Improving the Creditworthiness of Turkish Municipalities

Four Turkish municipalities are working with the World Bank Group to improve their creditworthiness and expand their financing options for climate-smart investments.

The cities—Ankara, Aydin, Eskisehir, and Manisa—are participating in the Subnational Creditworthiness Technical Assistance Program, developed by the World Bank and the Union of Municipalities of Turkey in 2018. The program builds on the City Creditworthiness Initiative, a global initiative developed by PPIAF and the World Bank to deepen city leaders’ knowledge about the fundamentals of creditworthiness and municipal finance. The program provides technical assistance to address the key priorities and challenges identified by government representatives and city officials.  In Turkey, the program is helping expand the capacity of city officials to manage finances, strengthen their own-source revenue mobilization, build capacity for climate-smart capital investment planning, and identify alternative financing mechanisms for municipal infrastructure projects.

Funded by PPIAF, the support to Turkey was implemented in collaboration with the Turkish Union of Municipalities (TBB), government counterparts, and Agence Française de Développement (AFD). 

PPIAF Support 

PPIAF pulled this work off through its Sub-National Technical Assistance program under exceptional circumstances—government restrictions for containing COVID-19. Throughout the assistance, there was active engagement from TBB and officials from the four municipalities.

The program helped city officials develop concrete investment project proposals. Municipal officials learned how to use a project screening tool developed for assessing potential municipal investment projects. Cities can use the tool to identify and prioritize potential initiatives. Results were consolidated into a Project Pipeline Assessment Report, and further developed into project business cases that included cost-benefit analyses. 

Other components of the program helped the municipalities conduct financial assessments and develop a debt management strategy. One city, Eskisehir, went a step further by developing a full-fledged, climate-smart investment plan. 

The program also developed a systematic assessment and set of recommendations for enhancing own-source revenue for metropolitan municipalities, which is a priority in Turkey’s National Development Plan.

Next steps

PPIAF is considering further support to assist the municipalities in the long term. TBB has shown interest in rolling out a similar program in other cities, which would provide an opportunity to refine SNTA’s approach.

Further monitoring will be necessary to help the participating municipalities implement recommendations and develop infrastructure investment projects. PPIAF is in discussion with TBB and government officials to expand the reach of the program.