonmeal As2octs. The environmental components of the project(sewerage, sewage treatment, stormwater, and solid waste) amount to 70% of thetotal project cost. The project's overall environmental impact will be highlypositive since it will (i) postpone the need to develop new water resources;(Li) improve the water quality of streams and reduce contamination ofgroundwater and seawater; (iii) reduce the incidence of flooding in Bursa; and,(iv) improve solid waste collection and disposal. The project components whichhave specific environmental impacts are two sewage treatment plants, and the newsolid waste disposal landfill. Znvironmental control measures have been takeninto account in the site selection and preliminary design of the project.Measures to mitigate the project environmental impacts during detailed designand construction have been agreed.

65. The basic legislation required to control waste discharges in sewers,watercourses, and landfill sites is in place. Under the Water PollutionRegulations, national water quality objectives for inland waters have beendefined with four classes of water quality, from class I for high quality waterto class IV for highly polluted water. In Bursa, untreated wastewater dischargesresult in gros pollution of the Nilufer River and, downstream of the city, itswater quality corresponds to class IV. In order to prevent public health risksand odor within the environs of the city, protect groundwater sources for watersupply, allow downstream water use by industry and agriculture, and lessen thelevel of pollution in the Sea of Marmara, the water quality of the Nilufor Riverdownstream of the city should be in class II. However, the class II objectiveis only affordable in the long term. The project is therefore designed toachieve the intermediate objectives of roducing of gross pollution in the short

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term although still in the class IV range, and attaining a class III standardfor the medium term. The project provides an example of how the national waterquality objectives can be progressively reached within the framework of theNational Water Pollution Regulations.

66. The land areas requ .red for the construction of the new landfill and thetwo sewage treatment plants are agricultural and uninhabited. The procedures toacquire the lots owned by private owners and to compensate them are consistentwith normal Turkish practice and are acceptable to the Bank. Acquisition isproceeding satisfactorily and has not given rise to difficulties in on-goingoperations.

67. Benfits. The project would have major benefits stemming froms (i)improved operational efficiency of BUSKI and of the solid waste management bythe Municipality; (ii) promotion of local resource mobilization and costrecovery; (iii) reduction in the health hazards to the local and touristpopulation through better water supply, sewerage and solid waste managementservices; (iv) reduction of losses in property and labor productivity resultingfrom frequent flooding; and (v) improvement of environmental conditions throughprimary treatment of sewage and t 'ustrial wastewater, rehabilitation of theexisting dump site, and controlled collection of clinical and industrial solidwastes.

68. Proieot Risks and Sustainabilitv. The project risks relate tos (i)institutional weakness of the borrowers for timely project implementation; and(Ui) sustaining the willingness and ability of local authorities to adoptresource mobilization and cost recovery measures necessary to generatesufficient counterpart funds. To mitigate the first risk and to contribute tothe institutional sustainability of the project, its design includes animportant technical assistance component which is already underway. To mitigatethe second risk and to contribute to the financial sustainability of theproject, a system of quarterly automatic tariff adjustments based on priceindices to compensate for inflation was adopted, a project management unit wasestablished, and a periodical review and the implementation of Action Plansspecifying time bound actions necessary to further improve efficiency andfinancial performance of the borrowers were confirmed at negotiations andcovenanted in the Loan Agreements. The borrowers demonstrated a strongcommitment to implement agreed actions during project preparation andreconfirmed their continued commitment during loan negotiations.

69. Recommendation. I am satisfied that the proposed loans would comply withthe Articles of Agreement of the Bank and recommend that the Executive Directorsapprove the proposed loans.

Lewis T. PrestonPresident

Attachments

Washington, D.C.February 8, 1993

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SibcshMl-A

ESTIMATED COSTS AND FPIANCING PLAN

Estimate,d Proiect CostsZoal ,FIei g Total---- USs$ Milliln---

Water Sumlv & SewsraGe PartWater Supply Works 15.3 6.6 21.9Storm Drainage Works 10.3 5.3 15.6Sa-werage Works 14.2 6.3 20.5Sewage Treatment 18.4 25.9 44.3Water supply & sewerage Equipment 0.0 30.7 30.7Consultant Services 7.6 10.3 17.9PPP Advance for Water & Sewerage 0.5 0.6 1.1Land Acquisition 11. 0.0 , 11.9Total Base Costs (June, 1992) 78.2 85.7 163.9contingencies 40.5 31.0 1 71.SGrand Total 118.7 116.7 235.4

MiM2_ M=

Solid Waste PartExisting Site Rehabilitation 0.6 0.2 0.8New Waste Disposal site 2.6 2.1 4.7Waste Transfer station 0.5 2.0 2.5Waste Collection & Transport 0.0 1.8 1.8Clinical Waste Incinerator 0.6 1.6 2.2Consultant Services 1.4 1.3 2.7PPP Advance for Solid Waste 0.2 0.2 0.4Land Acquisition 1.2 0.0 Q 1.2Total Base Costs (June, 1992) 7.1 9.2 16.3contingencies 3.4 3.3 _6.Grand Total 10.5 12.5 23.0

S513 m_St in=38

TOTAL PROJECT COST 129.2 129.2 258.4mm, .. ==. ==. R

Note: Local prices include about 9% of taxes and duties

Vinancina Plan:Local E=gian Total------US$ Million---

IBRD Loans - 129.5 129.5Internal Cash Generation (BUSKI,BMM) 128.9 - 128.9

Total 128.9 129,S 2§8.4

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Schedtule_BPage I of 2

kPgourement Method and Disburzeents(Us$ million equivalent)

A. ProCuremeMt

Project Element Procurement MethodTotal

ICe LCB Other NPf Cost

1. Works1.1 Water Supply. Stonmater and Sewerage 138.4 15.6 154.0

(64.7) (7.3) (72.0)1.2 Solid Uaste 5.0 2.? 7.7

(2.4) (1.3) (3.7)2. Goods

2.1 Pipeworks 38.4 0.3 38.7(18.0) (0.1) (18.1)

2.2 Water and Sewerage Naintenance Equipment 1.8 1.2 a/ 1.7(0.8) (0.6) (1.4)

2.3 Solid Waste Transfer & Disposal Equipment 3.7 3.7(1.8) (1.8)

2.4 Solid Waste Collection & Tr3nsport Equipment 2.5 2.5(1.2) (1.2)

2.5 Clinical Incinerator 3.3 3.3(1.6) (1.6)

3. Consultancies3.1 Technicat Assistance for Project 16.7 b/ 16.7

Implementation in BUSKI (16.7) (16.7)

3.2 Technical Assistance for Project 1.3 bl 1.3lIplementation in the lunicipality (1.3) (1.3)

3.4 Technical Assistance for Institutional 7.7 b/ 7.7Building in BUSKI (7.7) (7.7)

3.5 Technical Assistance for Institutional 2.5 b/ 2.5Building of solid waste activity within OM (2.5) (2.5)

4. Miscellaneous4.1 Refinancing PPF 1.5 b/ 1.5

(1.5) (1.5)

4.2 Land Acquisition 15.8 15.8

Total 193.1 18.6 30.9 15.8 258.4(90.5) (8.?) (30.3) (129.5)

Note: Figures in parentheses are the respective amounts financed by the Bank toans. Nutmers may not add updue to rwnding.Other: a/ International shopping ($0.6 m) and Local shoping ($0.6 m)

bI Consultants will be hired according to Bank's uConsultant Guidelines".N.B.F.: Not Bank-Financed.

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Schedule 8

Page 2 of 2

Loan to BUSKI

Amount of the Loan Atlocated(Expressed in USS Eguivalent) X of Expenditures

CateIBrX to be Financed

(1) Civil Works 67,000,000 47X

(2) Goods 18.000.000 47X

(3) Technical Assistance

Ca) Engineering & PMU 10,000,000 100%

(b) Investigation,Survey and Mapping 4,000,000 100X

(c) Institutional Strengthening& Training 8.000,000 100%

(4) Refunding of ProjectPreparation Facility 1,100,000

C5) Unallocated 8.900.000

Total 117,000,000

Loan to Municiealitv

Amount of the Loan Allocated(Expressed in US$ Ecuivalent) % of Expenditures

Category to be Financed

C1) Civil Works 3,400,000 48X

(2) Goods 4.300,000 48%

(3) Technical Assistar-.

(a) Engineering & PMU 1.500.000 100X

lb) InstitutionalImprovement& Training 1,900,000 1008

(4) Refunding of ProJectPreparation Facility 400,000

(5) Unallocated 1,000,000

Totat 12.500,000

Estimated Disbursement Schedule:

I1RD Fiscal Year

3 1994 1995 1996 1997 1998 2000 2001

------------ -----------*IUS$ millions-------------------

Annual 0.0 10.1 10.9 14.2 21.1 20.3 26.1 22.1 4.7

Cumutative 0.0 10.1 21.0 35.2 56.3 76.6 102.7 124.8 129.5

-24-

Schedule C

Timetable of Kea Project Processing Events

(a) Time taken to prepare: Fifteen months

(b) Prepared by: BUSKI and Bursa MetropolitanMunicipality with the assistance ofconsultants.

(c) First Bank Mission: March 1991

(d) Appraisal Mission Departure2 June 25, 1992

(e) Negotiations: January 19, 1993

(f) Planned Date of Effectiveness: Mid-June 1993

(g) List of relevant PCRs and PPARs: PPAR 4853 (Istanbul Water Supply)

PPAR 1082 (Istanbul Sewerage Project)

-25- Schedule OPage 1 of 2

THE STATUS OF BANK GROUP OPERATIONS IN TURKEYA. STATEMENT OF BANK LOANS AND IDA CREDITS

(AsofDecember3l. 109

Amount (Smlllon)Fiscal (less cancellations)

Loan No. Year Sorrower Purpose Bank IDA UndliburiedSeventy-nine loans. six 8-loans and 14 credts have been fully disbursed, 6743.86 196.16of which SECALs, SALs and Program LV-ris: a/

Ln. 1818-TU 1980 Republic of Turkey SAL 200.00 0.00Ln. 1915-TU 1981 Republic of Turkey SAL 76.00 0.00Ln. 1987-TU 1981 Republic of Turkey SAL II 300.00 0.00Ln. 2158-TU 1082 Republic of Turkey SAL III 304.50 0.00Ln. 2321-TU 1983 Repubilc of Turkey SAL IV 300.80 0.00Ln. 2441-TU 1984 Repubilo of Turkey SAL V 376.00 0.00Ln. 2580-TU 1985 Republic of Turkey ASAL 260.19 0.00Ln. 2714-TU 1986 Republic of Turkey FSAL I 300.00 0.00Ln. 80160-TU 1987 Repubilc of Turkey B-Loan for PSAL 1 32.26 0.00Ln. B019C-TU 1987 Republic of Turkey B-Loan for FSAL I 20.00 0.00Ln. 80220-TU 1988 Repubilc of Turkey B-Loan for ESAL 30.59 0.00Ln.80240-TU 1989 Repubilc of Turkey B-Loan for FSAL It 29.68 0.00

Subtotal 2219.01 0.00

Ln.240S-TU 1984 Repubitc of Turkey Agricultural Extension and Research 72.20 13.83Ln. 2433-TU 1084 Republic -f Turkey IAES IrIgation 11530 4.62Ln. 2535-TU 1985 Republic of Turkey Third Ports 129.50 08.95Ln. 2536-TU 1985 Republic of Turkey Indusrial Schools 57.70 28.73Ln. 2602-TU 1986 TEK Power Systems Operations AssL 140.00 72.29Ln. 2847-TU 1986 Republic of Turkey Small- & Medium-Scale industry 100.00 1.03Ln. 266-TU 1086 Republic of Turkey Kayraktepe Hydropower 200.00 179.27Ln. 2863-TU 1986 Republic of Turkey Drainage & On-Farm Development 265.00 160.52Ln.2739-TU 1987 Republic of Turkey Railways i 197.00 26.80Ln.2750-TU 1987 Republic of Turkey Sir Hydropower 132.00 0.71in. 2776-TU 1987 Repubiic of Turkey Non-Formal Vocational Trainng 58.50 42.21Ln. 2818-TU 1987 IZSU Izmir Water & Sewerage 184.00 127.32Ln. 2810-TU 1987 Republic of Turkey Cukurova Urban Development 28.50 7.38

* Ln. 28e-TU 1987 Republic of Turkey Energy Sector Adjustment 325.00 20.79Ln. 2888-TU 1988 ISKI Istanbul Water Supply 218.00 101.76L'n. 2901-TU 1988 TSKB, SYKB and Industrial Export Development 300.00 12.54

Republic of TurkeyLin. 2922-TU 1088 Republic of Turkey Industrial Training II 115 80 58.86Ln. 2984-TU 1988 Republic of Turkey Financia Sector Adjustment It 400.00 100.00Ln. 3057-TU 1989 Republic of Turkey Health 75.00 69.59Ln. 3087-TU 1989 Republic of Turkey Small- & Medium-Scale Industry II 204.50 76.72Ln.3077-TU i9S9 Republic of Turkey A4ro-lndustry 150.00 100.32Ln. 3090-TU 1989 Republic of Turkey Third Agricultural Credit 179.29 0.22Lin. 3151-TU 108 ASMi Ankara Sewerage 173.00 165.27Ln.3177-TU 190 Republic of Turkey Second Agricultural Extension 63.00 44.28Ln. 3192-TU 1090 Republic of Turkey National Education 90.20 88.12Ln. 3296-TU 1991 Republic of Turkey Technology Development 100.00 05.92Ln. 3324-TU 1091 Republic of Turkey State & Provincial Roads 300.00 200.20Ln. 3340-TO 1991 TEK TEK Restruturing 300.00 300.00Ln.3340-TU 1991 Republic of Turkey PiWate invesment CrodIt 200.00 193.78Lin. 3472-TU 1992 Republic of Turkey Agricultural Research 65.00 55.00Ln. 3476-TU 1992 Republic of Turkey Berko Hydropower 270.00 263.44Ln.3477-TO 1902 RepubilcotTurkey Treasury ata Systems 9.20 6.49Lin. 3511-TU 1993 Repubic of Turkey Earthquake Reconstruction 285.00 258.00in. 3541-TU 1093 Republic of Turkey Employment &Tranhng bI 67.00 67.00

Total 11293S4 106.15 3101.96Of which has been repaid 3521.10 48.46

Tot now outstanding 7772.44 147.70Amounts sold 3.55of which has been repaid 3.58

Total now held by IBRD 7768.89Total Undhsbursed 3101M

al Approved during or after FY80.bl Not yet effective.I SEGAL

-29- Schedule 0Page 2 of 2

THE STATUS OF iANK GROUP OPERATIONS IN TURKEYS. STATEMENT OF IPf INVESTMENTS

(As of December 31.1992)

Amount (Smillione)(less cancella-on)

Oats Botrower Purpose Loan equity Totai

196871/72 Sites Textils 3.16 1.94 5.091973 Akdeniz Toudsm 0.33 0.27 0.601974 Aksa Textiles 10.00 0.00 10.001975 Asian Cement manufacturing 10.60 0.00 10.601975 Kaitaltope TexIles 1.30 0.00 1.301076 saga Resin & Plastio manufacturing 18.00 0.00 16.00197417 Borusan Iron & Steel 3.60 0.50 4.10197679 Alsl Celik Machinery & equipment 12.00 5.82 17.821979 Ego Mosan Motorcycles & bcycles 2.15 0.00 2.151980 Momes Tites 4.00 0.00 4.001932 Man Motors Motor Vehicles 7.89 0.00 7.89l96467I1W2/73I7e1671$0J83 TSKB OFO 60.00 5.93 65.931970I7'182183 Viking Paper manufacturing 2.50 0.87 3.3710761781813 Ooktas Iron & Stel 7.60 2.85 10.3s1984 Pinar Slaughtering 3.90 0.00 3.901988 Manse Motor Vehicles 0.47 0.00 6.471979180/82I4I85 lsas Metals & motor vehIcles 5.88 4.59 13.441986 Cam Eiya1 Glass manufacturing 7.94 0.00 7.941987 Guney Textiles 16.48 0.00 16.481988 Elbo Steam & Hot Water supply 26.44 0.00 25.44ion8 Eginkan Mfg. Non-Meteio Mineral PR 16.45 0.00 16.461989 Coats Iplik Textiles Wearing Apparel S Leather 7.72 0.00 7.721989 Dlsbank Commercial banks 60.00 0.00 60.001989 Ousa Textilee 25.00 0.00 25.001989 lsko Textiles 33.24 0.00 33.241989 Sanko Textile 6.37 0.00 6.371989 Sardilbe Rstaurants & hotels 2.68 2.15 4.811981189 lKridarell Glass manubatudng 33.42 0.00 33.42198e80 Eska Turlan Tourism 9.08 0.00 9.081990 Conrad Restaurants & hotels 48.50 4.C0 52.5019S0 FSP (Kamelys) Restaurants & hotels 12.09 0.00 12.091990 Meruin Restaurant & hotels 12.50 0.00 12.501990 Simplot Food products 9.40 0.00 9.4019o0 TKF Merchant bank 0.00 8.86 8.86197048790 ACS Glass Glass manufacturng 20.79 3.84 24.631971 tJ7344/8M0 Nasas Metal nanufacturng 8.87 1.85 10.4219890 Silkar Tourism 24.17 4.91 29.081988/90 IGFK Leasing 0.00 1.20 1.2019899 Iras Hotel Resaurants & hotels 13.03 0.00 13.031091 Kepez Eleotri Utlties 25.00 0.00 28.001991 Kula TextIles 19.40 0.00 19.401979181318418991 Trakya Cam Glass manufacturing 88.63 1.73 104.361992 Abn-zaolbasl 8mal-& Medilum-Scae Entrprises 0.00 0.00 6.001992 Flnansbank Small- & Medium-Scae Enterprises 30.60 0.00 30.601992 Helier Facteong bqxort Finance 0.00 0.0 0.501992 Korfezbanck ma- & Medium-ScaleiEterprises 24.40 0.00 24.401992 MiSut _syl DOaryProducts 10.00 6.00 16.001992 NASCO Textles 20.00 2.80 22.501981192 Interbank Multipurpose banks 130.00 0.00 130.001989192 Ram Dle Ti"et Or 74.75 0.00 74.751991/92 Koy Tur Slaughterng 8.60 4.13 12.731993 0ldor RadiorlVCommunmesion 4.00 1.00 5.001993 Sise ve Cam Glass manufaturing 20.81 0.00 20.811993 Medya Printing. Publishing & Allied Ind. 12.13 0.00 12.13

Total Grss Commitment 1028A1 78.43 1104.84Less Cancellations. Termination Exchangs

Adjustments, Prepaymnents and Sales 609.12 41.45 850.67

Total Commimnts now held by IFO 417.29 36.98 484.27Total Undisbursed IFC 15.45 1.39 16.84Total Outstanding IFC 401.84 35.69 437.43

IBRDU21o RiSSAN

T. AG«n * . .6 i F@EDERAION

IUIOMIA a~~~~~EOIOA

j\ fi ) (t / $ 2 5 t TURKEY

WRSA WATER AND SANITATION \tA/ IRAQ

S si,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~IEDT fUIURE ESSIING X~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~AMRP

59 NEW NEIWCtS~~~~~~~~ DISTRICT UCT/ o 25

,E, 3 WEII EELDS h=3i WUlAN AREAS ~ ~ ~ ~ ~ FAN

TURKEY~~~~~~~~~~~~~~~~~~~JUC

WRA ATR* N SRAtMNT PAll*OANONL PROJECT

WATORMSUPPZI COAMORENT

* PUMPING STATIONS ~~~~~~~~~ RIVURS AND WAPERCOURYSDIRMUST Ad

NEW NETWORKS DISTRICT MIJNICIPAIITY UNiTS 2~~~DSTRIC

BURSA WATER ANDSANITATION NARONALCAPTA

WATER SUPPLY COMPONEN ITERAINLBUDRE

Dw.e. I D-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~OEMR 9.

IBRD 24151. . & FA flV 5 >' RUSS. 4w.1 T

I Ifa? _tTURKEY

BURSA WATER AND SANITATION PROJECTWASTE WATER COMPONENT,,/ D

* PRI R1EEAMEAN IRTTS ROADS ( / < / \

-+PROJECT COUECTOES _C RlVERS AND OPEN CHANELS -/

.EJSsTINGcOLLECrOEs __ METEOPVLINMuNJCIPAUIY EITS ) ULUDAG MOUNTAINl-* FUTURE COIIECTORS ---- DISIRICE RAUNKICIMY UMIIS / > X o RItOEDSC

TURK ANAREAS

BURSA WATER AND SANITAIIONALcPROJEC

J~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.- __ D--L- -

RSEENATIONAL CAKrONAL IES -KrERNAMONAL MUNDMES~~~~~~~~~~~~~~~~~~~~~~~~~~~ MhdDAq~.yHm

NOEMBERIM f

MRD 241520

T rtS C-1A w

TURKEY~~~~~~~~~~~~~~~~~~~~~~~TRE

WURSA WATER AND SANITATION PROJECT/STORM WATER COMPONENT i

- " PRujc cOLlIrORSS ROADS /. /\

-- PRCutCEINTERcErloRs -- RNERS AND OfZN CHANNEES /\

= FUIURERS --- LILIrdU CNIlh5S/XUUDAG MOUNTAINo l 3 ,

URUN AREAS ELOMEThRA

* NAtlONAL CAPiTAL

---- NAIIONA.L ROINDES 5i h _

_ELI.KNOW 19

tURSA WATER AND 'ANITAllN s Sb >GS

t TUEKEY t 2~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~TRE

WRSA WATER AND SANEAnON PROJR |~~~~~~~~~~~~~~~~~~~~~~~~DANTA

SOLID WASTE COMPONENT

FXUECT OUONENTS: /

- L@FIU - OD S REHABIUWI1ON OF~ DUMAP SITS _-.~- RVERS AND WATRCURDES

K TRAN4SRERSTAION -- METEOPOUTANMUNICIPAUTY IMTSr

- POTEN4tIAL FUTUREL NDFliL SRNRA UIDGMUTII 2 3 4 5

UREAN AREAS ~ ~ ~ OSANAZ

* NATIONAL. CAPITAL

--- INTERNATINONAN OUNDARIES P

SOLID WASTE COMPONENT~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~N~IREIP