World Bank Document...APK - Research Planning and Coordination Council APL - Adaptable Program Loan BEP - Basic Education Project ... SPO - State Planning Organization YIBO - Primary

Document ofThe World Bank

Report No: 21831-TU

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED LOAN

IN THE AMOUNT OF US$300 MILLION

TO THE

REPUBLIC OF TURKEY

FOR A

SECOND BASIC EDUCATION PROJECT

IN SUPPORT OF THE SECOND PHASE OF THEBASIC EDUCATION PROGRAM

June 12, 2002

E[uman Development Sector UnitI urkey Country UnitE urope and Central Asia Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective as of March 10, 2002)

Currency Unit = Turkish Lira (TRL)US$1 = TRL1,380,000

FISCAL YEARJanuary 1 - December 31

ABBREVIATIONS AND ACRONYMS

APK - Research Planning and Coordination CouncilAPL - Adaptable Program LoanBEP - Basic Education ProjectCAS - Country Assistance StrategyCQ - Consultant's QualificationsCY - Calendar YearDC - Direct ContractingEA - Enviromnental AssessmentECA - Europe and Central AsiaEGITEK - General Directorate for Educational TechnologiesEMP - Environmental Management PlanERDD - Education Research and Development DepartmentEU - European UnionFMS - Financial Management SystemGIS - Geographic Information SystemGNP - Gross National ProductIALS - International Adult Literacy StudyIBRD - International Bank for Reconstruction and DevelopmentICB - International Competitive BiddingICR - Implementation Completion ReportICT - Information Communication TechnologyIDA - Intemational Development AssociationIS - International ShoppingMIS - Management Information SystemMOF - Ministry of FinanceMONE - Ministry of National EducationNCB - National Competitive BiddingNGO - Non-Govemmental OrganizationNS - National ShoppingOECD - Organization for Economic Co-operation and DevelopmentPAD - Project Appraisal DocumentPCC - Project Coordination CenterPISA - Programme for Intemational Student AssessmentPIO - Primary Education Part-Time Boarding SchoolPMR - Project Management ReportPSR - Project Status ReportQBS - Quality Based Selection

QCBS - Quality and Cost Based SelectionQER - Quality Enhancement ReviewRFP - Request for ProposalSBD - Standard Bidding DocumentSIS - State Institute of StatisticsSOE - Statement of ExpendituresSPO - State Planning OrganizationYIBO - Primary Education Regional Boarding School

Vice President: Johannes F. LinnCountry Director: Ajay Chhibber

Sector Director: Annette DixonActing Education Sector Manager: Emesto Cuadra

Task Team Leaders: Marit Granheim/Paud Murphy

TURKEYSECOND BASIC EDUCATION PROJECT

CONTENTS

A. Program Purpose and Project Development Objective Page

1. Program purpose and program phasing 32. Project development objective 63. Key performance indicators 6

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 82. Main sector issues end Government strategy 83. Sector issues to be addressed by the project and strategic choices 94. Program description and performance triggers for subsequent loans 10

C. Program and Project Description Summary

1. Project components 112. Key policy and institutional reforms supported by the project 143. Benefits and target population 154. Institutional and implementation arrangements 15

D. Project Rationale

1. Project alternatives considered and reasons for rejection 172. Major related projects financed by the Bank and other development agencies 183. Lessons learned and reflected in the project design 184. Indications of borrower commitment and ownership 195. Value added of Bank support in this project 1 9

E. Summary Project Analysis

1. Economic 202. Financial 203. Technical 214. Institutional 225. Environmental 236. Social 247. Safeguard Policies 26

F. Sustainability and Risks

1. Sustainability 262. Critical risks 263. Possible controversial aspects 28

G. Main Loan Conditions

1. Effectiveness Condition 282. OtherBoard 28

H. Readiness for Implementation 30

I. Compliance with Bank Policies 30

Annexes

Annex 1: Project Design Summary 31Annex 2: Detailed Project Description 40Annex 3: Estimated Project Costs 48Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 49Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary 50Annex 6: Procurement and Disbursement Arrangements 51Annex 7: Project Processing Schedule 79Annex 8: Documents in the Project File 80Annex 9: Statement of Loans and Credits 81Annex 10: Country at a Glance 84Annex 11: Letter of Sector Policy 86

MAP(S)IBRD28849

TURKEYSecond Basic Education Project

Project Appraisal DocumentEurope and Central Asia Region

ECSHD

Date: June 12, 2002 Team Leader: Paud MurphyCounitry Director: Ajay Chhibber Sector Manager: Ernesto P. CuadraProject ID: P059872 Sector(s): EP - Primary EducationLending Instrument: Adaptable Program Loan (APL) Theme(s): Education

Poverty Targeted Intervention: Y

IBRD Others Total Commitment ClosinguS$ m % US$ m US$ m Date Date

APL 1 300.00 3.0 9673.00 9973.00 06/23/1998 06/30/2003 Republic of Turkey

APL 2 300.00 2.7 10896.00 11196.00 07/01/2002 02/28/2006 Republic of TurkeyI.oanl

Total 600.00 20569.00 21169.00

[XI Loan [ ] Credit [] Grant [] Guarantee [ Other:

For Loans/Credits/Others:Loan Currency: United States DollarAmount (US$m): 300

Borrower Rationale for Choice of Loan Terms Available on File: ER Yes

Prolposed Terms (IBRD): Variable-Spread Currency Loan (VSL)Grace period (years): 5 Years to maturity: 15Conimitment fee: 3/4 of 1% Front end fee (FEF) on Bank loan: 1.00%

BOF'ROWER 55.50 1.34 56.85IBR:) 112.90 187.10 300.00Financing Gap 0.01 0.01Tot29I: 168.41 188.44 356.86

Borrower: REPUBLIC OF TURKEYResponsible agency: MINISTRY OF NATIONAL EDUCATIONMinistry of National EducationAddress: M.E.B. Miistesarlik, 06648 Bakanliklar, Ankara TURKEYContact Person: Can Altan, Deputy UndersecretaryTel: (90-312) 418-4548 Fax: (90-312) 425-4531 Email: [email protected]

Estimated Disbursements ( Bank FY/US$m):

Annual 3.1 187.74 72.14 8.41_Cumulative 31.71 219.45 291.59 300.00

Project implementation period: September 1, 2002 to August 31, 2005Expected effectiveness date: 09/01/2002 Expected closing date: 02/28/2006

AS PAD , RP-. M,Id,z

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A. Program Purpose and Project Development Objective1. Program purpose and program phasing:

As Turkey prepares for full participation in the global economy, the Government and the publicrecognize the need to raise the educational qualifications of the population (described in Section B.2,below). They also recognize that the most urgent priority is to increase the coverage of education at thebase of the education pyramid. After several attempts to address this need earlier in the 1990s, in August1997 Parliament approved a new Basic Education Law which extends the duration of compulsoryschooling from five years to eight years and mandates improved quality and relevance of basic education.The law also mobilizes major new financing for the necessary investments to achieve these objectives.There has also been an outpouring of voluntary private donations of over US$350 million to support theGovernment Program. To support this initiative further, the Government requested large-scale supportfrom the World Bank in November 1997. In June 1998, the Bank's Board approved the first phase of theUS$600 million Adaptable Program Loan (Loan No. 4355-TU) to support the implementation of theGovernment's Basic Education Program.

This Project Appraisal Document describes the World Bank's second phase of the APL forUS$300 million. However, because the project is intended to be part of the Government's overall programof support for basic education over the next three years, that program is also described briefly here forcontext. In addition, because this project and the Government's program are each based on work cail-edout over the past four years, the document also provides a summary of the Govemment's prograr oGfsupport for basic education to date and a description of the first Bank APL in support of that program.

Basic Education Program: Progress to date. The Basic Education Program comprises a broadrange of actions, financed largely by the Government, but also by major private contributions. TheGovernment-financed portion of the Program involves expenditures of over US$2 billion per year,including both actions financed under the investment budget (such as construction of new schools,refurbishment of existing schools, and provision of improved educational equipment and materials), andactions financed under the recurrent budget (largely comprised of payment of salaries of teachers and othereducational staff, and recruitment and training of additional teachers and educational staff to expandschool capacity). Total annual expenditures for the Basic Education Program to date -- including allinvestment and recurrent costs which directly support basic education - are estimated at over US$3 billionannually.

There has been major progress in implementing the Basic Education Program and achieving itsobjectives. Although total basic education enrollments had declined during the six years prior to theProgram, enrollments in basic education have increased by 1.5 million since the start of the Program,raising the net enrollment ratio for eight-year basic education from 75.8 percent to 95 percent. Girls'enrollments in rural areas made the most rapid progress. Girls' enrollments in grade six in rural areasincreased by 162 percent in the first year of the Program, and have continued to make sharp gains since.There are few cases in the history of any national education system which can compare with these initialachievements of the Basic Education Program.

Other actions implemented to date under the Basic Education Program include the following:

School Construction and Rehabilitation. Through a combination of Government resources andprivate contributions, the Ministry of National Education (MONE) constructed 103,983 new basiceducation classrooms during the five years 1997 - 2001, bringing the total stock to 264,776 basiceducation classrooms. These actions created additional capacity for more than 3 million basiceducation students. Enhanced allocation of flmds for capital investment in combination with new

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contracting procedures made this vastly scaled-up school building program possible. In addition,the Program has supported the renovation of 300 large rural and central village schools, 1,300small rural schools, 13 regional boarding and pension schools, and is funding the rehabilitation andextension of 44 schools in low-income areas around large cities (gecekondu areas).

Support to Students from low-income families. The Program has provided a complete set of free

textbooks to 796,000 needy basic education students in 36 provinces. Free school meals are beingprovided to 635,000 basic education students in the school bussing program, to over 80,000 basiceducation students in boarding schools, and to 100,000 students in the Marmara earthquake area.In addition, the Program is supporting daily bussing for 600,000 students from villages without aschool offering grades 6 to 8 to larger population centers which have such a school.

Teacher Recruitment and Training. Over 50,000 additional basic education teachers have beenrecruited. In addition, four annual cycles of in-service training have been provided to basiceducation teachers, principals, inspectors, and provincial education staff.

Introducing Information and Communication Technologies aCT). The Ministry introduced

computers in secondary schooling under the earlier Bank-financed National EducationDevelopment Project (Loan 3192-TU). The Basic Education Program is extending this initiative tobasic education, starting with grade four. In addition to developing teacher and student computerliteracy, it is integrating ICT into other subjects in basic education, starting with grade four.

The First Phase of the APL. The first phase of the APL (Basic Education Project, Loan4355-TU) financed a subset of the Government's Basic Education Program. The US$300 million providedunder the first APL is supporting the following activities: a) refurbishment and enlargement of 300 ruralbasic education schools; b) provision of educational materials to all 22,268 rural schools in Turkey; c)introduction of ICT classes in almost 3,000 basic education schools throughout the country; d) in-servicetraining for basic education teachers and school inspectors; e) monitoring and evaluation, and f)reconstruction of earthquake-damaged schools and other earthquake recovery actions. Project activities aand c, above, are completed. Activities b, e, and f are in progress. Following the August, 1999 Marmaraearthquake, the first phase of the APL was amended at the Government's request to incorporate schoolreconstruction and other actions to support the resumption of education in the earthquake area. Theproject was further amended in November, 2000 to remove some earthquake activities that were financedby other sources, and to enlarge and refurbish 44 schools in Ankara province. The first phase of the APLwas scheduled to close at the end of the 2000/01 school year, in June, 2001 but has been extended and isnow expected to close in June 2003.

Refurbishment of Rural Schools. Loan funds financed the refurbishment of 199 small rural basiceducation schools and teacher housing in five provinces in the East and Southeast with the lowestschool attendance and educational performance. Those schools are back in operation, under vastlyimproved teaching and learning conditions. In addition, 121 central village schools and 13 regionalboarding schools were rehabilitated. The loan also financed the civil and installation works forICT classrooms at 2,802 schools. The rehabilitation of 1,300 small rural schools is wellunderway. The loan is further financing the ongoing rehabilitation and extensions of 44 schools inlow-income areas around large cities (gecekondu areas), and 28 additional regional boarding andpension schools. Finally, the loan is funding the reconstruction and upgrading of 4 earthquakedamaged schools. All ongoing civil works under funding from the first APL is expected to becompleted before December 2002.

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Providing Educational Materials to Rural Schools. Procurement is in progress for educationalmaterials which are being provided to all 22,268 rural basic education schools, and to 3 millionchildren in those schools. This action will make a major contribution to reducing the educationalhandicap of rural schools. Together with the preceding activity, it is also expected to improveschool attendance, since feedback from monitoring and evaluation indicates that the cost ofproviding educational materials, student uniforms, and school lunches is a key factor that preventssome parents from sending their children to school.

Introducing ICT. The first phase of the APL is financing the establishment of ICT classrooms in2,802 existing basic education schools throughout the country - at least two schools in each of the921 subprovinces of Turkey. All of these schools have been prepared and equipped, and are nowin operation.

In-service teacher education. The first phase of the APL financed training for 330,000 basiceducation teachers and 2,850 basic education inspectors in improved pedagogical matters.Additionally, 2,250 ICT classroom coordinators and 35,000 basic education teachers receivedtraining in the use of computers in basic education.

Basic Education Program: the next three years. Despite the major progress achieved in meetingthe objectives of the Basic Education Program to date, there are still about half a million children of basiceducation age who are not in school. For the most part, these children live in rural areas, where there isgenerally sufficient school capacity in grades one through five. But many village primary schools requireinvestments to upgrade facilities, provide better educational materials, and train teachers in order to becomefully effective and to attract children who are not currently attending school. For grades six through eight,the situation is different. At this level, there are important remaining investment needs throughout thecountry for expanded capacity. In view of the dispersion of the rural population, there are also recurrentbudget needs to bus students to central schools in the upper grades of basic education and to operateboarding schools for students from very remote villages. Some urban basic education schools and fewrural schools are severely overcrowded, and investments in expanded capacity are needed in order to reducecrowding. Further investments are also needed to extend the effort of equipping all basic education schoolswith facilities for ICT. Over the three years, 2002/03 - 2004/05 inclusive, the Basic Education Programwill address these needs by continuing the efforts to expand basic education school capacity, to improve thequality of basic education, and to make rural schools and schools in low-income areas around large cities (gecekondu areas) more attractive to the populations they are meant to serve. The overall level of financingneeds for implementation of the Program during these three years is projected to be US$11.2 billion.While, the economic crisis of late:2000 resulted in an 9.4 percent reduction in GNP, and this affectedGovernment's ability to finance all of the expenditures needed, Government's commitment to maintainingthe share of education at 4.25 percent of GNP will protect the education budget.

The second phase of the APL. This proposed Project -- financed by a second phase of the APLof US$300 million - will support implementation of the Government's Basic Education Program over thethree years 2002/03 - 2004/05 inclusive by extending the actions supported under the first APL, bysupporting the development of preschool education as an integral part of basic education, and special needseducation. As it was during the first APL, new basic school construction will be financed entirely byGovernment budget resources and private donations. The second phase of the APL will help finance thefollowing subset of the Government's Program: a) ICT hardware, software for approximately 3,000additional basic education schools throughout Turkey and the establishment of an education portal; b)refurbishment of about 550 rural schools, bussing schools and regional boarding and part-time boardingschools, as well as renovation and extension of 550 bussing schools and schools in low-income areas

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around large cities (gecekondu areas), which is a key requirement for closing the enrollment gap; c)provision of educational materials to about 4,000 additional basic education schools; d) further in-servicetraining of basic education teachers and inspectors; e) construction and furniture for 300 new preschoolclassrooms at existing basic education schools, educational materials and training to develop preschooleducation as an integral part of basic education, as well as training and educational materials to supportnonformal education for mothers of young children; f) rehabilitation, extension and furnishing of 60 schoolsfor children with special needs, as well as educational materials and training to develop education forchildren with special needs;and to integrate it more within basic education; g) continued support forProgram implementation and h) continued monitoring and evaluation of the Program. These activities aredescribed more fully in Section C, below.

By the end of 2004/05, the Government's.Basic Education Program is expected to,have: a) createdadditional capacity for two million basic education students - enough to accommodate the entire basiceducation age group and to reduce the most severe cases of classroom overcrowding; b) made a veryimportant contribution to filling the enrollment gap in rural areas by upgrading and expanding schoolfacilities, by providing better teaching and learning materials to all rural schools, and by supportingcommunity partnerships with basic education schools; and c) made a major contribution to improved basiceducation quality by providing six annual cycles of training to teachers, principals, and school inspectors,by providing a basic set of educational materials to all rural schools and to needy urban schools, and byintroducing ICT in approximately 6,000 basic education schools throughout the country. Although theBasic Education Program is making very good progress toward its primary goal of universal coverage inbasic education, full achievement of this and other Program objectives - including equipping all basiceducation schools with ICT classrooms, reducing classroom overcrowding, and eliminating themultiple-shift use of schools -- will take at least a decade to achieve. Program implementation beyond2004/05 will be financed largely by the Govermment and by continued private contributions. TheGovernment has requested further Bank financing for implementation of the Program beyond 2004/05.Further Bank financing for subsequent stages of imnplementation could be considered in the future,depending upon Government priorities, available fiscal resources, and the implementation experience of thesecond phase of the APL.

2. Project development objective: (see Annex 1)

The objective of the second phase of the APL is very similar to the objective of the first phase ofthe APL: to promote progress in coverage of eight-year basic education and improved basic educationquality by supporting the implementation of the Basic Education Program. The second phase of the APLwill support the Basic Education Program during the three-year period 2002/03 - 2004/05. In particular,activities supported through the second phase of the APL will concentrate on increasing coverage andimproving quality among the children of low-income families and children with special needs. The projectwill also continue to extend opportuniity to a greater number of children to have access to ICT in basiceducation schools across the country. The project will comprise the same actions that were supportedunder the first APL, as well as the development of nonfonnal early childhood programs and thedevelopment of preschool education and education of children with special needs as integral parts of basiceducation.

3. Key performance indicators: (see Annex 1)

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Government Goals for the Basic Education ProgramThe Government of Turkey has adopted the following main goals for its Basic Education Program and isestablishing an annual review to look at progress on the quantitative aspects. They will conduct a separateannual review to look at selected qualitative aspects of these goals:

* All eligible children (including educable children with special needs) enrolled in and completingbasic education* School enrollment for eligible children at the age of pre-school education approaches 25 percent* Student performance for all students in basic education improves* 40 percent of all children in basic education utilize ICT for learning

Key performance indicators for the Second Basic Education Project (Second Phase of theAPL)

The Second Basic Education Project (Second phase of APL) is supporting the achievement of theseGovermment Goals and has based it's Project Goals and performance indicators on the goals for the BasicEducation Program. Accordingly, the Project has established the following perfornance indicators formeasuring progress on the project:

* More than 350,000 students benefit as a result of renovated or new education facilities:- 9,800 students in rural schools- 185,300 students in schools in low-income areas around large cities (gecekonduareas)- 83,200 students in regional Basic Education Boarding Schools

and Part-boarding Schools- 70,800 students in Bussing schools- 12,000 students in pre-schooling- 4,800 students with special needs

* More than 3.5 million students enabled to improve their performance as a result of provision ofnew educational materials provided to:

- 3,430,000 students in schools in low-income areas around large cities (gecekonduareas)- 32,000 students in pre-schooling- 36,000 students with special needs

* More that 35,000 students with special needs improve their performance as a result of 4,225teachers and administrators attending special needs in-service training

* Over 150,000 pre-school students improve their school readiness as a result of 4,500 teachersattending pre-school in-service training

• Children in more than 50,000 families improve their school readiness as a result of direct trainingof mothers and their children

* More than 2 million students utilize ICT for leaming as a result of installation of ICT classrooms(interventions in the first phase and second phase of the Program), teacher training and theeducation portal

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700,000 students in rural schools1,400,000 students in urban schools

70,000 teachers trained

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)Document number: R2001-0113/1/IFC/R2001-0134/1 Date of latest CAS discussion: 07/12/2001

The proposed second phase of the APL in support of the Basic Education Program would supportthe central CAS objective: "to help Turkey meet its goals of irnproving living standards and reducingeconomic vulnerability and poverty" (para. 36). Financing under the second phase of the APL would do soby supporting two of the five themes of the current CAS: it would support the first of these, "to expandsocial services and social protection", by supporting improved coverage of basic education throughout thecountry. It would support the second theme, "to accelerate connectivity and technological capabilities", byfinancing the second phase of the Government's expansion of computer education in basic educationschools. This initiative - one of the most ambitious and far-reaching investments in ICT ever undertakenin a national education system - is expected to make a quantum improvement in the technological skills ofTurkey's population. The importance of the project was again confirmed in the CAS Progress Report,discussed at the Board on July 12, 2001.

2. Main sector issues and Government strategy:

Educational attainment of Turkey's population and labor force is by far the lowest of all theOECD countries. In 1997, before the Basic Education Program began, virtually all children in otherOECD countries completed at least eight years of schooling, but in Turkey, fewer than 90 percent ofchildren completed the first five years of schooling. Of those students who did complete the first five years,45 percent - mostly girls - did not pursue further education. Only 53 percent of the 6-8 grade age groupattended school. Just 17 percent of Turkey's labor force had at least a secondary education, versus anaverage of 60 percent across all the OECD countries. Fully 70 percent of the labor force had only afive-year primary education or less. Ten percent of the labor force was illiterate. The East and Southeastlagged far behind the rest of the country in educational attainment, with almost half of girls dropping outbefore completion of fifth grade in some provinces. In particular rural schools had problems with highturnover of teachers, availibility of educational materials, school attendance, and educational performance.

Raising the educational qualifications of the population is a crucial requirement for nationalintegration and for improved labor productivity and employment growth in Turkey. It is also crucial formaking the Turkish economy more competitive with the European Union, with the other OECD countries,and with Turkey's global trading partners.

Turkey is in the midst of a national mobilization to improve the educational qualifications of itspopulation - starting at the base of the education pyramid. The Basic Education Law (No. 4306) whichwas adopted by Turkey's Parliament in August, 1997 extends the period of compulsory basic educationfrom five years to eight years, and raises new tax revenues to finance a vast expansion of educationinfrastructure to accommodate the expected increase in basic education enrollments. Prior to adoption ofthe new Law, most children started school and completed five years of schooling, but 45 percent of studentsdropped out at the completion of grade five. Part of the reason for the high drop-out rate at this level wasthat village schools typically provide for only the first five grades of schooling. In order to continueschooling beyond grade five, most rural children either had to commute to a middle school (grades 6through 8) in a nearby town, or attend a boarding school. The compulsory extension of basic education

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began to take effect in September, 1998, when all children who had completed grade five in the prior schoolyear were required to enroll in grade six. In the following two years, progression from grade six to gradeseven, and from grade seven to grade eight became compulsory, and dropouts within the eight-year basiceducation cycle were also proscribed.

The passage of the new Basic Education Law ended a period of stagnation in basic educationenrollments which started in 1991. In 1998, the first year that the compulsory nature of the new law tookeffect, total enrollments increased sharply - by 4.4 percent. Enrollments in grade 6, which becamemandatory for the first time in that year, increased from 866,000 in September, 1997 to 1,127,000 inSeptember, 1998 - an increase of over 30 percent. In rural areas, the gains were dramatic: boys'enrollments in grade six increased by 62 percent; girls' enrollments increased by 162 percent. The rate ofenrollment growth for girls was at least 50 percent greater than for boys in each of the years since thepassage of the Law. The overall progress in basic education enrollments following the passage of the BasicEducation Law is best summarized by the net enrollment ratio, which is the proportion of the basiceducation age group which is currently enrolled in school. The net enrollment ratio increased very sharplyfollowing passage of the Law, from 75.8 percent in 1996/97 to 95 percent in 2001/02. There are few casesof such rapid enrollment gains in the history of any national education system.

This enrollment expansion is a very impressive achievement of the Basic Education Program, yetthere are no grounds for complacency. There are still more than half a rnillion children of basic educationschool age who are not attending school and the gender gap remains: 46 percent of the basic educationpupils are girls. Non-attendance in basic education is concentrated largely in rural areas of the East andSoutheast, and in gecekondu areas of the largest cities. Under the Basic Education Program, the Ministryis continuing to make a major effort to improve school attendance by improving school facilities andteaching materials in rural areas.

As part of the current ICT policy, Government aims to provide computer classrooms in all basiceducation schools within the next three years. A start has been made with support from the first phase ofthe APL and more than 3,000 classrooms in all the regions of the country have computers and software.Available evidence indicates that the computers are being utilized by children and teachers to gain skills incomputer use and in some applications. In addition, to give all students from 5th grade on basic computerskills, one major challenge is still remaining: to utilize the technology for educational purposes.Government is currently revising its policy on the use of ICT in education. This will specify the plan tointegrate ICT into the curriculum and provide recommendations for community use of ICT classrooms aswell as indicate important new directions through e-learning and life-long learning programs.

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3. Sector issues to be addressed by the project and strategic choices:

The success of the Basic Education Program in raising enrollments has led to a sharp increase inthe number of students entering secondary education (grades 9 through 12). Secondary enrollments areprojected to increase by more than 100 percent of their current level (2 million) by 2005 and the transitionrate from Grade 8 to Grade 9 is already approaching 100 percent. Major investments in secondary schoolcapacity are needed to accommodate this increase and to upgrade teaching quality in secondary education.While Government has committed itself to maintaining education expenditures at 4.25 percent of GNP, theeconomic crisis of late 2000 resulted in a 3 percent drop in MONE's budget in 2001. While the economy isexpected to recover and growth to resume, resources will be somewhat constrained and the Governmentfaces a difficult strategic choice between the investment needs of basic education and the investment needsof secondary education. Moving ahead more rapidly with investments to reduce class size anddouble-shifting in basic education schools would claim budget resources that are urgently needed forsecondary education expansion and upgrading. In order to allow the urgent investments in expandedsecondary schooling to proceed, it will be necessary to pursue the objectives of reduced class size anddouble-shifting in basic education schools more gradually than the Ministry of National Education hadinitially planned.

Reaching those children not currently in school, will require additional effort on the part ofGovernment. The second phase of the APL aims to support Government's efforts to increase enrollments inareas with significant dropouts by supporting further improvements to schools, further provision ofeducational materials, further teacher training to equip basic education teachers to deal with the teachingchallenges of rural schools, and efforts to reduce teachers' sense of isolation in remote, rural schools. Inaddition, the project will support preschool education and early childhood development for children fromlow-income families and education for students with special needs..

The first phase of the APL provided support to install 3,188 ICT classrooms in 2,802 basiceducation schools around the country and MONE supported training for 13,143 teachers. A formalevaluation of the use of ICT in classrooms is currently underway and the Bank has assisted MONE todevelop the terms of reference for this. The second phase of the APL will extend ICT classrooms toanother 3,000 schools and assist MONE to develop and implement a strategy for utilizing ICT foreducational purposes. In particular, technical assistance will be provided to assist the development of aneducation portal and to revise modalities for ICT teacher training including e-learning.

4. Program description and performance triggers for subsequent loans:

The main elements of the Government's Basic Education Program in the period 2002/03 to2004/05 inclusive, include construction of new basic education schools, refurbishment of existing basiceducation schools and associated sanitary toilet facilities and teacher housing units; provision ofeducational equipment and materials to basic education schools in urban and rural areas of the country;equipping of additional classrooms in basic education schools for ICT; recruitment and deployment of newbasic education teachers to meet the need for additional teachers, plus attrition of basic education teachers;provision of in-service training in effective teaching methods to basic education teachers, school principals,and school inspectors; expansion of preschool education and nonformal education for mothers of youngchildren; and bussing of students from remote areas to centralized bussing schools.

The second phase of the APL would help finance school refurbishment, provision of educationalmaterials, ICT classrooms, in-service teacher training, school improvement, early childhood development,including preschool, and education of children with special needs. A summary of the Program's majorexpenditure items is presented in Section C. 1, below, together with an indication of which activities are

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proposed for financing under the second phase of the APL.

Further APL financing for basic education beyond this second phase of the APL is not consideredat this stage. This is true for two reasons:

The first is that the initial two phases of the Program will have largely met the main Programobjectives:

* The Government will have created additional capacity for about four million basic educationstudents - enough to accommodate the entire basic education age group and to reduce the most severecases of classroom overcrowding. Thereafter, a longer-term program of school construction and otherinitiatives will be necessary in order to meet the objectives of universal coverage of eight-year basiceducation, reducing average class size to 30 students and gradually eliminating double-shift operation ofschools.

* The Government will have made a very important contribution to filling the enrollnent gap in ruralareas by upgrading and expanding school facilities and providing better teaching and learning materials toall rural schools. There will still be some children who do not attend school, but not caused by a lack ofschool places. The Basic Education Program has made substantial progress in overcoming the traditionalreluctance of parents in some regions of the country to send their daughters to school beyond the age ofpuberty. Still some resistance remains, and some will remain even after the second phase of the Program.Progress in overcoming this residual resistance to eight-year basic education will require progress in otherdomains of economic and social development, as well as continued advocacy by the Government for theimportance of education.

* The Government will also have made a major contribution to improved basic education quality byproviding annual cycles of training to teachers, principals, and school inspectors, by providing a basic setof educational materials to all rural schools and to needy urban schools, and by developing computereducation in approximately 6,000 basic education schools throughout the country. Here, too, fullrealization of these benefits will require longer-term efforts.

The second reason is that the actions supported under the first and second phase of the APLsshould be sustainable thereafter under the Government's own resources, whereas there is an urgent need tomobilize additional resources in order to accommodate the more-than-doubling of demand for secondaryenrollments that is expected in the next five years.

C. Program and Project Description Summary

1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed costbreakdown):

The main expenditure elements of the Basic Education Program for the four years 2001/02 to2004/05 are presented in the following table. These include all Government investment and recurrent costsin US dollars during the period. Investment costs include all school construction and rehabilitation,education materials purchase, in-service training and ICT equipment. Recurrent costs include all teacherssalaries and school bussing costs. The table also shows domestic financing from all sources and fromexternal financing.

BASIC EDUCATION PROGRAM COSTS: PHASE 22001-02 2002-03 2003-04 2004-05

Investment Costs:Primary school construction 322,235,294 490,500,000 654,000,000 882,900,000preschool construction 14,044,971 26,150,000 39,225,000 65,375,000special education construction - - 4,546,700 239,300school renovation 130,800,000 248,800,000 238,298,100 261,662,000ICT classrooms, MONE Portal, Rural School 123,000,000 49,650,000 126,300,000 46,350,000

Internet ConnectionsEducational Materials 47,796,630 4,769,600 3,449,350 2,382,560In-service Teacher Training 117,556 4,870,412 5,049,497 3,826,914

TOTAL INVESTMENT 637,994,451 824,740,012 1,070,868,647 1,262,735,774

Recurrent Costs:Salaries and Wages:

Primary school 2,029,104,052 2,221,597,384 2,315,817,929 2,464,161,163Pre-school 43,902,421 53,913,95.7 69,574,019 80,635,564Special Education 23,890,479 24,979,412 24,979,412 26,085,000Other 28,802,516 31,903,529 31,903,529 31,903,529

Student bussing 63,352,781 74,405,882 76,695,294 78,984,706Maintenance and itilities 35,727,363 39,173,120 40,223,120 41,623,120Other Recurrent Costs 13,679,973 11,237,760 11,799,648 12,389,631Transfers . 35,940,170 37,620,588 37,620,588 37,620,588Total Recurrent Costs and Transfers 2,274,399,754 2,494,831,633 2,608,613,540 2,773,403,302

Total Basic Education Program Costs 2,912,394,205 3,319,571,645 3,679,482,187 4,036,139,076

Domestic Financing:Central Government Budget, laws 4306,3418 2,673,065,239 3,000,589,689 3,327,508,343 3,866,143,000Private donations 84,000,000 84,000,000 84,000,000 84,000,000

Gap 155,328,966 234,981,956 267,973,844 85,996,077

External FinancingWorld Bank 120,000,000 30,000,000 187,000,000 75,000,000EU - 15,000,000 15,000,000 15,000,000EIB - 78,000,000 - -

Total 120,000,000 123,000,000 202,000,000 90,000,000

Remaining GAP 35,328,966 111,981,956 65,973,844 (4,003,923)

NOTES:(1) Maintenance and Utility Costs contain only Central Government Financed M&E(2) Private Donations assume that 2800 new classrooms/year are financed by private sector(3) Contribution of Local Government (II Ozel Idaresi) is not included, as it is not known what share of those go to

maintenance and what share to go investment financing.(4) Dollar values based on IMF exchange rate projections. Dollar unit costs for salaries etc are based on current

TL amounts converted at the IMF projected average exchange rate for 2002.(5) It is assumed that all resources from 4306 funds will be used for Basic and Preschool Education

Project Components. The second phase of the Basic Education Project would support acontinuation and extension of the activities supported under the first phase of the APL. In addition, it

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would support an expansion of formal preschool education and nonformal mother and child educationwhich is designed to help children from educationally deprived households succeed in basic education aswell as providing support for the education of children with special needs. Annex 2 provides a detaileddescription of project components; Annex 3 provides a detailed cost breakdown. The project comprisesfive components:

* Extending Basic Education Coverage (loan financing US$112.37 million) would supportcontinued rehabilitation and extension of rural and schools in low-income areas around large cities (gecekondu areas) to improve school attendance, would finance the construction of new preschoolclassrooms in existing basic education schools, and would support the renovation and extension ofschools for children with special needs.

* Improved Basic Education Quality (loan financing US$165.45 million) would support continuedinvestments to equip basic education schools with ICT classrooms, to equip remote rural schools withmodest computer facilities, to develop an online education portal website, and to provide educationalmaterials to schools in low-income areas around large cities (gecekondu areas). It would also initiatesupport for expanded formal preschool education and education of children with special needs. Inaddition, nonformal education in early childhood development for mothers will provide better chancesof success in basic education for children from educationally deprived households.

* Delivery of Basic Education Program (loan financing US$16.05 million) would provide ICTinservice training to teachers to provide them with basic computer skills and to assist them to utilizeICT to improve instruction, to inspectors to assist them provide pedagogical ICT support to schools,and to assist computer instructors to utilize the existing ICT classrooms to their full potential. Inaddition, specially designed in-service training courses would be delivered to teachers of children withspecial needs and to preschool teachers and trainers of mothers in early childhood development.

* Project Implementation Support (loan financing, US$1.43 million) would finance consultantservices (particularly in the areas of project management, procurement management, financialmanagement, reporting and communication, ICT and construction) and provision of office equipment,training and incremental operating costs to upgrade implementation capacity.

* Monitoring and Evaluation (loan financing, US$1.70 million) would support studies and otheractions to assess the outcomes of the Program against several categories of performance indicators, andprovide continuous feedback to Program management to improve the effectiveness of the Program. Inparticular, the loan will support semi-annual reviews of the Basic Education Program and the secondphase of the APL by Government and the World Bank.

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The main elements of the Project for the three years 2002/03-2004/05 are included in the following table.The project will support the Government's Basic Education Program through basic school rehabilitationand additional pre-school and special education facilities; purchase of ICT equipment and educationalmaterials, in-service training for all teachers including pre-school and special needs, as well as ProjectImplementation Support, and Monitoring and Evaluation.

Spec--'';@'_-ial needs schosiExtending Basic Education Coverage Primary Education 133.09 37.3 112.37 37.5

Basic schools,Preschool classrooms,Special needs schools

Improved Basic Education Quality Primary Education 196.31 55.0 165.45 55.2ICTEducational materialsPreschool and nonformal early

childhood programsSpecial needs education

Delivery of Basic Education Program Primary Education 20.58 5.8 16.05 5.4In-service

Project Implementation Support Primary Education 1.75 0.5 1.43 0.5Monitoring and Evaluation Primary Education 2.13 0.6 1.70 0.6

Total Project Costs 353.86 99.2 297.00 99.0

Front-end fee 3.00 0.8 3.00 1.0Total Financing Required 356.86 100.0 300.00 100.0

2. Key policy and institutional reforms supported by the project:

The recent Turkey Living Standards Study (Report No. 20029-TU) identifies the absence of basiceducation as the single characteristic with the strongest correlation to poverty risk. The Government'sadoption of the Basic Education Program, which expands education opporunities at the base of theeducation pyramid, is itself a major policy reform. It makes a particular effort to make up the deficienciesof regions with lagging enrollments and educational performance. The additional resources which theGovernment and the public have committed to this effort have addressed the former budgetary constraintand stagnation of enrollments and programs in basic education. The second phase of the APL will continueto support this emphasis on expansion and improvement of basic education.

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3. Benefits and target population:

The direct beneficiaries are expected to be the young people who will attend basic education underthe Project, and the basic education students who will benefit from better educational materials (includingaccess to ICT for many children and communities), more motivated and better qualified teachers, and lesscrowded classrooms. Teachers will also benefit from the improved training and incentives. Other directbeneficiaries of the Project include the mothers of children who are better equipped to provide for theirchildren's health, education, and nutritional needs because of the Project. The Project is targeting theregions and families with the lowest school attendance and educational performance in basic education - inparticular, girls in the East and Southeast, and children from households in low-income areas around largecities (gecekondu areas). Provincial education administrations are also benefitting from strengthenedcapacity to diagnose, implement and manage programs to meet their needs. The long-term benefits areexpected to include a stronger human resource base underpinning a more competitive economy and areduction in poverty levels as well as improvement in health indicators.

4. Institutional and implementation arrangements:

The Project is to be implemented over a three-year period, beginning in September, 2002. Theproposed completion date is August 31, 2005. Because the Govermment sees basic education as afundamental public service, guaranteed under the Constitution, it prefers to implement the Project as muchas possible within the existing public administrative structure. Under the first phase, implementationresponsibility is bome by MONE central line units shared with 81 provincial directorates.

The second phase of the Project will also be implemented by the central MONE line units andMONE's provincial national education directorates. Central MONE line units responsible for theimplementation of the Project are: Basic Education General Directorate, Preschool Education GeneralDirectorate, Special Education, Guidance and Counseling Services General Directorate, EducationTechnologies General Directorate, Apprenticeship and Non-formal Training General Directorate,Education Research and Development Department, In-service Training Department, Board of Education,and Research, Planning and Coordination Council.

Overall project coordination at the central level is being carried out by the Project CoordinationCenter (PCC) under direct responsibility of the Deputy Undersecretary responsible for the PCC. MONEplans to maintain this approach under the second phase of the APL, but with the restructuring efforts of thePCC and the new PCC Services Directive drafted, it is expected that the project finances will be managedmore efficiently and effectively. PCC was restructured in 2000 to comprise I 1 units: project managementunit, project research and development unit, education, training and documentation unit, informationtechnologies unit, procurement unit, import and customs unit, construction unit, financial management unit,monitoring and evaluation unit and personnel and administrative affairs unit.

Regarding the disbursements from the Bank Loan, there will be one special account for the projectin US Dollars and it will be held at the Central Bank of Turkey. Payments to the contractors, suppliers andconsultants, under all project components will be made from the special account with the authorization ofthe PCC. Payments will be made directly from the loan account for amounts over 20 percent of theauthorized special account allocation.

Regarding the counterpart funds, the PCC wifl inform the General Directorate of Basic Education(GDBE) to initiate the payment of the counterpart contribution. MONE will submit the paymentdocuments to the Ministry of Finance representative (Budget Department and Payment Office) in theMinistry of Education. The payment to the contractors, suppliers and the consultants will be made directly

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to them by the Ministry of Finance Budget Department. The Ministry of Finance Budget Department willprovide monthly payment information to the PCC on a transaction basis.

The loan will be disbursed over a period of three years, under the Bank's traditional proceduresincluding SOEs, direct payments and special commitments. Financial statements will be prepared for theproject by the PCC. The FMRs will be prepared semi-annually and will be submitted to the Bank no laterthan 45 days after the end of the quarterly period. The project financial statements will be audited by theTreasury Controllers in accordance with Intemational Standards on Auditing (ISA) and under terms ofreference already cleared by the Bank.

Implementation follow-up will be carried out by the PCC and annual project implementation plansand procurement and financial projections will be prepared based on the project implementation plan.Semi-annual project progress reports will be prepared by the PCC with an input from implementing unitsand submitted to the Bank. Regular monthly project implementation status meetings will be held and allproject implementation units of MONE and Bank staff will participate in the meetings. Minutes of themeetings will be prepared by the PCC and circulated in the MONE and to the Bank's project team.Semi-annual Financial Management Reports (FMR) will also be prepared by the PCC and submitted to theBank.

Provincial Project Management Services (PPMS) Units will be established in every province. ThePPMS Unit will be responsible for effective project implementation at the provincial level under theauthority of the provincial Govemor and Kaymakams (sub-provincial govemors) and the Provincialeducation director regarding education matters. Policy Guidance to the PCC and the PPMS Units will beprovided by a Project Steering and Executing Committee (PSEC) comprising heads of relevant MONEDirectorates. The PSEC will meet every two months to discuss project progress.

Extending Basic Education Coverage. The provinces are responsible for identifying theirinfrastructure needs, and prepare initial proposals for school construction, rehabilitation and extensionaccording to the criteria established by the Ministry and agreed mutually with the Bank. The responsibilityfor implementation will continue to be with the provincial directorates, strengthened by PCC's continuoussupport for training on technical and procurement related administrative issues. PCC's distant and on-sitemonitoring of quality and progress of construction and rehabilitation activities will be strengthened throughthe engagement of supervision and construction management consultancy firms. Consultancy services willbe provided to their full extent, including in-service training of provincial supervisory staff, for constructionin provinces with inadequate supervision capacity, while in the provinces with adequate capacity andcommitment, the consultancy services will be for monitoring only. These consultancy services will alsoinclude inspection visits during the defects liability period. MONE will participate in the final siteinspection and handing-over of completed activities, but will not have responsibility for the inspections andthe issuing of instructions for making good any defects. The consultants will be directly answerable toPCC, but collaborate closely with the provincial education directorates. A three-level indicator-basedreporting structure (supervisors to construction management, construction management to PCC, and PCCto MONE and the provincial education directorates) will be developed and adopted. PCC will providequarterly (interim) indicator-only reports to the Bank.

* Improved Basic Education Quality. The ICT component of the Basic Education Project will beimplemented by the Ministry's General Directorate for Educational Technologies (EGITEK), with supportof consultants. New ICT activities and the continued ICT activities from the first phase of the APL willalso be implemented by EGITEK under the second phase of the APL with support from consultants.

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* Delivery of Basic Education Programn The training component under the Project will beimplemented by the respective line units of the Ministry - basic education, teacher training, preschooleducation and special needs education, etc.- and for nonformal education of mothers in early childhooddevelopment, by the Mother and Child Foundation, and all activities financed by the second phase of theAPL will be under the coordination of the PCC.

* Project Implementation Support. Diring the first phase of the APL, project management,financial management, procurement and preparation of withdrawal applications for the Project were carriedout by the PCC, based upon inputs from the respective line units of the MONE and the provinces. Sincethe Project had some problems in these areas, the World Bank advised MONE that some technicalassistance in procurement, financial management and project management was needed in the PCC forimproving performance and timeliness for the second phase of the APL. Agreement has been reached thatadditional expertise will be in place in the PCC before commencement of implementation of the secondphase of the APL. Further technical assistance will be provided regarding ICT, Reporting andCommunication, Construction Management and Monitoring and Evaluation (M&E).

* Monitoring and Evaluation Implementation of the Monitoring and Evaluation component of theProject will be coordinated with the participating line units (Education Research and DevelopmentDepartmeht (ERDD) and the Ministry's Planning, Research, and Coordination Council (APK)) by theMonitoring and Evaluation Unit of the PCC. Evaluation studies for the second phase of the APL will becarried out under competitive contracts, and PCC will report the results of the evaluations and assessmentsto the World Bank. Two annual reviews (one based on annual stalistics and another based on evaluationstudies) will be presented and discussed involving both the MONE's senior staff and the World Bank.

D. Project Rationale

1. Project alternatives considered and reasons for rejection:

As earlier agreed, this operation is proposed as an APL, owing to the scale of the Project and itsevolutionary nature. The PAD for the first phase of the APL had stated that "the second phase of the APLis expected to finance the provision of textbooks to schools in low-income areas around large cities (gecekondu areas), school construction and upgrading, the expansion of computer literacy instruction, andfurther training of basic education personnel." The construction of new basic schools under the special,streamlined procedures that were allowed under the 1997 Basic Education Law is producing impressiveresults. Under the first phase of the Program, the Ministry, using budget resources, provided 796,000complete sets of textbooks to basic education students in 36 provinces of the countly. It will continue toprovide textbooks to children in need under the second phase of the Program. The second phase of the APLwill also finance formal preschool education, nonfonnal education of mothers in early childhooddevelopment and the education of children with special needs. While preschool education was planned tobe financed, the education of children with special needs is a new area of activity. However, given the 268special education schools, the special education classes, inclusive education and guidance services, serving36,000 students around the country, the Bank considers this an important area to support.

Given the impressive achievements under the Basic Education Program; the problems withimplementation using Bank guidelines; the changes in the new procurement law in Turkey moving thiscloser to the Bank's procurement standards; the conmmitment of Government to maintaining education'sshare of GNP at 4.25 percent; and the fact that the Government has managed to protect MONE's share

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during the recent economic crises; the monitoring and evaluation instruments in place now in Turkey; andthe desirability of establishing a dialogue bringing global lessons to bear on Turkey's educational problemsrather than a dialogue on procurement and administration issues; the Bank team considered and exploredthe possibility of providing direct budget support to assist implementation of the Basic Education Program.However, it was considered that a mid-stream redesign was likely to delay the project further.

2. Major related projects financed by the Bank and/or other development agencies (completed,ongoing and planned).

lit~~~~~~~~~~~~~~~~~~~~~~~~~~ilImplementation Development

Bank-financed Progress (IP) Objective (DO)

Employment and Training Employment and Training S SProject completed

Basic education expansion and Basic Education Project, S Simprovement Phase I (FY98)Support Turkey's poverty reduction Social Risk Mitigation Project, S Smeasures through alleviating the impact (FY02)of the current economic crisis, includingprotecting and promoting poorchildren's human capital.Other development agenciesEducation/Employment EU - Basic Education Project.

EU - Modernization ofVocational Training.UNICEF- Early ChildhoodDevelopment and EducationProject.

NGO/Civic Participation UNDP - Gender Program.

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

3. Lessons learned and reflected in the project design:

During the first phase of the APL, there were a number of delays in the procurement of ICThardware and software, attributable both to the MONE and to inadequate post-review by the Bank.However, once contracts were signed, delivery and installation of ICT hardware and software progressedrapidly, such that almost all of the first-phase ICT classrooms were equipped and in operation by the end ofthe 1999/2000 school year. The care which went into preparation and review of the ICT hardware andsoftware technical specifications and bidding documents during the first phase of the APL is expected tolead to much smoother and faster procurement of ICT hardware and software during the second phase ofthe APL.

Procurements of other items, particularly International Competitive Bidding (ICB) for educationalmaterials for rural schools, took a long time. This experience has provided lessons for both the Bank andthe Government's PCC. In particular, items to be procured under ICB for the second phase of the APL arethe subject of considerable discussion in regard to the importance of the items, the suitability of the itemsfor ICB and the likely outcomes. In addition, the PCC is being strengthened with technical assistance in

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procurement by hiring two procurement specialists (and also financial management and projectmanagement specialists).

MONE carried out monitoring and evaluation of the first phase of the APL effectively, but under aquite different arrangement than that foreseen at appraisal. It involved limited use of consultants, andrelied upon documentation of quantitative results generated through the MONE's pernanent documentationsystem, and a consultative process with provinces in addition to feedback through formal surveyinstruments. This approach will be developed and fine-tuned for this second phase of the APL.

The experience in implementing the Monitoring Response Facility under the first phase of the APLshowed that the communities and schools with the greatest educational needs tend to need close assistancein identifying their needs and in developing proposals that are feasible and responsive to their needs. Ratherthan having an unconstrained solicitation of proposals, the implementation tearn found that it is preferableto pre-identify target areas on the basis of objective indicators of educational needs, and then to workintensively with communities and schools in the targeted areas to develop viable subprojects which can besupported under the fund. Once the concept and process are well understood, the schools which aresuccessfully implementing subprojects can help other schools in the target area to develop proposalsthrough a similar process. This approach has been used to develop new subprojects under the first phase ofthe APL and is yielding good results. However, owing to the lack of sound entities .to receive and manageGovernment funds at the local level, MONE decided not to include sitnilar subcomponents in the secondphase of the APL.

4. Indications of borrower commitment and ownership:

The Ministry, the Govemrnent, and the public remain strongly committed to the Basic EducationProgram, as evidenced by the continued heavy commitment of public resources and private, voluntarycontributions to the Program, and the prominent role of the Program in the Government's overalldevelopment strategy. In 2002, for example, the Istanbul Stock Exchange is funding construction of 87basic education schools. In addition, Government has committed itself to maintaining education's share ofGNP at 4.25 percent and has managed to protect education during the recent economic crisis. Inpreparation for the second phase of the APL, Government established a coordination group under a DeputyUndersecretary to prepare the plans and identified a small team of people to work full time on thepreparation together with the PCC. In addition, MONE convened a four-day workshop on projectmanagement and LogFrame issues. MONE is also planning to organize training to enhance planning andimplementation capacity.

5. Value added of Bank support in this project:

MONE's very large school construction program -- involving expenditures of well over US$1billion since 1998 - incorporated the improved school construction norms developed with Bank supportunder the Basic Education Pilot Project. The Bank's involvement in the first phase of the APL in supportof the Basic Education Program helped ensure that the Program benefited from international experience --particularly, in the computer education activities and the development of technical specifications foreducational materials for rural schools. It also helped ensure that the needs of the most educationallydeprived areas received the special attention that they need. The same benefits of Bank involvement willapply during the second phase of the Project. In addition, the Bank's work on early childhood developmentis expected to provide insights which will guide MONE's work in preschool and for Mother and Childinterventions to be supported under the second phase of the APL.

Separately, the World Bank Institute tailored its flagship Educational Reform Course for Turkey

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and delivered two modules in Ankara. This was very well received. Bank staff have also assisted inidentifying international experience relevant to Turkey and assisted MONE to gain from these experiencesthrough study visits and through bringing in technical assistance to Turkey.

E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)

1. Economic (see Annex 4):O Cost benefit NPV=US$ million; ERR = % (see Annex 4)O Cost effectiveness* Other (specify)

The actions to improve the quality and relevance of basic education under the Basic EducationProgram are a crucial part of the Government's strategy to raise the qualifications and competitiveness ofTurkey's labor force. The research evidence based on both macro- and micro-level data in Turkey confirmsthe major contribution of expanded basic education to aggregate economic performance and personalearnings. The importance of expanded basic education coverage as an instrument of poverty alleviation inTurkey has been documented in the recent Living Standards Study (Report No. 20029-TU). Rates ofreturn for education quality improvement are intrinsically more difficult to estimate than for expansion ofenrollments. Nevertheless, there is evidence of significant gains to improved quality of basic education. Arecent analysis of the benefits of computer literacy training, based on observed eamings differentials forcomputer-literate and non-computer-literate workers and on the cost of employer-provided training,estimates a very high benefit/cost ratio for the computer literacy investments under the Program.Evaluations of home-based preschool education programs in Turkey have documented significant andenduring benefits in terms of improved school attendance and school performance.

2. Financial (see Annex 4 and Annex 5):NPV=US$ million; FRR = % (see Annex 4)

Fiscal Impact:

The economic crisis which hit Turkey in late 2000 and intensified following a further shock inFebruary 2001, resulted in a 9.4 percent drop in GNP and continued high inflation of 68 percent in 2001.Despite a commitment by the Government to keep education expenditures at 4.25 percent of GNP under theongoing adjustment program, the economic downturn of 2001 resulted in a 3 percent drop in the Ministryof Education's overall budget in real terms and in a drop in basic education expenditures of almost 15percent in 2001. Similarly, revenue collection from taxes (Law 4306) earmarked to fund the basiceducation expansion program dropped by about 40 percent in real terms in 2001 and may drop further in2002. As a result, the Government had to significantly curtail its classroom expansion program, with theresult that only an estimated 10,000 additional classrooms will be built during the ongoing school year,compared to annual construction of between 20,000 to 26,000 new classrooms prior to the crisis.

The economy is, however, expected to recover under the IMF and World Bank supportedprograms. GNP is projected to grow at 3 percent in 2002, followed by a 5 percent increase in the twofollowing years. As a result of the Government's commitment to keep education expenditures at 4.25percent of GNP, the Ministry of Education's budget for 2002 foresees an increase of 12 percent in realterms, with a substantial increase in the budget for basic education. In tandem with recovery in economicproduction and a substantial reduction in inflation, revenues from taxes earmarked for education are

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expected to increase by over 15 percent. However, a further substantial increase in the number of studentsto be enrolled in basic education over the next few years, the Government's ambitious plan to substantiallyreduce the number of students per class in the coming three years, and the increased emphasis to be placedon pre-school education will require substantial additional resources. Government funds alone will notsuffice to finance this program, even under the most optimistic projection scenarios. A substantial financinggap is expected to occur, particularly in the ongoing and the following two school years. The Governmentplans to finance this gap with the help of external sources and private donations.

3. Technical:

In approving the first phase of the APL, the Board also delegated to Regional management theresponsibility for approving a second phase of the APL in support of the Basic Education Program, uponconfirmation that the first phase of the Government's Program as implemented is consistent with theProgram as agreed by the Board, and upon substantial fulfillment of seven trigger actions:

* Sign contracts or otherwise arrange for the provision of a basic package of educational materials,satisfactory to the Bank, to all rural schools.

* Contract for and achieve approximately 30 percent completion of facilities upgrading for about200 village schools in five designated provinces.

* Implement the agreed program of in-service training for teachers, school principals, and inspectors.

* Carry out the agreed monitoring and social assessment program, including the basic educationpublic information campaign.

* Develop the school infrastructure program for the second phase of the Program according tocriteria satisfactory to the Bank.

* Finalize specifications and bidding documents for the second phase of information technologyprocurement, as agreed with the Bank.

* Disburse or commit at least 60 percent of the first phase of the APL.

A Quality Enhancement Review (QER) team first met on December 5 and 6, 2000. The ReviewPanel found that the Project is being implemented in a manner that is consistent with the Ministry'sstatement of intent at the outset of the Project. The Review Panel's overall conclusion was "that the spirit,if not the letter, of the triggers has for the most part been met and that the project should move to Phase II,principally because of the progress in meeting the basic goals of the Project." Subsequently, following afull supervision mission in January and February 2002, the QER team confirmed that six of the seventriggers were met: the seventh, sign contracts or otherwise arrange for the provision of a basic package ofeducational materials, satisfactory to the Bank, to all rural schools, was not fully met. Subsequently, theRegional Operations Committee approved appraisal and negotiations based on the progress towardsmeeting this trigger and a Government action plan to meet it fully. The QER Panel also recommended thatthe second phase of the APL include several actions to provide for more satisfactory monitoring andevaluation of Project outcomes during the second phase. These recommended actions have beensummarized in a QER Follow-Up Action Plan, which has been discussed and agreed with the MONE.

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These actions are included in the Key Performance Indicators (Annex 1).

4. Institutional:

Implementation arrangements for the second phase of the APL will involve the same institutional roles for

the implementing entities that they are performing currently under the first phase of the APL. PCC, guided

by the new Service Directives, will work more collaboratively with the MONE central line units, provincial

directorates, Project Steering and Executing Committee (PSEC) and Provincial Project ManagementServices (PPMS) Units. Currently, PCC is being strengthened by recruiting four long-term nationalconsultants in Project Management, Financial Management and Procurement Management(2). Other

consultants will be hired as needed for specific tasks. Reporting and communication capacity of the PCCand other related line units and provincial directorates of the Ministry will be increased to enable

preparation and submission of quarterly and/or semi-annual reports, holding regular monthly progressmeetings with the related units involving in implementation, coordination and decision making.

4.1 Executing agencies:

MONE's related central line units (Primary Education General Directorate, Preschool Education General

Directorate, Special Education, Guidance and Counseling Services General Directorate, EducationTechnologies General Directorate, Apprenticeship and Non-formal Training General DirectorntcEducation Research and Development Department, In-service Training Department, Board of Education,and Research, Planning and Coordination Council) and provincial directorates will execute the project with

the help of the PCC and responsible Deputy Undersecretary and other high level management.

4.2 Project management:

PCC will be responsible for coordinating the Project activities between related central Ministry units and

provincial directorates. Implementation arrangements for the second phase of the APL will involve the

same institutional roles for the implementing entities that they are performing currently under the first

phase of the APL. Although there were initial delays in implementing the first phase of the APL,

implementation performance has improved and is now satisfactory.

4.3 Procurement issues:

MONE has been involved in managing four World Bank projects and the PCC was established during

implementation of first phase of the APL to coordinate and support implementation of all activities. PCC

has six procurement specialists and these manage all procurement on behalf of the World Bank. GeneralDirectorates and Departments within MONE prepare technical specifications, terms of reference etc and

evaluate technical aspects of proposals within their field of activity. In an effort to address some of the

procurement problems under the first phase of the APL, PCC is hiring two experts in procurement to guide

the procurement work and additional training is being provided for all procurement staff as part of the

second phase of the APL. In addition, PCC has developed a detailed procurement plan in consultation with

line units and Bank staff and this document reflects the lessons leamed during the first phase of the APL,

particularly in regard to procurement of educational materials, in-service training, and ICT equipment.

4.4 Financial management issues:

An assessment of the financial management arrangements for the Project was undertaken between

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December 1-8, 2000 and the assessment was updated during appraisal to determine whether the financialmanagement arrangements for the project are acceptable to the Bank. It was concluded that the financialmanagement arrangements for the Project satisfy the Bank's minimum requirements. The detailed financialmanagement assessment include Annex 6b of this PAD. The identified financial risks for this Project arethe following:

Country financial management risk - the draft CFAA identified major weaknesses in the Turkish publicand private financial accountability. To strengthen accountability, the Project will be controlled andaccounted for by the PCC.

Project financial management risk - this Project will involve a large number of transactions. It is essentialthat the PCC financial management staff have experience both in financial management and World Bankprocedures as they are currently implementing the first phase of the APL. Also the staffing level of theFinancial management unit will be further strengthened with the recruitment of a financial managementexpert.

Counterpart funds availability risk - the Project will support the Governments overall Basic EducationProgram. Law No. 4306 of August 18,1998 on "Primary Education, National Education, Apprenticeshipand Vocational Training, Organization and Duties of Ministry of National Education" gives the Ministry ofNational Education the right to increase parts of the value addedd tax (VAT) as a contribution from thepopulation to support the Basic Education Program. The counterpart funds will be made available from thefunds accumulated from these contributions. For the whole Program the total projected domestic financingwill be US$12.86 billion for the period between 2001-2005. The counterpart funding for this Project isestimated to be about US$57 million. Allocation of these counterpart funds will be made annually withinthe Ministry's budget.

5. Environmental: Environmental Category: B (Partial Assessment)5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (includingconsultation and disclosure) and the significant issues and their treatment emerging from this analysis.

Although the Project is very large, no significant environmental risks are foreseen, in view of the highlydispersed nature of the Project. Environmental standards for safety, waste disposal, use of hazardousmaterials, esthetics and other aspects of the school construction program are codified in a HandbookforBasic Education School Buildings which was developed with Bank assistance in preparation for theProgram. These standards have been reviewed by the Bank team, and found satisfactory. MONE hasconfirmed that no involuntary resettlement will occur under the Project, and has instructed all of theprovincial administrations, in identifying sites for new schools under the Project, to select only sites whichare vacant public lands owned by the Ministry or the Treasury. Given the urgency with which theGovemment aims to complete the physical infrastructure for the Program, the Ministry is committed toavoiding land acquisition as this would require extensive time for legally required consultations and courtdecisions. Where private contributions are made for school buildings, MONE, from its own funds, will payprivate individuals who will contribute their vacant land for school building purposes, in accordance withthe laws of Turkey. With regard to the refurbishment and renovations of the schools and other learningfacilities, the govemment has prepared an Environmental Management Plan, which the PCC will ensure iscarried out.

5.2 What are the main features of the EMP and are they adequate?

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The rehabilitation of schools could result in significant levels of construction waste. The Ministry of Laborand Social Security provides standards for construction materials and workers' health and safety. Solidwaste must be disposed in accordance with Turkish Solid Waste Control Regulations of the Ministry ofEnviromnent. There will also be an increase in demand for drinking water. Drinldng water supplied at therefurbished schools financed under the Bank project should meet the standards laid down by the TurkishStandards Institution. The Ministry of National Education will collaborate with other government agenciesto conduct the monitoring and evaluation work.

5.3 For Category A and B projects, timeline and status of EA:Date of receipt of final draft: Sent to Infoshop - March 29, 2002

5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the environmental impacts and proposed environment management plan? Describe mechanismsof consultation that were used and which groups were consulted?

The Ministry of National Education has and will work with other government agencies, school authorities,local communities to ensure full understanding of the Project and the environmental impact on thecormmunities. The affected communities will be informed about the schedule, including the details ofquantities of waste.

5.5 What mechanisms have been established to monitor and evaluate the impact of the project on theenvironment? Do the indicators reflect the objectives and results of the EMP?

The Ministry of National Education will ensure the Environmental Management Plan is carried out fully.Together with other govenmment agencies, the PCC will conduct regular monitoring visits to the areas thatare affected by the refurbishment and renovations.

6. Social:6.1 Summarize key social issues relevant to the project objectives, and specify the project's socialdevelopment outcomes.

The Government's Program explicitly aims at enrolling all eligible children, thereby improving the access oflow-income households to eight-year basic education. To the extent that low household income is aconstraint to school attendance, the Govermnents Program also aims to improve school attendance byproviding free textbooks and school uniforms to children from these households. Because of the linkbetween perceived school quality and school attendance, the various initiatives under the Bank's Project toimprove the quality of basic education - including rural school rehabilitation and the provision ofeducational materials to poorly equipped schools -- are also expected to contribute to improved schoolattendance. The gains which the Program is achieving in school attendance have particularly benefitedgirls and the children of low-income households, because it is girls and children from low-incomehouseholds who are most likely not to attend school. The Ministry is carrying out and will continue tocarry out promotional activities which help maintain public support for and compliance with the Program.In addition, the Social Risk Mitigation Project is providing education grants to mothers from low-incomehouseholds with children enrolled in basic education. Up to US$8 a month is provided for enrolled childrenwho attend school regularly and do not repeat a grade more than once.

6.2 Participatory Approach: How are key stakeholders participating in the project?

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Social assessment contributed to the design of the Basic Education Program. It is playing an important rolein implementation of the Program and in the design of the second phase of the Program. A beneficiaryassessment commissioned by the Bank helped document the constraints to girls' school attendance, andinfluenced the design of the Basic Education Pilot Project which was carried out under the NationalEducation Development Project, as well as of the Basic Education Program. During the preparation of theProgram, the Ministry, the Bank, and other donors consulted widely with a range of education stakeholders,including school administrators, teachers, students, local governments, local representatives of centralgovernment as well as the media. The Ministry maintained these consultations under the implementation ofthe first phase of the Program, and will continue to do so under the second phase. Late in 1999 and early in2000, the Ministry carried out a series of regional meetings to assess public views of centralized bussingschools and to solicit recommendations to make boarding schools more effective. The findings andrecommendations of these consultations have influenced the design of the second phase of the Program -including the decision to carry out rural school rehabilitation on a larger scale. The evaluations which theMinistry has commissioned under the first phase of the APL will add further valuable information on howthe Program is affecting and is perceived by stakeholders.

6.3 How does the project involve consultations or collaboration with NGOs or other civil societyorganizations?

The Ministry has requested NGO involvement in the implementation of the nonformal early childdevelopment component of the second phase of the APL. lhe project design is expected to support NGOpartnerships through contracting the Mother and Child Foundation to implement the nonformal educationof mothers in early childhood development. During the second phase of the APL they will extend theiractivities to all provinces in Turkey.

6.4 What institutional arrangements have been provided to ensure the project achieves its socialdevelopment outcomes?

The Monitoring and Evaluation component and the Ministry's ongoing management information systemwill continue to monitor social development outcomes of the Program during the second phase, and toprovide feedback to help fine-tune the Program as implementation progresses.

6.5 How will the project monitor performance in terms of social development outcomes?

The Monitoring and Evaluation component and the Ministry's ongoing management infonnation systemwill continue to monitor social development outcomes of the Project/Program during the second phase,including participation of girls, children from low-income families, and by region, and to provide feedbackto help fine-tune the Project/Program implementation.

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7. Safeguard Policies:7.1 Do any of the following safeguard policies apply to the project?

Environmental Assessment (OP40P 4.1 4.01, GP 4.01) Yes 0 No

Natural Habitats (OP 4.04, BP 4.04, GP 4.04) O Yes * No

Forestry (OP 4D36, GP 4.36) 0 Yes 0 NoPest Management (OP 4.09) O Yes *P No

Cultural Property (OPN 11.03) O5 Yes * No

Indigenous Peoples (OD 4.20) C) Yes *0 No

Involuntary Resettlement (OP/BP 4.12) O Yes * No

Safety of Dams (OP 4.37, BP 4.37) O Yes *0 No

Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) 0 Yes 0 NoProjects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* 0 Yes * No

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.

PCC and MONE through the supervision and construction management consultancy firms, will

ensure that provincial planners, contractors and supervisors will adhere to protection and risk-mitigation

measures for key environmental aspects, which are agreed for building materials, effluent drainage, erosion,and vegetation, and heating systems.

F. Sustainability and Risks

1. Sustainability:

Among the critical risks for continuing successful implementation of the Basic Education Program,

the most important sustainability risk results from the need for continued budget support to maintain

implementation of Program interventions at the intended levels. As shown in the expenditure projection in

Section C, above, total investment and recurrent budget needs for the Program -- including teacher salary

costs, by far the largest single item -- amount to over US$10 billion over the next three years. The US$300

million resources from the second phase of the APL will make only a very modest contribution to these

total financing needs. Government has provided assurances that it will provide the necessary budget

resources - 4.25 percent of GNP - to implement the program effectively.

2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1):

-z - -r<!T-t.Risk-~-t ;-_ -.. RiR5tfi§Z4>-. - t- ikMtgt

From Outputs to ObjectiveIn order to achieve its objectives, the M The Program includes Bank financing for the

Program needs to move forward with key complementary inputs, including inservice

many initiatives in parallel, such that each training, that are essential for achieving the

of the project inputs is accompanied by intended objectives of the Program. Supervision

the complementary inputs that are efforts will continue to focus on these critical

necessary to achieve the intended risk activities. In addition, MONE has

development outcomes. Most undertaken to provide the cost of internet

conspicuous of these needs is that for connectivity for basic education schools within

in-service training to ensure that the the general budget.

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provision of improved educationalequipment - in particular ICT - isaccompanied by supervisory staff who areproficient in its effective educationalapplications. A critical aspect of ICTutilization for pedagogical purposes isinternet access and the associated schoolcosts.

The realization of Program objectives may M The Ministry has provided additional salarysuffer if basic education staff in key roles incentives under the Program for teachers indo not continue to serve in their intended hardship teaching posts.roles.

From Components to OutputsThis second phase of the APL will be M Under the current Economic Reform Program,implemented under the stringent budgetary the Government has provided assurances thatconditions of the Govermuent's economic these budget needs will be protected throughoutreform program. The special financing implementation of the reform program - inthat was mobilized in 1997 and 1998 to particular, to maintain education budgetlaunch the Basic Education Program allocations at 4.25 percent of GNP or higher.helped redress a long period of budgetary Procedural and institutional changes to improveconstraint, under which basic education the effectiveness of use of budget resources forenrollments and basic education quality education will be sought in the context of thewere stagnant. This increase in budget FY2002 Programrnatic Public Sectorresources has led to very significant gains Adjustment Loan (PPSAL).in education coverage and quality. Butmuch remains to be done. Additionalresources for basic education are neededin order to continue the improvements inbasic education coverage and quality thatwere launched in 1998. Financialresource needs for Phase Himplementation are estimated at US$11.2billion.

Program results could suffer if M The Ministry is making good use of monitoringimplementation fails to take account of and evaluation feedback to fine-tune themonitoring and evaluation findings. Program. Under support for second phase of

the APL, this experience is expected to continue.

Political instability could adversely affect M This is an area in which the Government mustthe Program. play the lead role. The Ministry of National

Education has thus far skillfully built consensusfor the Program, and is expected to continue toperform this positive support role effectively.

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Overall Risk Rating M

Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)

3. Possible Controversial Aspects:

There are none.

G. Main Loan Conditions

1. Effectiveness Condition

None

2. Other [classify according to covenant types used in the Legal Agreements.]

Conditions of Board Presentation:

(1) Contracts for the three pending lots of educational materials under the Basic Educajion Project havebeen approved by the Ministry of Finance and the three signed contracts received by the Bank, thusensuring that over 80% of the estimated cost of the educational materials package has been contracted;

(ii) MONE will have appointed consultants (offers extended and accepted but consultants notnecessarily in position) to the following positions within the PCC: one (1) project management specialist,two (2) procurement management specialists, and one (1) financial management specialist, all on tenns andconditions satisfactory to the Bank;

(iii) The Minister of National Education will have written to the Bank confirming the action plan for thepurchase of the remaining seven lots of educational materials under the Basic Education Project. Thestatus of the remaining lots will be reviewed by the Bank during September/October 2002 mission.

Other Conditions:

(i) The Borrower, through the MONE, shall maintain a financial management system adequate toreflect the operations, resources and expenditures related to the Project, and shall have the records,accounts and financial statements audited for each Fiscal Year, furnishing as soon as available, but in anycase not later that six months after the end of each Fiscal Year, an audit thereon;

(ii) The Project Coordination Center shall be responsible for coordinating adequate arrangements forthe overall implementation of the Project among the MONE central units and eighty-one (81) of itsprovincial directives, including aspects related to procurement of works and goods and selection andemployment of consultants' services, disbursement of Loan proceeds, and maintenance of Project accounts;

(iii) At the provincial and sub-provincial level, the Project shall be implemented under the authority ofthe provincial govemors and the sub-province governors (kaymakams), with the provincial educationdirectors being responsible for the lead technical role on educational matters and provincial projectmanagement services units being established;

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(iv) The Borrower shall take all measures necessary to carry out the Environmental Management Planin a timely manner, ensuring that adequate information on the implementation of the said measures issuitably included in the progress reports;

(v) The Borrower shall, not later than April 30 and October 31 in each calendar year, commencing onApril 30, 2003, and until Project completion, cause the PCC to prepare and submit to the Bank for itsreview, a progress report, of such scope and in such detail as the Bank shall reasonably request, describing,in accordance with evolving parameters acceptable to the Bank, the progress achieved by the Borrower inthe implementation, through the MONE, of the Project during the preceding six (6) month period;

(vi) The Borrower shall, not later than April 30 in each calendar year, commencing on April 30, 2003,and until Program completion, cause the MONE to carry out with representatives from the Borrower'sUndersecretariat of Treasury, the State Planning Organization, the State Institute of Statistics, the Bankand other third parties relevant to the implementation and development of the Program, including relevantnon-government organizations, a quantitative review on the progress achieved by the Borrower in carryingout the Program during the preceding twelve (12) month period, on the basis of published statisticalabstracts to be furnished by the MONE, and, thereafter, the Borrower shall cause the MONE to carry outthe measures resulting from the recommendations agreed upon with the Bank to ensure the efficientcarrying out of the Program and the achievement of the objectives thereof during the twelve (12) monthperiod following such date;

(vii) The Borrower shall, not later than October 31 in each calendar year, commnencing on October 3 1,2003, and until Prograrn completion, cause the MONE to carry out with the Bank and other third partiesrelevant to the implementation and development of the Program, including relevant academics andpractitioners from the Borrower's provinces, a qualitative review on selected aspects of the Program duringthe preceding twelve (12) month period, on the basis of a selected topic established not later than October31 in each calendar year for the said purposes and which shall focus on the outcomes of studies of differentaspects of education, including those evaluation studies carried out under the Project, and, thereafter, theBorrower shall cause the MONE to carry out the measures resulting from the recommendations agreedupon with the Bank to ensure the efficient carrying out of the Program and the achievement of theobjectives thereof during the twelve (12) month period following such date. For the purpose of thequalitative progress review scheduled not later than October 31, 2003, progress shall be reviewed on thebasis of the study on information and communications technology utilization and the social impact studiespresently being undertaken by the MONE;

(viii) The Borrower shall, through the MONE, maintain policies and procedures adequate to enable it tomonitor and evaluate on an ongoing basis, in accordance with the Performance Indicators, the carrying outof the Project and the Program and the achievement of the objectives, and through the MONE, theBorrower shall prepare, under the terms of reference satisfactory to the Bank, and furnish to the Bank, onor about January 30, 2004, a report integrating the results of these monitoring and evaluation activities onthe progress achieved in the carrying out of the Project and the Program during the period preceding thedate of said report and setting out measures recommended to ensure the efficient carrying out of the Projectand the Program and the achievement of the objectives thereof, based on the conclusions andrecommendations of the said report and the Banks views on the matter.

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H. Readiness for Implementation

0I 1. a) The engineering design documents for the first year's activities are complete and ready for the startof project implementation.

1 1. b) Not applicable.

CK 2. The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.

1 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.

O 4. The following items are lacking and are discussed under loan conditions (Section G):

1. Compliance with Bank Policies

1 1. This project complies with all applicable Bank policies.O 2. The following exceptions to Bank policies are recommended for approval. The project complies with

all other applicable Bank policies.

Paud Murphy /Git nanhe m sto P. Cuadra Ajay ChhibberTeam Leadefs Jctor Manager Country Director /Y/E/

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Annex 1: Project Design SummaryTURKEY: Second Basic Education Project

Si?ctor-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission)T) increase the number and All children of basic Statistics by Research, The global economy remainsquality of graduates from the education age attend and Planning and Coordination open and allows Turkey'sB isic Education System successfully complete eight Council, the State Institute goods and services free

year basic education of Statistics and ERDD access

Program Purpose: End-of-Program Indicators: Program reports: (from Purpose to Goal)Government Goals forBasic Education Program

To achieve full coverage and - All eligible children Statistics by Research, Activities to be carried outin iprove quality in eight year (including children with Planning and Coordination under the program arebE sic education special needs) enrolled in Council and the State completed within the agreed

and completing basic Institute of Statistics periods of timeeducation

- School enrollment foreligible children at the age ofpre-school educationapproaches 25%

ERDD reports- Student performance for allstudents in basic educationimproves

- 40% of all children in basiceducation utilize ICT forlearning

APL IEstablish capacity toimplement, monitor and-valuate the Program.Initiate the investments toachieve Program objectives,starting with the highestr.riority needs

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Objective: Indicators:APL II More than 350,000 studentsIncreasing coverage and benefit as a result of Statistics by Research, Support for programimproving quality among low renovated or new education Planning and Coordination initiatives is sustainedincome and disadvantaged facilities: Council and the State Institute through Phase II

groups and extending - 9,800 students in rural of Statistics

opportunity to a greater schoolsnumber of children to have - 185,300 students inaccess to computers in basic schools in gecekondueducation schools across the areascountry - 83,200 students in

regional BasicEducation BoardingSchools andPart-boarding Schools

- 70,800 students inBussing Schools

- 12,000 students inpre-schooling

- 14,800 students withspecial needs

More than 3.5 million Evaluation studiesstudents enabled to improvetheir performance as a resultof provision of neweducational materialsprovided to:

- 3,430,000 students inschools in gecekonduareas

- 32,000 students inpre-schooling

- 36,000 students withspecial needs

More than 35,000 students Evaluation studieswith special needs improvetheir performance as a resultof 4,225 teachers andadministrators attendingspecial needs in-servicetraining

More than 150,000 pre-school ERDD reportsstudents improve theirschool readiness as a resultof 4,500 teachers attendingpre-school in-servicetraining

Children in 50,000 families

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improve their schoolreadiness as a result oftraining of mothers andtheir children

More than 2 million studentsutilize ICT for learning as aresult of installation of ICTclassrooms (interventions inthe first and second BasicEducation Project), teachertraining and the educationportal

- 700,000 in ruralschools

- 1,400,000 in urbanschools

- 70 000 teachers trained

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Output from each Output Indicators: Project reports: (from Outputs to Objective)

Component:1. Extending Basic Renovation of 200 rural Monthly progress reports Results of APL phase one

Education Coverage schools by the end of Project from provincial education Outputs successful achieveddirectorates and and operational: MIS, M&E

Construction of new schools, Renovation and additional supervisory consultancy system, studies and

renovation and construction dining rooms for 400 assessments

of additional facilities for bussing schools by the end PCC's quarterly

existing rural schools and of the Project indicator-only progress There is no resistance to

schools in gecekondu areas reports to MONE and WB girls' enrolling and

Renovation of 200 bussing completing an 8 year

schools by the end of the Semi-annual Project program

Project Implementation ProgressReport The provinces undertake

Renovation and additional reporting at agreed format

facilities for 150 Mid-term technical audits and frequency

YIBOs/PIOs by the end of Supervision missionthe Project reports

Renovation and additional Annua! -statisticsclassrooms for 150 schoolsin gecekondu areas by the Inspection reportsend of the Project

Six-monthly ProjectNew construction and Progress Reportsfurnishings of 300Pre-school classrooms atexisting basic educationschools

40 special education schoolsrenovated; 20 additionalbuildings for specialeducation constructed by theend of the Project

2. Improved Basic 3000 schools (4002 Data by State Statistics The Government reform

Education Quality classrooms) equipped with Organization program will continue to

computers and educational meet its budgetary

Increasing the quality in ERDD reports allocations at 4.25% of GNP

education through ICT software by the end of or higher

integration and provision of Project Supervision mission

educational materials for reports

basic education rural Design, develop andschools, pre-education maintain an educationschools, special education portalschools and schools ingecekondu areas Educational materials to

be defined by the MONE,provided for 4000 schoolsin gecekondu areas by the

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mid- 2004

Educational materialsdefined by MONE for800 pre-school classroomsprovided by the end ofProject

ICT installed in 70 specialeducation schools

ICT installed in 40 primary Government Reformschools within hospitals initiatives and procedural and

institutional change regarding900 Braille typewriters for use of budget resources for

the blind in 15 schools for education will bethe visually impaired implemented in the FY 2002

Public Programmatic Sector65 group hearing devices Adjustment Loan

for the students in 47schools for the hearingdisabled

Educational materials for Administrators, teachers and640 classrooms in schools inspectors apply new skillsfor students with special and methods as intended andneeds and in 700 classrooms manage programs to standardfor students with specialneeds in ordinary schools

3. Delivery of BasicEducation Program Provision of ICT in-service Policies implemented by 2006improved training for 31,500 teachers

(10,500 teachers for eachIn-service training for year) in primary educationteachers, school by the end of the Projectadministrators and inspectors,and MONE & provincial staff Provision of ICT in-service

training for 3,000 primaryeducation inspectors (1,000inspectors for each year) bythe end of the Project

Provision of ICT in-servicetraining for 5,800 schooladministrators in primaryeducation (1,935administrators for eachyear) by the end of the

- 35 -

ProjectProvision of ICT in-service MOCEF evaluation reports Consultancy services for

training for 22,800 rural implementation of Outputs are

school teachers (7,600 available

teachers for each year) bythe end of the Project

Provision of annual ICTin-service training for 250master trainers and 5,800school based formators bythe end of the Project

Provision of in-servicetraining for 4,500pre-school teachers andadministrators by the end of2004

Provision of in-servicetraining for 4051 teachers,628 administrators, 931provincial staff, 780inspectors and for 304education experts in specialneeds education by the endof the Project

Provision of in-service andpre-service training for1300 non-formal earlychildhood educators

Provision of training andmaterials for 95,000mothers of young children

4. Program Implementation PCC staff complete relevant Supervision mission reports Sustainability of the Program

Support staff development and Supportcertification programs in

PCC staff trained project management, M&E,procurement, financial

Integrated management management andsystem established communications by the end

of 2003Financial managementsystem established Provision of office

equipment for MONE line

Office equipment procured units by the end of 2003 andfor PCC in office

PCC consultants hired equipment, training and

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technical assistance by theSeminars and meetings held end of the Project

Incremental operating costsdealt with effectively

5. Monitoring and Assessment of the Updated Evaluation reportsEvaluation APL II in terms of social,

economic and institutionalMonitoring and evaluation aspects

of the Program is ensuredthrough site visits, statistics, Impact studies for extendingetc. basic education coverage

ICT integration study

On-going ICT evaluationstudies

Evaluation studies on theaffect of the pre-schooleducation on basiceducation

Impact studies on in-servicetraining activities

Evaluation/impact studieson efficiency of specialeducation initiatives

OECD-evaluation of BasicEducation in Turkey

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Sub-components: component) Outputs)

1. Extending Basic (in million US$)Education CoverageConstruction of new schools, 1. US$133.09 Project Progress Reportrenovation and construction of Financial resources areadditional facilities for Procurement Report readily available

existing rural, pre-educationschools, special education Financial Reportsschools and schools ingecekondu areas

2. Improved Basic 2. US$196.31Education Quality

Increasing the quality ineducation through ICTintegration and provision ofeducational materials forbasic education ruralschools, pre-educationschools, special educationschools and schools ingecekondu areas

3. Delivery of Basic 3. US$20.58Education ProgramImproved

In-service training forteachers, schoolsadministrators andinspectors, and MONE &provincial staff

4. Program 4. US$1.75Implementation Support

PCC staff trainedIntegrated managementsystem establishedFinancial managementsystem establishedOffice equipment procuredPCC consultants hiredSeminars and meetings

heldIncremental operating costs

dealt with effectively

5. Monitoring and 5. US$2.13

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Evaluation

Monitoring and evaluationof the Program is ensuredthrough site visits, statistics,etc.

6. Front End Fee 6. US$3.00

7. Total 7. US$356.86

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Annex 2: Detailed Project DescriptionTURKEY: Second Basic Education Project

By Component:

Project Component 1 - US$133.09 millionBank financing US$11237 millionImproved Basic Education Coverage

Basic School Renovation is included under the Improved Basic Education Coverage component becausemore attractive and more functional rural schools and teacher housing units have been found to be animportant factor in inducing better school attendance and better teacher retention. In addition, provision ofbetter facilities for preschool education for children from low-income families will encourage these familiesto send their children to basic education schools. This component includes, in addition to basic schoolrenovation and extension, preschool classroom construction in existing basic schools as well asrehabilitation and extension of schools for children with special needs.

Basic School Renovation and Extension (Estimated loan financing US$ 98.85 million)The second phase of the APL will rehabilitate and extend about 1,100 basic education schools in

rural and low-income urban areas. Many of the schools to bc renovated during Phase II will berural five-year basic education schools. (The estimated average costs at appraisal of small ruralschools was US$15,000 and of 'bussing' schools US$30,000.) This activity will also include thegeneral renovation and construction of new dining hall facilities at larger 'bussing' schools(estimated at US$65,000 per school), and rehabilitation of eight-year regional boarding schoolsand part-time boarding schools (estimated at US$200,000 average cost per school). On average 6rural schools will be selected for renovation in each of the 81 provinces. In the metropolitanprovinces, five-year basic education schools in low-income areas around large cities (gecekonduareas), will be selected for rehabilitation, with prior approval from the Bank. The actual numberof schools selected in each province will vary in direct proportion to the level of poverty of eachprovince, as identified by the State Planning Organization. Rehabilitation and extension will becarried out to the school facility standards that were agreed and applied for similar activities underPhase I.

Preschool Classroom Construction (Estimated loan financing US$6.56 million) In addition, 300preschool classrooms will be constructed at existing basic education schools (at an averageestimate cost at appraisal of US$ 21,000 per classroom).

Rehabilitation and Extension of Schools for Children with Special Needs (Estimated loanfinancing US$4.64 million) Forty schools for children with special needs will be renovated(estimated at US$ 45,000 each) and additional facilities will be constructed at 20 existing schools(estimated at US$135,000 each).

Finally, Consultancy services (Estimated loan financing US$2.81 million) for supervision andmanagement of renovation and new construction works will be used to support PCC and theprovincial education directorates to ensure quality and progress of implementation.

Project Component 2 - US$196.31 millionBank financing US$165.45 million

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Improved Basic Education Quality

This component comprises four sub-components: ICT, Educational Materials Provision, PreschoolEducation and Special Needs Education. These sub-components are described below:

ICT. (Estimated loan financing, US$154.60 million) USS93.84 million for ICT classrooms;US$38 million for instructional software; US$20 million for civil works, and US$7 million foran educational portal and decision support system, and US$200,000 for continuation of theICT monitoring and evaluation study). This subcomponent extends the Ministry's ongoingeffort to equip ICT classrooms in large, eight-year basic education schools based upon a policyobjective to provide computer literacy to all teachers and students. ICT classrooms are nowinstalled in 2,802 basic education schools under the first phase of the APL. The second phaseof the APL will provide ICT classrooms in an additional 3,000 schools (4,002 classrooms).Activities under the program include: countrywide provision of ICT classrooms to ensure equalaccess to technological capabilities and connectivity regardless of geography (65 percent of the3000 basic education schools are in sub-provinces and rural areas); expanding access and useof the Internet, and improved monitoring and evaluation of computer literacy achievements.While attitude surveys of parents, teachers, and administrators were conducted under the firstphase of the APL on the use of the ICT classrooms, a formal evaluation on the use of ICT inthe schools is being implemented. It will examine five key areas of ICT use: in-service teachertraining;formator selection, training and operational duties; ICT classroom utilization byformators and classroom teachers; classroom teacher ICT usage; role of the principal inencouraging ICT usage; and ICT basic skills audit of teachers and students. The results of thisevaluation will be used in fine-tuning ICT activities during the Program. Also, the evaluationwill be conducted regularly in the second phase of the APL. In addition a consultancyassignment will be undertaken to integrate ICT more effectively into classroom teaching andlearning.

Under the first phase of the APL, MONE finalized bidding documents for equipping the ICTclassrooms, and for procurement of off-the-shelf instructional and office software for the ICTclassrooms (including some instructional software that was unavailable for the 2,802 schoolsin the first project). This was a trigger for moving to the second phase of the APL. The ICTclassrooms are now equipped with servers, personal computers, multimedia instructionalsoftware, Internet access, and overhead projectors. The configuration and amount ofequipment varies depending on the size of the school. Under the first phase of the APL, threetypes of schools have been configured with ICT classrooms, and this will continue under thesecond phase of the APL. As with the first phase of the APL, administrative offices andteachers' rooms will also be equipped. The selection of basic education schools to be equippedwith ICT classrooms under the second phase of the APL has followed the same process andcriteria as in the fist phase of the APL. The list of schools has been agreed with the Ministry.Implementation of the classrooms is planned during the 2003-2004 school year.

The first phase of the APL provided training to students and in-service training for teachersandformators in ICT use and applications, aimned at computer literacy only. The second phaseof the APL will include this objective in the next 3,000 schools, and attempt to measure it, aswell as look at the Intemet as an alternative way of individualized learning, distributing bothcurricula and extra-curricula content, and allowing for interaction through e-mail betweenteachers and pupils and between pupils. A key feature of this approach will be to develop aWeb-based portal as on online entry point to a comprehensive array of information and

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services for teachers,formators, administrators, students and the wider commnunity associatedwith the Basic Education Program. The portal will contain educational content such as lessonplans, online interactive curriculum content, an archive of past examinations and a wide rangeof e-learning content. It will provide a range of communication services to teachers andstudents to allow them to share infornation and to discuss topics of interest in a secure andsupportive environment. The portal will also contain materials of relevance to adult learners,particularly those participating in after-school computer literacy activities. It is envisaged thatthe portal will be developed in such a way as to facilitate its expansion after the completion ofthe second phase of the APL. Consulting services for the portal will be initiated by EGITEKwith terms of reference satisfactory to the Bank.

MONE is a very large organization with a variety of information systems and it needs tostrengthen educational management information and analysis for this and subsequent phases ofthe Basic Education Program. In order to improve MONE's information management capacityand support ongoing educational management information system development, the project willsupport an investigative study for a Decision Support System (DSS).

One lesson of the first phase of the APL was that greater integration and coordination needs totake place between civil works contractors and computer equipment suppliers. Many hardwaresuppliers ended up carrying out additional civil works, such as repairing furniture and movingpower sockets in order to install the computers. The fact that multiple contractors wereinvolved in preparing the ICT classrooms under the first phase of the APL led to confusionwithin the school as to who was responsible when problems arose with power and wiring,preparation of the ICT classroom (floors, painting etc.), furniture installation, air conditioningand additional security features. During the second phase of the APL, civil works to ICTclassrooms will be part of the ICT supply and installation contract. This consultancy willcomprise two components, first supervision of civil works and second supervision of goods andtheir installation. The quality of the civil works will be checked, where necessary corrected,and approved before the equipment will be delivered and installed. Subsequently, the quantityand quality of installed equipment will be checked in addition to their correct configuration.

The second phase of the APL will begin to engage students and teachers more fully with use ofthe Intemet for pedagogical purposes. Under the first phase of the APL, 2,802 Basic Educationschools were provided with Intemet connectivity via dial-up modem for one year. Onceprovision of Internet services to the schools--both Intemet Service Provider (ISP) and dial-upcosts--expired, the schools had to pay the annual ISP charges and ongoing call charges if theywished to use the Internet in the ICT classroom. The majority of schools did not re-sign acontract with their ISP. Many schools have had problems paying recurrent telephone costs.Connectivity, via normal dial-up, is slow. Under APL II Intemet connectivity will be providedfor three years to the schools. At the same time, MONE is looking into options for higherbandwidth connectivity such as leased line or satellite connections. MONE is keenly aware ofthe situation in which most schools cannot use the Internet because they cannot afford thetelephone bill and that more robust connectivity is required for pedagogical uses. For FY03,MONE will deploy its best resources to include resources for recurrent Intemet costs for the7,000 ICT classroom schools and the 22,854 rural schools under the first phase of the APL.And a Joint Working Group of the Ministries of National Education and of Transportation isexamining the costs and feasibility of other telecommunications infrastructure for all schools.

If then all savings in the procurement of ICT hardware and software for 3,000 BEP schools

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during the second phase of the APL, these could be used to support broadband Internetconnectivity. The Bank will be willing to consider utilizing any savings to support MONE'sefforts to provide affordable and stable Internet access under the Project.

Educational Materials Provision. (Estimated loan financing US$3.62 million) The firstphase of the APL is financing the provision of a simple package of educational materials to all30,000 rural basic education schools. The second phase of the APL will extend that initiativeto 4,000 schools in low-income areas around large cities (gecekondu areas), 800 pre-schoolclasses and 1,340 schools serving children with special needs. The materials to be provided foreach rural and schools in gecekondu areas have been determined by MONE and the PCCbased on deficiencies in educational materials in relation to Ministry norms for reading books,reference books, maps, and other basic educational materials. The materials have also beendeternined on the basis of procurement problems identified in the first phase of the APL Thisactivity is progranmmed for implementation during the initial year of Phase II implementation,and will provide basic educational materials in accordance with the available resources.Materials for preschools have been determined by MONE and a final list is being agreed withthe World Bank. Again, this list will be based on educational needs and ease of procurement.Finally, the identification of education materials for the education of children with specialneeds is a highly specialized and technical undertaking. MONE is developing its list inconsultation with World Bank experts and will utilize international shopping to procure thesematerials.

Preschool Education and Nonformal Early Childhood Program. (Estimnated loan financing,US$3.67 million) This activity will support both formal preschool education and nonformaloutreach programs supporting early childhood education for mothers of young children to helpexpand coverage from the current low level of 11 percent of the 48-72 months cohort. Themain aim of this component is to develop preschool education to imnprove childrens'performance in basic education. Priority will be given to parents and children in provinceswith low schooling rates and high imrnmigration. The formal preschool portion will includefacilities construction and furnishing, provision of educational materials, and preschool teachertraining in order to expand and upgrade the preschool education programs that are offeredwithin basic education schools or in free-standing public preschools. The outreach portionwill support an' NGO partnership in implementing nonformal early childhood education whichwill extend these programs throughout the country.

Special Needs Education (Estimated loan financing, US$3.79 million). Special education inTurkey is intended to integrate students with special needs into society and to provide themwith an occupation by meeting their education needs in the best way. Turkey provides specialeducation to children and young people in five groups: the sight impaired, the hearing impaired,the physically impaired, the mentally impaired and children with long-term illnesses. Childrenand young people with multihandicap or emotional/behavioral problems do not get the samesupport, and there is no training for teachers to deal with their problems. The capacity of thespecial needs education in Turkey is limited and too few students get access to professionalhelp.

This activity will support the development of a comprehensive policy paper for special needseducation, including development of facilities, ICT equipment, educational materials and ofin-service training. Forty special schools will be renovated and additional buildings will beconstructed in 20 of the special schools for the mentally retarded.

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Seventy special schools for those mentally retarded children capable of being educated and forthe hearing disabled will be equipped with 770 computers (11 per school) and the necessarysoftware to assist student learning. Half of the schools for the hearing disabled will organizethe computers in ICT classrooms, and the other special schools will place their computers inregular classrooms, clusters of 2-3 in each room. Forty primary schools within hospitals willbe equipped with computers and printers.

All the schools for the visually impaired will be equipped with 900 Braille Typewriters and allthe schools for the hearing disabled will be equipped with a total of 65 group hearing devices.One thousand three hundred and forty (1,340) classrooms, will be provided with educationalmaterials; 700 in special educational classes in regular primary schools and 640 in preschooland primary classrooms in the special schools for the mentally retarded and in the schools forthe hearing disabled students.

In addition priority will be given to pilot interventions integrating students with special needsinto ordinary education. This in-school portion will include facilities, rehabilitation provisionof educational materials and training of teachers in classrooms receiving the integratedstudents.

The evaluation of this component will involve assessing the utilization of the ICT and theeducational materials and an assessment of the in-service training. The evaluation of the ICTand the educational materials will assess the number of users, the time spent, and the quality ofthe use. This evaluation will also include the teachers skill and competence in using the ICTfor special educational purpose. The in-service training will be evaluated on the results of thecontent-development of the different courses and how the training was delivered. Thisevaluation will put emphasize on the uses made by participants of the training provided.

Project Component 3 - US$ 20.58 millionBank Financing US$16.05 millionDelivery of Basic Education Program

This component comprises four subcomponents: In-service training for ICT; in-service training inpreschool education; inservice training in special needs education and mother and child education.

In-service Training for ICT (Estimated loan financing US$13.57 million) Under the secondphase of the APL, there will be a more structured approach to ICT in-service teacher training.The revised program will focus on two areas--computer literacy and on integrating the existingsoftware and hardware into classroom teaching and learning activities. Terms of referencehave been finalized for a Turkish University or a private consultancy firm to work with theappropriate MONE line units to design and deliver a set of ICT training materials to improveICT utilization. They will develop a range of inservice courses and accompanying materials toimprove the utilization of the existing ICT resources, such as educational and Office software,the Intemet and hardware devices byformators and classroom teachers. This consultancy willidentify and develop online and offline materials for use for teachers, administrators andformators.

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The ICT training consultants (to be paid under the first phase of the APL), working withEGITEK and the In-Service Training Department, will develop a range of materials includingprinted teachers' manuals, CDs, television programs, and other online training materials. Inaddition to developing the materials the consultants will deliver the in-service training toteachers from ICT classroom schools (31,500), teachers from rural schools with ICT (22,280),inspectors (3,000), school administrators (5,800), school formators (7,000) and masterformators (250). The consultants will develop customized courses for each group to meet theirvaried needs.

In addition, to the ICT training provided by the consultants, MONE will continue to deliverICT in-service. Under first phase of the APL, MONE identified 250 master teachers, orformators, to deliver in-service training to school basedformators, who in turn trained staffwithin their own school. During the first phase of the APL master trainers were located intheir schools and could only offer training outside of school hours. Under second phase of theAPL, they will be located in in-service training centers at the provincial and sub-provinciallevel. These master trainers will act as representatives of MONE and EGITEK in the localregions by providing both pedagogical and technical assistance to schools with ICTclassrooms. With regard to in-service, the master trainers will coordinate and deliver localICT training to teachers in their region. Where possible, teachers will receive this training intheir own ICT classroom. Teachers from village schools, where the numbers of teachers is toosmall to conduct cost-effective training, will also receive ICT training and it will be deliveredin teachers' guest houses by the master trainers.

A key component of MONE's in-service strategy will be the development of an e-leamingportal (see Project Component 2). This portal will contain both pedagogical content ande-learning training materials. The online training materials will include a range of courses formaster trainers, school based trainers, teachers and students, which can be completed in theirown time, either in school or at home. The portal will also facilitate the exchange of additionaltraining materials, such as Power Point presentations and training notes among trainers, whilealso providing them with an effective communication platform for sharing ideas and resources.

Master trainers will receive annual intensive in-service training aimed at maximizing the use ofthe ICT classrooms in the second phase. To help maintain incentives and to expose mastertrainers to international best practice, MONE will offer study trips to the most dynamic andcompetent master trainers. These study trips will allow Turkish teachers to observe bestpractice in the area of ICT utilization so that they can bring these ideas home and apply themin their own schools.

In-service training in preschool education (Estimated loan financing US$1.58 million) willbe provided for training of 4,500 pre-school teachers in order to expand and upgrade thepre-school education programs that are offered within basic education schools or infree-standing public preschools.

In-service training in special needs education (Estimated loan financing US$0.90 million)will be provided for 7 days to regular teachers, teachers in special needs education, counselors,administrators, inspectors, instructors and principals. This training will include differenttopics for the different groups of professionals: information about students with different kind

of disabilities, teaching special education to these groups of students with special needs, use of

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measurement materials, innovation and management in special education.

Mother and Child Education - this activity will support outreach programs to help expandnonformal early childhobd programs. The main aim of this component is to expand a networkof mother and child education programs in current 59 provinces to all (81) provinces ofTurkey. The main aim is to improve children's readiness at school entry. It is to be targeted torural areas and low-income areas around large cities (gecekondu areas) with low preschooleducation coverage, high proportion of children from educationally deprived households -e.g.households with illiterate parents and areas where children typically start school with littleproficiency in the Turkish language. A set of educational materials will be provided tomother-child instructors and mothers. Information Education and Communication (IEC)pamphlets, posters, and videos will be produced for dissemination to increase demand for theseservices. The Ministry will collaborate with NGOs, such as MOCEF - in implementing themother and child education program throughout the country.

Project Component 4 - US$1.75 millionBank financing US$1.43 millionProject Implementation Support

This component provides support to continue strengthening the Ministry's project implementation capacity- particularly in the areas of project management, reporting and communication, procurement managementand financial management by the PCC. Under the first phase of the APL the Ministry elected not to use allthe resources that were initially provided for consultant implementation support, on the grounds that thePCC had the capacity to implement the Project on a timely basis. However, in the course of implementingthe first phase of the APL, the Ministry agreed that there was a need to firther strengthen the PCC'sproject management, procurement management and financial management and reporting andcommunication capacity. Under the first phase of the APL four consultants in the areas of: projectmanagement, procurement management (2) and financial management are being hired to support the PCCduring the last year of project implementation. The second phase of the APL provides for furtherprofessional consultant support to complete the upgrading of the PCC's management capacity in the projectmanagement, procurement, financial management and reporting and communication areas. Additionally,under the second phase of the APL a budget for "Incremental Recurrent Expenditures" will be provided forthe PCC, to enable the PCC to implement its activities in a timely and efficient manner.

Project Component 5 - US$2.13 millionBank financing US$1.70 millionMonitoring, Evaluation and Review

Under the first phase of the APL, the Ministry carried out monitoring and evaluation of the variousactivities under the Basic Education Program through use of information from various sources. Theseincluded: a) data from the State Institute of Statistics and the Council for Research, Planning andCoordination; b) data from the Ministry's MIS system; c) results of student achievement testing; d)systematic and consultative meetings with inspectors, provincial and sub-provincial directors of education;and e) results from evaluation studies and feedback from surveys covering critical Program areas. In anumber of important areas, the Ministry used this feedback to refine the design of the Basic EducationProgram as implementation progressed. Under the second phase of the APL, the Ministry will expand andimprove this monitoring and evaluation model. It will also disseminate the findings of monitoring andevaluation more actively and make the information from the different monitoring, evaluation and reviewactivities accessible to all stakeholders in the education system (students, teachers, parents, inspectors and

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administrators from all levels, politicians, university staff involved in education, etc.).

Among other improvements, information on Program activities and outcomes will be publicized on theMinistry's webpage. In addition, MONE will conduct regular dialogue between the levels of the system(Ministry and the provinces, provinces and subprovinces, subprovinces and schools, principals andteachers) and develop materials and measures to help teachers and administrative staff improve the qualityof education based on the monitoring, the student achievement testing and results of the evaluation studies.Student achievement testing will be expanded and strengthened under the second phase of the APL, and theresults of these tests will be made available to the public on the Ministry's webpage. Using the Ministry'sown budget resources, the Education Research and Development Department (ERDD) will continue studentachievement testing in science, mathematics, social science and Turkish language in grades 4, 5, 6, 7 and 8.

By November 2002, the Ministry of National Education will have established a baseline for studentperformance in these subject areas and for these grades. In 2002/2003, ERDD will extend the number ofachievement tests and pilot-test performance in computer literacy/e-learning and English language for the

same grade. ERDD will then organize an intemational symposium to evaluate the quality of theirachievement testing and evaluation studies. In order to strengthen the ERDD's capacity to carry out theactivities on student achievements, the second phase of the APL will finance equipment, training, studytours and consultant services. In addition, Turkey, represented by ERDD, is participating in PISA - aninterational comparative study on student literacy in reading, mathematics and science conducted andreported on every third year by OECD.

Under the first phase of the APL, the Ministry has carried out social, institutional, and economic evaluationstudies of basic education schools. The second phase of the APL will support an updating of these studies,as well as specific studies on: a) the impact of expanded basic education school capacity on enrollments,classroom crowding, and multiple-shift use of classrooms; b) the impact and effectiveness of ICTintegration in basic education; c) the impact of preschool education on basic education participation andperformance; d) evaluation/impact studies on efficiency of special needs education initiatives; e) impactstudies on in-service training activities that are to be implemented under Phase H; and f) OECD evaluationof Basic Education in Turkey. The Ministry is committed to publicize the results of the evaluation studieson their web site. Altogether, the informnation from the Project's monitoring indicators, results from thenational and international student achievement tests and the evaluation studies (Annex I), will provideimportant feedback on the learning impacts of the sizeable investments under the Program.

Finally, MONE will organize two reviews of progress on implementation of basic education each year.One of these reviews will examine achievements on a number of indicators of progress (to be selected).The second will examine progress on one identified area of interest and on budget performance and plans.

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Annex 3: Estimated Project CostsTURKEY: Second Basic Education Project

Extending Basic Education Coverage 82.72 34.04 116.76Improved Basic Quality 44.76 129.42 174.18Delivery of Basic Education 19.07 0.00 19.07Project Implementation Support 1.41 0.17 1.58Monitoring and Evaluation 1.47 0.5I I1.98Total Baseline Cost 149.43 164.14 313.57Physical Contingencies 13.61 16.12 29.73Price Contingencies 5.37 5.19 10.56

Total Project Costs' 168.41 185.45 353.86Front-end fee 3.00 3.00

Total Financing Required 168.41 188.45 356.86

Civil works 90.64 38.86 129.50Goods 48.67 140.21 188.88Consultant Services 7.63 6.06 13.69In-service Training 20.58 0.00 20.58Training 0.15 0.33 0.48Incremental Operating Costs 0.73 0.00 0.73

Total Project Costs 168.40 185.46 353.86Front-end fee 3.00 3.00

Total Financing Required 168.40 188.46 356.86

Identifiable taxes and duties are O (USSm) andthe total projectcost, net oftaxes, is 356.86 (US$m). Therefore, the project cost sharing ratio is 84.07% oftotal project cost net of taxes.

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Annex 4 Economic Analysis Update

TURKEY: Second Basic Education Project

Turkey's investment in its people through the provision of eight years of basic education instead of

five is likely to continue to benefit the country in a number of ways. Clearly, there will be benefits to the

economy. For example, a one-year increase in the average educational attainment of the labor force was

reported to be associated with a 0.21 percent increase in GDP. Clearly, also, Turkey's economic growth

within the broader European community is more likely to be achieved with a well-educated labor force.

There are also benefits to female basic education including lower fertility, and better nutrition and child

health. There are also significant social benefits such as improved social cohesion, a more informed

electorate and a broader appreciation of Turkey's position in a global economy. These benefits are likely to

be accelerated through the investment in computer education for basic education. In order to compete in

the global economy, it will be critical for Turkey's young people to have access to computer literacy and the

ability to utilize global information through the internet.

The economic analysis conducted for the first APL justified the investment in expanded basic

education on a number of grounds. First, cost-effectiveness analysis calculated the annual cost of a student

in different basic education schools, including the annualized costs of investment expenditures, salaries,

bussing maintenance and other costs and concluded that, while large schools were less costly, small schools

wete appropriate in some areas to encourage children's participation. The analysis conducted for the firstAPL also examined the Benefit/cost ratios and concluded that there are continuing high rates of return to

basic education at the micro- and macro-levels. At the same time earnings of women who have completed

basic education were reported to be 52 percent higher than those who had not.

The analysis also examined the benefits of introducing computer literacy and concluded that the

estimated benefit/cost ratio was between 10.5 and 26.5 and the present net value of investment in ICT

education ranged from US$6.6 billion to US$16.6 billion. These benefits are unlikely to have changed over

the four years of implementation of the basic education program.

Finally, the analysis conducted for the first phase of the APL also examined the fiscal impact of the

investment in basic education (including the Bank's loan) and concluded that the additional incremental

costs would be over $200 million annually against the annual aggregate incremental recurrent costs of the

entire program of over US$1 billion annually. The analysts concluded that continued broad public supportfor the program would be necessary in order to mobilize and sustain these additional resources. The

extension of the basic education law (4306) and the associated additional financing from 2000 to 2010 is

one indication of this support. Fiscal analysis conducted for the second APL (and reported on in the body

of the PAD) shows that the Government is committed to financing basic education and has the resources to

meet most of its needs. However, there is a financing gap which the loan and support from other external

financing agencies (including the EU) is expected to fill.

In conclusion, there continue to be compelling economic and social arguments for investing in basic

education in Turkey at this time.

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Annex 5: Financial Summary

TURKEY: Second Basic Education Project

Years Ending

Yeari Year2 Year3 | Year4 Year5 F Year6 Year7l'otal FinancingF'equiredProject CostsInvestment Costs 34.6 222.9 85.6 9.9 0.0 0.0 0.0

Recurrent Costs 0.4 0.2 0.1 0.0 0.0 0.0 0.0l'otal Project Costs 35.0 223.1 85.7 9.9 0.0 0.0 0.0

Front-end fee 3.0 0.0 0.0 0.0 0.0 0.0 0.0l'otal Financing 38.0 223.1 85.7 9.9 0.0 0.0 0.0

FinancingIBRD/IDA 31.7 187.7 72.1 8.5 0.0 0.0 0.0Government 6.3 35.4 13.7 1.5 0.0 0.0 0.0

Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0ProvincIal 0.0 0.0 0.0 0.0 0.0. 0.0 0.0

Co-financlers 0.0 0.0 0.0 0.0 0.0 0.0 0.0Liser Fees/Beneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0Cther 0.0 0.0 0.0 0.0 0.0 0.0 0.0Total Project Financing 38.0 223.1 85.8 10.0 0.0 0.0 0.0

| Year I Year 2 Year 3 I Year 4 | Year 5 | Year 6 | Year 7l1otal FinancingFtequiredF'roject Costs

Investment Costs 34.6 222.9 85.6 9.9 0.0 0.0 0.0Recurrent Costs 0.4 0.2 0.1 0.0 0.0 0.0 0.0

lTotal Project Costs 35.0 223.1 85.7 9.9 0.0 0.0 0.0Front-end fee 3.0 0.0 0.0 0.0 0.0 0.0 0.0

l'otal Financing 38.0 223.1 85.7 9.9 0.0 0.0 0.0

FinancingIBRD/IDA 31.7 187.7 72.1 8.4 0.0 0.0 0.0Govemment 6.3 35.4 13.6 1.5 1.5 1.5 1.5

Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0lUser Fees/Beneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0Total Project Financing 38.0 223.1 85.7 9.9 1.5 1.5 1.5

Alain assumptions:

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Annex 6: Procurement and Disbursement Arrangements

TURKEY: Second Basic Education Project

Procurement

L. Procurement:

Procurement of goods and works financed by the World Bank will be done in accordance with the World

Bank Guidelines: Procurement under IBRD Loans and IDA Credits (issued in January 1995, Revised

January and August 1996, September 1997 and January 1999). Consulting services, technical assistance

and in-service training financed by the World Bank will be done in accordance with the World Bank

Guidelines: Selection and Employment of Consultants by the World Bank Borrowers (issued in January

1997, revised September 1997 and January 1999). The Bank's Standard Bidding Documents and Request

for Proposals will be used. A General Procurement Notice will be published in the Development Business

of the United Nations in September 2002.

1. ImDlementation:

Implementation of the Project is the responsibility of the Ministry of National Education (MONE). Overall

management of the Project will be carried out by the Project Coordination Center (PCC) established to

manage the Bank-financed part of the Basic Education Program. The general directorates and the

provincial directorates of the Ministry will be responsible for the implementation of the Project and PCC

will ensure the coordination among related implementation units of the Ministry.

Procurement under the World Bank funded projects is the responsibility of the PCC, formed by the

approval of the Minister of National Education for the implementation of the first Phase. Therefore, for the

second Phase, PCC will also be responsible for the Project implementation including coordination,

procurement, disbursement, maintaining the Project accounts and overall coordination of implementation.

The PCC has a separate office and there are 35 staff in PCC in total. The existing PCC staff includes a

Project director appointed on September 2000, 6 procurement specialists, 6 financial management and

disbursement specialists, 7 customs follow-up experts, 2 training specialists, 2 information technology

experts and the administrative staff.

All bidding documents for the procurement of Bank-financed goods, works and services will be prepared by

PCC. Goods and services will be procured centrally by PCC whereas the procurement of works will be

implemented by the Provincial Directorates of the Ministry under the general guidance and oversight of the

PCC.

The related general directorates and departments within the Ministry are responsible for i) preparing the

technical parts of the procurement documents, such as scope of works, Terms of References, technical

specifications, delivery sites, bill of quantities, etc. and ii) evaluating the technical parts of the

proposals/bids related with their field of activity.

81 provincial directorates are responsible for tendering the construction works for the rehabilitation of

schools, refurbishment of classrooms etc. by using the standard documents provided to them and

supervising these construction contracts with the help of construction supervision consultants.

A Project Launch Workshop will be held in September 2002 to reaffirm the PCC's and implementation

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units' understanding of the procurement procedures under the Basic Education Project.

mll. Procurement Arrangements:

The following procurement methods will be applicable for the procurement of goods, works and services.

(a) Procurement of Goods:

The goods to be financed by the Bank include the following:

i) supply and installation of ICT hardware and software for ICT classrooms in basic education schools andin schools for children with special needs,ii) supply of educational (instructional) software;iii) provision of educational materials for basic education schools in rural areas and low-income areasaround large cities (gecekondu areas);iv) provision of educational materials for preschool and non-formal education;v) provision of Braille typewriters and hearing devices in schools for children with special needs;vi) hardware equipment necessary for establishment of education portal for the Mimstry; andvii) office equipment for the implementation of Project for MONE and PCC needs to assist with theimplementation of the Project.

Intemational Competitive Bidding (ICB): Contracts for Goods each estimated to cost $300,000 or moreequivalent, will be procured by ICB in accordance with Bank's procurement Guidelines.

National Competitive Bidding (NCB): Contracts for Goods each estimated to cost less than $300,000equivalent and up to an aggregate amount of $5,000,000 equivalent will be procured by NCB inaccordance with the Bank's Procurement Guidelines.

Intemational Shopping (IS): The contracts for the procurement of readily available off-shelf goodsestimated to cost less than US$100,000 per contract will be procured through IS on the basis of at leastthree quotations obtained from suppliers from two eligible source countries in accordance with the Bank'sProcurement Guidelines. The aggregate value of IS contracts is estimated at about US$1.00 millionequivalent.

National Shoping (NS): The contracts for the procurement of readily available off-shelf goods estimatedto cost less than US$50,000 per contract will be procured through NS on the basis of at least threequotations obtained from domestic suppliers in accordance with the Bank's Procurement Guidelines. Theaggregate value of NS contracts is estimated at about US$ 0.10 million equivalent.

Direct Contracting (DC): The procuremnent of goods estimated to cost less than US$100,000 per contractup to an aggregate amount US$ 0.5 million equivalent, which (i) would be an extension of an existingcontract, (ii) must be purchased from the original supplier to be compatible with the existing equipment,(iii) are of a proprietary nature, or (iv) must be procured from a particular supplier as a condition of aperformance guarantee, with the Bank's prior agreement, will be done through DC in accordance with theBank's Procurement Guidelines.

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(b) Procurement of Works:

The works to be financed by the Bank include the following:

i) renovation and extension of basic education schools in rural areas and low-income areas around largecities (gecekondu areas);ii) construction of preschool classrooms at existing basic education schools; andiii) renovation and extension of schools for children with special needs.

International Competitive Bidding (ICB): The contracts for the procurement of works estimated to costUS$5,000,000 or more each, will be procured through ICB in accordance with the Bank's ProcurementGuidelines.

National Competitive Bidding (NCB): The contracts for the procurement of school rehabilitation,extension and upgrading works estimated to cost less than US$5 million per contract will be procuredthrough NCB in accordance with the procedures acceptable to the Bank and also in accordance with theBank's Procurement Guidelines. The aggregate value of NCB contracts is estimated at about US$120.00million equivalent.

Procurement of Small Works (MW): The contracts for the procurement of school rehabilitation, extensioriand upgrading works estirmated to cost less than US$100,000 per contract will be procured underlump-sum, fixed-price contracts awarded on the basis of three quotations obtained from qualified domesticcontractors in response to written requests. The aggregate value of small works contracts is estimated atabout US$6.00 million equivalent.

(c) Procurement of Consulting Services:

The consulting services to be financed by the Bank include the following:

i) in-service training for primary education teachers;ii) in-service training for preschool and special education teachers and non-formal edtication;iii) mother and child education;iv) ICT integration in basic education;v) strengthening project management implementation;vi) construction management and supervision;vii) monitoring and evaluation;viii) design and development of education portal with operation and maintenance support;ix) investigation study for decision support system; andx) supervision and management services for school construction works and installation of ICT classrooms.

Ouality and Cost Based Selection (OCBS): The consulting services for in-service training for teachers andpreschool teachers and for monitoring and evaluation to be contracted to consulting firms will be procuredon the basis of QCBS procedure in accordance with the Bank's Consultants Guidelines.

Selection Based on Consultants' Qualifications (CO): The consulting services for in-service training forteachers and preschool teachers for the delivery of the Basic Education Program and for monitoring andevaluation to be contracted to consulting firms estimated to cost less than US$100,000 will be procured onthe basis of CQ procedure in accordance with the Bank's Consultants Guidelines. The aggregate value of

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CQ contracts is estimated at about US$0.10 million equivalent.

Individual Consultants (IC): The consulting services for strengthening project management andimplementation to be contracted to individual consultants will be procured on the basis of IndividualConsultants in accordance with the Bank's Consultants Guidelines. For individual consultants to be hiredfor more than six months duration, the positions will be advertised for expressions of interest ininternational and/or national media depending on the expertise required and selection will be based oncomparison of qualifications of those expressing interest. The aggregate value of IC contracts is estimatedat about US$0.85 million equivalent.

Single Source Selection (SS): The consulting services for the expansion of Mother and Child EducationProgram under a contract estimated to cost less than US$0.5 million equivalent and for the strengthening ofthe Ministry's capacity to implement the said program through training programs under a contractestimated to cost less than US$0.07 million equivalent will be procured from Mother and Child EducationFoundation (MOCEF) through Single Source selection in accordance with the Bank's Consultant'sGuidelines. MOCEF has developed and validated the original methodology, educational materials, trainermanuals and training materials for beneficiaries. Since 1994, MOCEF has provided technical assistance toMONE for the gradual expansion of the Program to 81 provinces in Turkey.

(d) Training and Study Tour Expenditures:

The PCC will prepare detailed training programs for every six months in consultation with theimplementation units of the Ministry. The Training Programs will contain time schedules for workshops,seminars, study tours and travels etc. including detailed information on the content, itinerary, location,number of beneficiaries, cost estimates for each activity, including explanation on how such training isconducive and consistent to the objectives of the Project and whether it offers the best price/quality ratio.These htaining programs will be submitted to the Bank for review and clearance before implementation.After the Bank's clearance, the program will be implemented in accordance with the agreed procedureswithout requiring the Bank's clearance of each component of the training program. The status of thetraining program will be included as part of progress reports and will be updated and/or modified as maybe mutually agreed between the Ministry and the Bank.

The training services expenditures consist of subsistence and travel (local and/or international) costsincurred by trainees, training fees, provision of training materials and handouts, trainers' fees etc. Theseexpenditures will be directly reimbursed subject to the presentation by the PCC of a Statement ofExpenditures.

(e) Procurement of In-service Training Services:

The in-service training activities will include the following:

(i) In-service training for ICT for basic education: in order to improve the utilization of software, hardwareand the intemet iri ICT classrooms, ICT courses that focus on their classroom usage by the basic educationschool teachers will be developed.(ii) In-service training for preschool education: the training courses for preschool teachers will include coreearly childhood curriculum content, drama, development of educational materials for preschools, etc.(iii) In-service training for special needs education: the training courses for special education teachers willinclude measurement instruments, development of innovative teaching methodology for students withspecial education, etc.

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In exceptional situations for the above mentioned specific in-service training programs, where a) the privatesector in Turkey has not yet developed sufficient capacity in terms of large volume (in the case of ICTtraining) and requirement of very specialized competences (in the case of special needs and preschooleducation) and b) the training has to be provided in Turkish language; the government-owned universitiesand research institutes may be contracted with the following principles:

- All in-service training activities will be advertised (nationally and/or internationally depending on the sizeof the contract) to collect expressions of interest. If there are private firms with sufficient capacity andcapability, then those firms will also be included to the shortlist, as well as government-owned universitiesand research institutes.- They may be contracted as sub-consultants to private sector firms.- They may contracted in accordance with the procedures for Single Source Selection when the case meetsthe criteria for this method of selection as set out in paragraphs 3.8 to 3.11 of the Bank's ConsultantsGuidelines.- They may be contracted in accordance with the procedures for Quality and Cost Based Selection whenmore than one of these institutions qualifies to execute the assignment and the assignment meets the criteriaset out in paragraph 3.2 of the Bank's Consultants Guidelines.- They may be contracted in accordance with the procedures for Selection Based on Consultants'Qualifications when more than one of these institutions are qualified to execute the assignment and theassignment meets the criteria set out in paragraph 3.7 of the Bank's Consultants Guidelines.- The government-owned universities, research institutes and extension agencies under the direct control ofthe implementing agency will be excluded from the provision of services.

(f) Operating Costs of PCC (Recurrent Costs):

The incremental operating costs associated with the Project include PCC staff salaries, bank charges and tomaintain Special Account These incremental operating costs will be financed by the Government.

The other operating costs including rent, operating and maintenance cost of PCC office premises (such ascommunication, electricity, heating etc.) and operating and rnaintenance cost of office equipment, stationaryand cost of advertisement for procurement under the Project will be financed through Loan proceeds.

[V. Procurement Review By The Bank:

The PCC will use the latest versions of the Bank's Standard Bidding Documents (SBD) for theprocurements financed by the Bank.

Scheduling of Procurement. Procurement of goods, works and services for the Project will be carried outin accordance with the agreed procurement plan, which will be updated as necessary and included in theprogress reports for Bank review and approval. The Bank will review the procurement arrangementsproposed by the Borrower, including contract packaging, applicable procedures, and the scheduling of theprocurement processes, for its conformity with Bank Procurement and Consultant Guidelines, the proposedimplementation program and disbursement schedule.

(a) Prior Review: The following procurement action and documentation would be subject to Prior Reviewby the Bank.

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Goods and Works: Prior review of bidding document package (including, inter alia, Invitation to Bid,Instructions to Bidders and Bid Data Sheet, General and Special Conditions of Contract, Bid Forms,Schedule of Requirements, Technical Specifications); Bid Evaluation Reports; Recommendations ofContract award and draft Contract will be conducted.

Consultant Services and In-service Training: Prior review of procurement documents and actions whichwill include:

QCBS: Prior review of (1) Consultants Short Lists (three to six consultants per assignment); (2) completeRequest for Proposal (RFP) package (including Invitation, Information to Consultants and Data Sheet,General and Special Conditions of Contract, Technical Proposal standard forms, Financial Proposalstandard forms, and draft Contract 'Agreement); (3) Terms of Reference, including description of services,consultants' reporting requirements, and required qualifications of consultants' key personnel; (4)Technical and Financial Evaluation Reports (including official minutes) and Recommendations for contractaward; and (5) Negotiated Contract will be conducted.

IC contracts of US$ 50,000 and above: Prior review of: (1) Consultants Short Lists (three to sixconsultants per assignment); (2) Draft Contract Agreernent; (3) Terms of Reference, including descriptionof services and consultants' reporting requirements; and (4) Negotiated Contract will be conducted.

IC contracts of below US$ 50,000: Prior review of: (1) selection criteria for consultants; and (2) Terms ofReference will be conducted.

The Bank's prior review of procurement action would cover the following:

(i) All ICB contracts for goods and works

(ii) First three NCB contracts for goods and works

(iii) First three Small Works contracts

(iv) First three IS and NS contracts for goods

(v) All contracts awarded under Direct Contracting Procedures

(vi) All contracts with consulting firms estimated to US$ 100,000 or more each

(vii) All contracts with individual consultants estimated to US$50,000 or more each

(viii) All contracts for services awarded under Single Source Selection

(ix) The Terms of Reference for all consultant contracts with consulting fimns and individuals

A complete set of procurement documentation, as specified above, for contracts which require prior review,will be submitted to the Bank before taking any action for review and clearance by the Bank's ProcurementSpecialist and the relevant technical staff.

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(b) Post Review: The procurement documents for all other contracts will be subject to the Bank's postreview on a random basis, one in five contracts. Post review of the procurement documents will normallybe undertaken during the Bank supervision mission or as the Bank may request to review any particularcontracts at any time. In such cases, the PCC will provide the Bank for its review the relevantdocumentation including bidding documents issued to the bidders, letter of invitation to quote, minutes ofbid opening, bid evaluation reports, copies of bid proposals, signed contracts etc. The post review will beconducted by the Bank's Procurement Specialist. The outcome of the post review will be communicated bythe Bank to the PCC expeditiously.

V. Procurement Monitoring and Reporting:

The PCC will keep a complete and up-to-date record of all procurement documentation and relevantcorrespondence in its files, which will be reviewed by the Bank staff during supervision missions. TheProcurement Plan for the Project will be prepared by the PCC and furnished to the Bank for its review andapproval in accordance with the provisions of the Bank's Procurement Guidelines. The Procurement Plan,which indicates the procurement arrangements, contract 'packaging, applicable procurement method,scheduling of procurement process, estimated cost etc, will be updated annually by the PCC. Allprocurements will be undertaken in accordance with the Procurement Plan and is attached this annex.

Monitoring reports on procurement progress will be submitted as part of progress reports on programimplementation. The report will include all information related with the completed, on-going and plannedcontracts.

VI. Action Plan To Build Up The Agency's Capacity:

The following actions need to be taken in the order below:

- The procurement file containing the up to date procurement documents such as guidelines, templates ofprocurement notices, standard bidding documents for the procurement of works and goods under ICB,NCB, MW and IS/NS methods, standard request for proposal document for the consultants services,standard consultants contracts for large and small assignments and for time based and lumps-sumpayments, evaluation report formats are prepared in hard copy and in electronic version on diskettes andprovided to the PCC staff during this capacity assessment. Although PCC are familiar with the Bank'sdocuments, the latest versions of the documents will be used in the new Project and PCC need to use theseversions for the preparation of procurement documents to be carried in the first year of the new Project.The PCC will translate into Turkish the related procurement documents such as National CompetitiveBidding and Minor Works procurement documents and provide the translations to the provincialdirectorates.

- PAS will organize a procurement familiarization seminar for the Project related staff including new PCCstaff and the staff from other related departments of the Ministry who will be potentially involved indifferent aspects such as technical, financial, legal aspects of the Project. This seminar will serve to bothintroduction of Bank's procurement procedures and updating their previous knowledge. The seminar willbe scheduled during the Project Launch Workshop to be held on September 2002.

- MONE will hire two experienced procurement consultant before loan implementation of the second phaseof APL. These two positions were advertised in March 2002 and it is expected to get these consultants inplace by May 2002. The procurement consultants will have at least 3 years experience in Bank financedprojects and will work very closely with the procurement staff of the PCC mainly for the preparation of

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bidding documents for the large procurements. The CVs of the procurement consultants will be reviewedand approved by the Bank.

- The Ministry and the Bank will create incentives for the procurement staff to encourage them to workeffectively and efficiently for the Project. In addition to the procurement training, the PCC staff will betrained to improve their English speaking, reading and writing skills, since almost all of the largeprocurements are carried out under ICB and all documentation and communications will be done inEnglish.

- In order to overcome the problems faced at the bid evaluation stage; qualified and experienced staff of theMinistry, especially those who have some knowledge of the Bank's procurement and evaluation procedureswill be appointed as evaluation committee members. At the beginning of each procurement, evaluationcommittee members will be appointed by the finalization of the bidding documents and they will startreviewing and becoming familiar with the bidding document and evaluation methodology stipulated in thebidding document Then, before the receipt of bids, PCC staff will meet with the evaluation committeemembers to explain the Bank's evaluation methodology in detail.

- To avoid long delays the Ministry's intemal approval procedures will be reviewed and delegation ofapproval authority up to certain amount will be considered.

- fhe existing electronic filing and electronic communication capacity of the PCC should be improved.

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Procurement methods (Table A)

Table A: Project Costs by Procurement Arrangements(US$ million equivalent)

1. Works 0.00 I118.12 5.90 0.00 124.02

(0.00) (100.10) (5.00) (0.00) (105.10)

2. Goods 184.27 4.60 0.95 0.00 189.82

(155.50) (3.90) (0.80) (0.00) (160.20)

3. Services 0.00 0.00 15.15 0.00 15.15

Consultancy Services (0.00) (0.00) (11.82) (0.00) (11.82)

4. Inservice Training 0.00 0.00 23.24 0.00 23.24

(0.00) (0.00) (18.78) (0.00) (18.78)

5. Front-end fee 0.00 0.00 3.00 0.00 3.00(0.00) (0.00) (3.00) (0.00) (3.00)

6. Training 0.00 0.00 0.50 0.00 0.50(0.00) (0.00) (0.50) (0.00) (0.50)

7. Incremental Operating Cost 0.00 0.00 1.13 0.00 1.13(0.00) (0.00) (0.60) (0.00) (0.60)

Total 184.27 i22.72 49.87 0.00 356.86

._________________________ (155.50) (104.00) (40.50) (0.00) (300.00)

"Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.

2ncludes civil works and goods to be procured through national shopping, consulting services, services ofcontracted staff of the project management office, training, technical assistance services, and incrementaloperating costs related to (i) managing the Project, and (ii) re-lending project funds to local governmentunits.

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Table Al: Consultant Selection Arrangements (optional)(US$ million equivalent)

A. Firrns 36.92 0.00 0.0 0.00 0.04 0.60 0.00 37.56

(28 .80) (0.00) (00) (0.00) (0 .03) (0.47) (0.00) (29 .30)

B. Individuals 0.00 0.00 0.'00 0.00 0.00 0.83 0.00 0.83

(0.00) (0.00) (0.00) (0.00) (0.00) (0.65) (0.00) (0.65)

Total 36.92 0.00 0.00 0.00 0.04 1.43 0.00 38.391 (28.80) (0.00) (0.00) (0.00) (0.03) (1.12) (0.00) (29.95)

1\ Including contingencies

Note: QCBS = Quality- and Cost-Based SelectionQBS = Quality-based Selection.SFB = Selection under a Fixed BudgetLCS = Least-Cost SelectionCQ = Selection Based on Consultants' QualificationsOther = Selection of individual consultants (per Section V of Consultants Guidelines), SingleSource SelectionN.B.F. = Not Bank-financedFigures in parenthesis are the amounts to be financed by the Bank Loan.

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Prior review thresholds (Table B)

Table B: Thresholds for Procurement Methods and Prior Review

1. Works >100 NCB 6.00

. ~~~~~~~<100 MW 0.30

2. Goods >100 ICB 183.50

<300 NCB 0.90

<100/50 IS/NS 0.10

<100 Direct Contracting 0.50

3. Services >100 QCBS 36.92

950 Ind 0.15

SS 0.60

4. MiscellaneousS. Miscellaneous6. Miscellaneous

Total value of contracts subject to prior review: 228.97

66%

Overall Procurement Risk Assessment

High

Frequency of procurement supervision missions proposed: One every 6 months (includes special

procurement supervision for post-review/audits)

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Overall Procurement Risk Assessment

hard copy and electronically before the Loan Effectiveness. 2. The PAS shall organize one dayprocurement familiarization seminar for the PCC staff during the Project Launch Workshop.3. PCC shall hire two experienced procurement consultant before the Loan effectiveness. 4.PCC procurement staff shall attend the intensive procurement training offered by ILO Turinduring the early implementation of the project.

Country Procurement Assessment Report orhAre the bidding documents for theCountry Procurement Strategy Paper status: procurement actions of the first yearThe CPAR is finalized in June 2001. ready by negotiations

YESNO X (except IT hardware andsoftware documents)

Estimated date Estimated date icate if there Domestic Domestic Preference forof Project of publication is procurement Preference Works, if applicableLaunch of General sbect to for Goods YesWorkshop Procurement mandatory SPN Yes X No XSeptember Notice in Development No2002 09/16/2002 Business

Explain briefly the Procurement Monitoring System: Procurement implementation progresswill be monitored through progress reports and supervision missions. Each supervisionmission will include the project procurement specialist for updating the procurement plan andconducting post review.

Co-financing: None

Indicate name of Procurement Staff or Bank's staff part of Task Team responsible for theprocurement in the Project: Elmas Arisoy (ECCTR)

Explain briefly the expected role of the Field Office in procurement: There are twoprocurement specialists in the Country Office and one of them is responsible for this project

and the other will provide back-up service in the absence of the assigned staff.

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PROCUREMENT PLAN FOR BASIC EDUCATION PROT (I)_I 2 3 4 5 6 l 7Cont- Description Type Number Estimated Cost (US$ Procurement PrequalV (BD/RFP) Bid Con- Con-

ract of slices/ millions) Method SLI .Invitatio I I.lnvitation tract tract

No items/ sub- n Preparation GPN/SPN/ Sign- Com-packages GPN/SPN/ Local ing pletion

Local 2.Opening2.Opening 3.Eval &3.Eval & Rec.AwaRecom

Total BF NBF_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ~~~~(a) (b) _ _ _ _ _ _ _ _ _ _ _ _ _

Component IIm roved Basic Education Coverae

1.1 Renovation of CW Multiple NCB Nov. 2002 Dec. 2002 Jan. 2003 Mar. Jul.

about 800 rural 2003 2003

schools and MW Feb. 2003

bussingschools Feb. 2003

1.2 Renovation of CW Multiple NCB Nov. 2002 Dec. 2002 Jan. 2003 Apr. Sep.

150 gecekondu 2003 2003schools and Feb. 2003

construction ofadditional Mar. 2003classes

1.3 Renovation of CW Multiple NCB Nov. 2002 Dec. 2002 Jan.2003 Apr. Aug.

about 150 Feb.2003 003 2003

boarding Mar.2003

schools1.4 Construction CW Multiple NCB Jan. 2003 Feb. 2003 Mar.2003 June Nov.

of about 300 2003 2003

preschool Apr.2003

classrooms inexisting May 2003

schools _1.5 Renovation of CW Multiple NCB Jan. 2003 Feb. 2003 Mar.2003 June Sep.

about 40 sp. 2003 2003

education Apr.2003

schools__________ May 2003

1.6 Construction CW Multiple NCB Jan 2003 Feb. 2003 Mar. 2003 June Nov.

of about 20 003 2003

additional Apr. 2003

facilities forspecial needs May 2003

1.7 Construction CS 7 QCBS Sep 2002 Nov 2002 Dec.2002 Mar Dec.

supervision 003 2004

and Jan.2003management

.____ for civil works . Feb.2003

SUB-TOTAL 127.22 107.60 19.62COMP I I _ I II_

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1 2 3 4 5 6 7Cont Description Type Nunber of Estimated Cost (US$ Procurement Prequal/ (BD/RFP) Bid Con- Con-ract slices/item millions) Method SL 1. I I .Invi- tract tractNo s/ sub- Invitation Preparation tation Sign- Comp-

packages GPN/SPN/ GPN/SPN/ ing letionLocal Local

2.Opening 2.Opening3.Eval & 3.Eval &Recom Rec.Awa

Total BF NBF(a) (b) _

Component IIImproved Basic Education Qua ity

11.1 Supply and G 1 ICB Dec. 2002 Jan 2003 Feb 2003 Aug Feb.installation of 2003 2004hardware and Apr.2003software forabout 4000 IT May 2003classrooms inabout 3000primaryeducationschool _

11.2 Educational G I ICB Dec. 2002 Jan. 2003 Feb.2003 Aug. Feb.software 2003 2004

Apr.2003

_____ May 2003 111.3 Supervision CS 7 QCBS Dec. 2002 Jan 2003 Feb.2003 Jul. Feb

services for Mar.2003 2003 2005supply andinstallation of May 2003hardware andsoftware inICTclassrooms

IA.4 Educational G 1 ICB Feb 2003 Mar.2003 Apr. 2003 Oct. Apr.materials for 2003 2004about 4,000 June 2003rural andgecekondu Jul. 2003schools

11.5 Educational G Multiple NCB Feb. 2003 Mar. 2003 Apr..2003 July Dec.Materials for 2003 2003about 800 Multiple IS May 2003preclassesand June 2003preschools .

11.6 900 Braille G 1 ICB Mar. 2003 Apr. 2003 May 2003 Nov. MayTypewriter 2003 2004

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for the blind July 2003

_ _______ _ _______ _ .Aug.2003

II.7 65 Group G I ICB Mar. 2003 Apr 2003 May2003 Nov May

hearing 2003 2004

device July 2003

Aug. 2003

II.8 40 Computer G I IS Mar. 2003 Apr. 2003 May 2003 Sep. Nov.

and printer 2003 2004

for primary June 2003

educationclassrooms July 2003

within_ hospitals I

11.9 Supply and G I ICB Apr. 2003 May 2003 Apr. 2003 Sep. Feb

installation o 2003 2004

hardware and June 2003

software forICT July 2003

classroomsfor about 70specialeducationschools

11.10 Educational G I NCB Apr..2003 May 2003 Apr. 2003 Aug. Dec.

materials for 2003 2003

about 1340 May 2003

classes forspecial June 2003

educationpreschool

11.11 Furniture for G 2 NCB Apr. 2003 May.2003 Apr..2003 Aug. Dec.

preschools 2003 2003

and special May 2003

educationI schools June 2003

II.12 Consultancy CS 1 QCBS Dec. 2002 Jan. 2003 Feb.2003 July Aug.

services for 2003 2005

ICT Mar.2003

integration inBasic May 2003

Education11.13 Design of CS I QCBS Feb. 2003 Mar.2003 Apr..2003 Aug.2 Aug.

education 003 2005

portal and May.2003

operation &maintenance June 2003

____ support

11.14 Hardware for G I ICB Aug. 2003 Sep.2003 Oct. 2003 Feb. July

establishment 2004 2004

of education Nov. 2003

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portal_ _ _ _ ~~~~~~~~Dec.2003___

II. 1' Investigation CS 1 QCBS Jan. 2004 Feb. 2004 Mar.2004 July Aug.of decision 2004 2005support Apr..2004system

_____ May.200411.16 Training and TR (c) Jan 2003 Aug.

study tours on 2005imnprovedbasiceducation

_ qualitySUB-TOTAL 196.98 166.40 30.58COMP II H

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1 2 3 4 5 6 _ __7

Cont- Description Type Nwnber of Estimated Cost(US$ Procurement Prequal/ SLI. (BD/RFP) Bid Con- Con-ract slices/item millions) Method Invitation 1 .Invitation tract tractNo s/ sub- GPN/SPN/ Preparation GPN/SPN/ Sign- Comp-

packages Local Local ing letion2.0pening 2.Opening3.Eval & 3.Eval &

_N,B. Recom Rec.AwaTotal BF NBF

(a) (b) _

Component IIIDelivery of Basic Education program

111.1 Printing of G Multiple NCB Jan. 2003 Feb. 2003 Mar. 2003 July Sep.training Apr.2003 003 2003materials for May 20035-6 age Motheiand Childeducation

111.2 Consultancy CS 1 SS Jan. 2003 Feb. 2003 Mar. 2003 May Mayservices for 2002 2005mother andchild educationincludingstrengtheningby training ofMinistry'scapacity ___

II1.3 In-service CS 6 QCBS Dec. 2002 Jan.2003 Feb.2003 June ug.training for Mar.2003 2003 2005ICT for 45000 Apr..2003teachers,inspectors,schoolmanager inrmary

educationschools, 250masterformattors and7000 schoolformattors

111.4 In-service CS Multiple QCBS Mar.2003 Apr.2003 May 2003 Sep. Aug.training for June 2003 003 20054500 teachers Ju.2003at preschoolsandnon-formaltrainers

111.5 In-service CS Multiple QCBS Mar. 2003 Apr.2003 May.2003 Sep. Aug.training for June 2003 003 20056,000 teachers Jul.2003and managers

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in specialeducationschools

III.6 In-service CS 1 CQ Mar. 2003 Apr..200 May 2003 June Sep.training for 93 3 2003 2003Specialeducationfornatter andinstructorSUB-TOTAL 24.77 19.43 5.34COMP III 3_ . _5-

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1 2 3 4 5 6 __ _ _ _7

Cont- Description Type Number of Estimated Cost(US$ Procure Prequal/ (BD/RFP) Bid Con- Con-ract slices/items/ millions) ment SLI 1. I .Invi- tract tractNo sub-packages Method Invitation Preparation tation Sign- Comp-

GPN/SPN/ GPN/SPN/Loca ing letionLocal 2.Opening

2.Opening 3.Eval &3.Eval & Rec.AwaRecom

Total BF NBF(a) (b)

Component IVProject implementation support

IV.1 PCC CS Multiple Ind. C. Jan.2003 Aug2005

Consultants .IV.2 Office G Multiple IS Jan. 2003 Feb. 2003 Mar.2003 June Aug.

Equipment for 2003 2003PCC and Apr.2003MONE lineunits . May 2003

IV.3 PCC Staff TR (c) Jan.2003 Aug.Training 2005

IV.4 PCC Operating OC (d) Jan.2003 Aug.Costs _ 2005SUB-TOTAL 2.36 1.60 0.76

COMP IV

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1 2 3 4' 5 6 ___ 7Cont- Description Type Number of Estimated Cost(US$ Procurem PrequaU (BD/RFP Bid Con- Con-ract slices/items/ millions) ent SLI. ) I .Invi- tract tractNo sub-packages Method Invitation 1. tation Sign- Comp-

GPN/SPN Preparati GPN/SPN/Local ing letionLocal on 2.Opening

2.0penin 3.Eval & Rec.Awa3.Eval&

_ _____________Recom

Total BF NBFl______ ______ (a) (b _ _ _

Co] nponent VMc nitoring and Evaluation

V.1 Monitoring CS I QCBS Sept. 2003 Nov. Dec.2003 Mar. Aug.program and 2003 2004 2005Project Jan.2004

Feb.2004V.2 National and CS Multiple QCBS Sept. 2003 Nov. Dec.2003 Mar. Aug.

International 2003 2004 2005Student Jan.2004AchievementStudies Feb.2004

V.3 Evaluation CS Multiple QCBS Feb. 2004 Mar.200 Apr. 2004 ul. Aug.Studies 4 2004 2005

May 2004

_____ _____ ______ _____ ________ _______ June 2004SUB-TOTAL 2.53 1.97 0.56

COMP V _

FRONT END 3.00 3.00IFEE I_I_ITOTAL 356.86 300.000 56.86

(a): The Total Costs are inclusive of all physical and price contingencies and local taxes.(b): NJBF: Non-Bank-Finance is the Government's contribution in termns of local taxes (such as 18% VAT). Governmentcontjibution is assumed as 15% of the total cost for goods and works contracts and as 22% of the total cost for consultancycontbacts and training.(c): Training will be financed according to the training programs to be developed by the PCC annually and to be reviewedand cleared by the Bank before implementation.(d): Operating Costs of the PCC will be financed in accordance with the annual budget that the PCC will prepare andsubniit to the Bank before incurring any expenditures, for the Bank's review and clearance.

Thresholds generally differ by country and project. Consult OD 11.04 "Review of ProcurementDocumentation" and contact the Regional Procurement Adviser for guidance.

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Disbursement

Allocation of loan proceeds (Table C)

Table C: Allocation of Loan Proceeds

M CE=.xp_ oei _ iiCivil Works 100.00 100% of foreign expenditures, 100% of

local expenditures (ex-factory cost), and85% of local expenditures for other items

procured locally

Goods 145.00 100% of foreip expenditures, 100% oflocal expenditures (ex-factory cost), and85% of local expenditures for other items

procured locally

Consultants' services 10.00 78%

In-service training 15.50 78%

Training under Parts B, D, and E 0.50 100%

Incremental Operating Costs 0.60 100% through June 30, 2003, and 80%thereafter

Unallocated 25.40 100%

Total Project Costs 297.00

Front-end fee 3.00 100%

Total 300.00

Use of statements of expenditures (SOEs):

Use of statements of expenditure (SOEs). During the first year of the Project, or as agreed between the

Government and the Bank, disbursements will be made against Statements of Expenditures for: (a) rural

school rehabilitation works costing less than US$500,000 equivalent per contract; (b) goods costing less

than US$400,000 equivalent per contract; (c) consulting contracts with firms, costing less than

US$100,000 equivalent each; (d) consulting contracts with individual costing less than US$50,000

equivalent each; (e) staff training costing less than US$15,000 each; and (f) incremental operating costs.

Full documentation in support of SOEs would be retained by the PCC for at least one year after the Bank

has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was

made. This information will be made available for review during supervision by Bank staff and for annual

audits which will be required to specifically comment on the propriety of SOE disbursements and the

quality of the associated record-keeping.

Special account:Special Account. The GoT will open and maintain a Special Account in US dollars at the Central Bank

on terms and conditions acceptable to the Bank. The Special Account will be used following

procedures to be agreed with the Bank, and will have an authorized allocation of US$20.0 million.

Both the Deputy Undersecretary of MONE and the PCC Director are authorized to sign withdrawal

applications, with only one signature required. At the start of the Project, the initial deposit will be

limited to US$10.0 million, and the remaining portion of the authorized allocation will be requested

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only after cumulative disbursements from the loan reach a level of US$60.0 million. The minimumapplication size for payments directly from the Loan Account for issuance of Special Commitments is20 percent of the Special Account authorized allocation.

During the first year of the Project, applications for replenishment of the Special Account will besubmitted to the Bank on a monthly basis, or when the balance of the Special Account is equal to abouthalf of the initial deposit or the authorized allocation, whichever comes first, and will include areconciled bank statement as well as other appropriate supporting documents. During the second andthird year, funds sufficient to cover the Project's needs for six months will be advanced to the SpecialAccount, provided the PCC has established the requisite financial management system and preparesand submits to the Bank the appropriate PMRs.

Financial Manaeement

1. Executive Summary and Conclusion

An assessment of the financial management arrangements for the Project was undertaken betweenDecember 1-8, 2000 and the assessment was updated during appraisal to determine whether the financialmanagement arrangements for the Project are acceptable to the Bank.

Detailed financial management questionnaire is included in the Project files. A summary of the conclusionsare as follows:

Rating Comments1. Implementing Entity Satisfactory2. Funds flow Satisfactory3. Staffing Satisfactory Will be strengthened with additional

staff4.Accounting Policies and procedures Satisfactory5. Internal Audit NA No reliance on internal audit6. External Audit Satisfactory7. Reporting and Monitoring Satisfactory _-

8. Information systems Marginally IS needs to be customized for APL Hsatisfactory

OVERALL FM RATING Satisfactory

Conclusion: The financial management arrangements for the Project satisfies the Bank's minimumrequirements.

2. Summary Project Description

The second phase of the Basic Education Project, to be financed under the second APL would support acontinuation and extension of the activities supported under the first APL which promotes the objectives ofimproved coverage, quality and relevance of basic education and the role of basic schools as a learningresource for the community. In addition the second APL would support an expansion of preschooleducation which is designed to help children from educationally deprived households succeed in basic

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education as well as providing support to Special Needs Education.

3. Country Issues

A country Financial Accountability Assessment for Turkey was carried out in 2001. The draft CFAAreport identified major weaknesses in the Turkish financial accountability, in both the public and theprivate sector.

In view of this the draft CFAA concludes that to ensure Bank funds are used for purposes intended, ringfenced financial management arrangements are more appropriate for the implementation of Bank- financedinvestment projects, rather than relying upon government systems.

4. Risk Analysis

A summary of the risk assessment for the Project is as followsRisk Comments

Inherent Risk1. Country Financial Management Risk High Based on draft 2001 CFAA

-______ ______._____ ___ _ __ _ ___ report2. Project Financial Management Issues High3. Counterpart funds Moderate

Overall Inherent Risk HighControl Risk1. Implementing Entity Moderate2. Funds Flow Moderate3. Staffing Moderate

4. Accounting Policies and Procedures Moderate5. Intemal Audit N/A

6. Extemal Audit Moderate

7. Reporting and Monitoring Moderate8. Information Systems ModerateOverall Control Risk Moderate

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Risk mitigation strategy

Country financial management risk - the draft CFAA identified major weaknesses in the Turkish financialaccountability, in both the public and the private sector. To compensate for this all expenditures for theProject will be controlled and accounted for by a separate unit within MONE (the Project CoordinationCenter formed by the approval of the Minister of Education).

Project financial management issues are considered substantial as this Project will involve numeroustransactions. However all payment and accounting is centralized at the PCC. The PCC financialmanagement staff have experience both in financial management and in World Bank procedures as they arecurrently implementing the first phase of the APL. Also the staffing level of the Financial management unitwill be further strengthened with the recruitment of a financial management expert.

Counterpart funds- the Project will support the Governments overall basic education program. There is aspecial Law No. 4306 of August 18,1998 on the amendment of Primary Education, National Education,Apprenticeship and Vocational Training, Organization and Duties of Ministry of National Education Lawsto increase the period of compulsory basic.education to 8 years. The law specifies collecting shares ofcontribution to education in order to finance the Basic Education Program, which is a national program.The counterpart funds will be made available from the funds accumulated from these contributions. Totalprojected domestic financing will be US$12,867,306,271 for the period between 2001-2005 for the wholeprogram and the counterpart funds will be financed from this amount. The counterpart funding for thisproject is mainly for value added tax and other local taxes and the total amount is about 57 Million USD.Allocation of these counterpart funds will be made annually within the Ministry' s budget.

5. Strengths and Weaknesses

The significant strengths that provide a basis of reliance on the project financial management systeminclude: (i) the experience of the PCC and its Financial management unit of implementing Bank-financedprojects and satisfying Bank financial management requirements; and (ii) the unqualified audit reports andpositive management letters issued by project auditors (iii) the centralization of all payment and accountingat the PCC in the project design.

There are no significant weaknesses of the Project financial management system.

6. Implementing Entity

The implementation of the Project will be carried out by the Ministry of National Education central unitsand provincial directories. Overall project coordination at the Central level will be carried out by theProject Coordination Center (PCC) under direct responsibility of the Deputy Undersecretary responsiblefor the PCC. Implementation follow up will be carried out by the PCC and annual project implementationplans and procurement and financial projections will be prepared based on the implementation plan.

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7. Funds Flow

Regarding the disbursements from the Bank Loan, there will be one special account for the Project in USDollars and it will be held at the Central Bank of Turkey. Payments to the contractors, suppliers andconsultants , under all project components will be made from the special account with the authorization ofthe PCC. Payments will be made directly from the loan account for amounts over 20 percent of theauthorized special account allocation.

Regarding the counterpart funds, the PCC will inform the General Directorate of Basic Education (GDBE)to initiate payment of the counterpart contribution. The MONE GDBE will submit the paymentdocuments to the Ministry of Finance representative (Budget Department and Payment Office) in theMinistry of Education. The payment to the contractors, suppliers and the consultants will be made directlyto them by the Ministry of Finance Payment Office. The MOF Payment office will provide monthlypayment information to the PCC.

The diagram presented below summarizes the flow of funds, relating supporting documentation andreporting lines for BEPII.

CHART OF FLOW OF FUNDS IN EP U

d r;p CNlbha~~~~~~~~~~~~~~~M~MN

Conwbn~~~~~~~~~~~~~obeo

Convactwa Educab~~~~~~~~~~~~~~~~ F~ on.

'~~~~1:a~~ 75 ---.

_ J r I~~~~~~~~~~~~~~~~~~~~~~~~~~~~d

r .~~~~~~~~~~~~~~~~~~~~~~~Od

RPqfmdGratW

- 75-

8. Staffing

The PCC comprises of 11 units, project management unit, project research and development unit,education, training and documentation unit, information technologies unit, procurement unit, import andcustoms unit, construction unit, financial management unit, monitoring and evaluation unit, monitoringresponse facility unit and personnel and administrative affairs unit.

The PCC is led by the Project Director who has overall responsibility for the day to day implementation.The PCC has a Financial Manager, who is responsible for the overall project financial managementmaintenance of books of accounts for the Project, preparation and dissemination of financial statements andFMRs and ensuring the timely audit of the Project. There are also three more staff working in the financialmanagement unit dealing with accounting and disbursement. The qualifications of the financialmanagement unit of the PCC are satisfactory for the implementation of the Project. However, consideringthe additional workload from the new Project an additional financial management specialist will berecruited to the PCC. This staff member will work together with the head of financial management unit incoordinating work with the other units within the PCC as well as MONE departments, preparation ofannual budgets, preparation of the FMRs by using the software (therefore organizing the necessarycustomization work) as well as other project related assignments. The existing financial management staffwill also get appropriate training in project financial management to enhance their skills. These trainingprograms will include attending courses about World Bank financial Management procedures both withinTurkey (the project launch workshop will include a session on financial management and will be given bythe FMS for the project) and overseas (like financial management courses conducted in ILO - ITC).

9. Accounting Policies and Procedures

The project accounting will be maintained separately within the PCC and will comply with IntemationalAccounting Standards. The PCC has a computerized financial management information system usedcurrently for the first phase of the APL. The FMIS is capable of recording the project transaction inaccordance with respective components as well as disbursement categories and sources of funds. The chartof accounts used for the first APL is adequate to properly account for and report on project activities anddisbursement categories. The FMIS facilitates using different modules for accounting of more than oneproject, and the same FMIS will be used for the second phase of the APL. The system is also capable ofproducing Financial Monitoring Reports. Customization of the existing software for the second phase ofthe APL will be finalized by loan effectiveness.

The financing plan of the first phase of the APL included sources from the Government, ProvincialAdministrations, IBRD and national donors. The Government contribution was the projected spending onthe whole Basic Education Program and APK (a unit of MONE) was in charge of reporting for counterpartfunds and PCC was in charge of accounting for loan funds. The communication between them was verylimited and that resulted in lack of financial statements for the whole program at the beginning. This hasimproved during the life of the project and the PCC now obtains information on an annual basis. Howeverthe information is not on a transactional basis.

The financing plan of the second phase of the APL is for the activities that will be financed under theWorld bank loan and the government contribution is mainly taxes. The payment information for thegovernment contribution will be made available to the PCC every month on a transaction basis. It shouldbe made available to the PCC on a diskette to facilitate easy uploading to the FMS.

Accounting procedures are set out in detail in the Financial Management Manual for the Project. The

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Financial Management Manual covers: (a) the financial management system of the Project including theaccounting and auditing policies; (b) the role of the financial management systems in the Projectimplementation; (c) the accounting arrangements for the Project including the format and contents of theproject reporting; (d) the auditing arrangements; and (e) budgeting and planning.

10. InternalAudit

The Ministry of National Education has an Internal Control department. The department generally carriesout investigations where irregularities are reported within any of the departments of the Ministry. Thereforethe PCC is not subject to regular internal audits.

11. ExternalAudit

No significant issues have arisen in the audit of previous Bank-financed project implemented by MONE -PCC.

The previous and current auditing arrangements and findings for the first phase of the APL are satisfactoryto the Bank and it has thus been agreed that similar audit arrangements will be adopted for BEP H. Annualaudits for the project accounts will be carried out in accordance with the "Guidelines for FinancialReporting and Auditing of Projects Financed by the World laDali". The audit reports will be in a format inaccordance with the "International Standards on Auditing". The audit reports will include a separateopinion on the operation of the Special Account and on disbursements made on the basis of SOEs. Theaudited financial statements including the audit of the special account and the SOEs will be sent to theBank within six months of the end of the Government's financial year.

The Project's financial statements will be audited by the Treasury Controllers in accordance withInternational Standards on Auditing (ISA) and under TOR already cleared by the Bank.

12. Reporting and Monitoring

The PCC will maintain records and will ensure appropriate accounting for the funds provided. Financialstatements will be prepared for the Project by the PCC. The FMRs will be prepared semi annually and willbe submitted to the Bank no later than 45 days after the end of the semester. The FMRs will be submittedwith a cover letter explaining the activities of the quarter and will include the following tables;

* Statement of Sources and Uses of Funds by categories* Statement of Sources and Uses of Funds by Project Components* Special Account Statement* A detailed schedule for tracking disbursements against specific contracts for civil works, goods andconsultants services (The format of this report will cover construction progress by province with respect topayments. This will require coordination between the construction supervisors, PCC construction unit andthe financial management unit. The data to be included in this report will be agreed during negotiations, theformat and integration of this to the financial management system will be dealt after negotiations)* Procurement reports

13. Information Systems

The PCC has been using an accounting software for the second phase of the APL since November 2000which is also used successfully by other PIUs in Turkey. All the staff in the Financial management unit

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have been trained on the software. The system is capable of producing FMRs. The PCC has a maintenancecontract with the supplier firm till November 2001 and will work together with the supplier for thecustomization work required to record the transactions under APL II as well as the preparation of FMRsfor the second phase of the APL.

14. Impact of Procurement Arrangements

A procurement assessment of BEP II dated March 29, 2002 was performed by a Bank ProcurementSpecialist and contained the following risk analysis: "Although the MONE has some experience inmanaging and implementing Bank financed projects, they are not good at applying the Bank's procedures inprocurement yet, therefore the new Project is put in the high-risk category"

The impact of this procurement assessment is to increase the perceived risk associated with the Project'sfinancial management arrangements and therefore will be mitigated by an increased level of Banksupervision.

15. Action Plan

It is concluded that the financial management arrangements for the Project satisfied the Bank's minimumrequirements. There are however a number of actions needed to improve the processes:

Action Deadline1. Customization of the existing accounting Effectivenesssoftware for APL H2. Hiring of the FMS Effectiveness

16. Supervision Plan

The customization of the financial management system for second phase of the APL will be monitored indetail until loan effectiveness by the FMS. The FMRs for the Project will be reviewed on a regular basisby the Project FMS and the results or issues will be followed up during the supervision missions. Financialaudit reports will be reviewed and issues identified will be followed up by the FMS. During the Bank'ssupervision missions the Project's financial management and disbursement arrangements (including areview of a sample of SOEs and movements on the Special Account) will be reviewed to ensure compliancewith the Bank's minimum requirements. As required, a Bank-accredited Financial Management Specialistwill assist in the supervision process.

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Annex 7: Project Processing Schedule

TURKEY: Second Basic Education Project

MON_tsffldu IdTime taken to prepare the project (months) 14

First Bank mission (identification)Appraisal mission departure 04/01/2002 04/08/2002

Negotiations 04/15/2002 04/15/2002

Planned Date of Effectiveness 09/02/2002

Prepared by:

Marit Granheim, Paud Murphy, Hong Chen, Ferda Sahmali

Preparation assistance:

Jennifer Manghinang

Bank staff who worked on the project included:

144mw" I>pc a i - r-r

Marit Granheim Team Leader, Senior Education Specialist

Paud Murphy Co-Team Leader, Lead Education Specialist

Michael Mertaugh Former Team Leader, Lead Education Economist

Ferda Sahmali Senior Operations Officer

Hong Chen Operations Analyst

Ayse Seda Aroymak Financial Management Specialist

Elmas Arisoy Procurement Specialist

Robert Schware Lead Informatics Specialist

Robert Hawkins Operations Specialist

Claudia Pardifias Ocafia Senior Counsel

Rohit Mehta Senior Disbursement Officer

Mary Eming Young Lead Specialist, Child Development

Monika Huppi Consultant, Economist

Leo Sinke Consultant, Architect

Michael Hallissy Consultant, ICT for Pedagogy

Jennifer Manghinang Program Assistant

Selma Karaman Team Assistant

Amber Surrency Consultant, Early Childhood Development

Marit Holm Consultant, Education of Children with Special Needs

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Annex 8: Documents in the Project File*TURKEY: Second Basic Education Project

A. Project Implementation Plan

The Project Implementation Plan was appraised by the Bank April 15, 2002 and the Bank found it to berealistic and of satisfactory quality.

B. Bank Staff Assessments

1. Emergency Earthquake Recovery Loan, Turkey, October 27, 1999.

2. Economic Reform Loan, Turkey, March 20, 2000.

3. Programmatic Financial and Public Sector Adjustment Loan (PFPSAL), Turkey, June 20, 2001.

4. Beneficiary Assessment Report (EERL), Turkey, April 2000

5.. Turkey Economic Reforms, Living Standards and Social Welfare Study, April 1999, PovertyReduction and Economic Management

C. Other

National Education at the Beginning of 2002*Including electronic files

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Annex 9: Statement of Loans and Credits

TURKEY: Second Basic Education Project

Dffference between expectedand actual

Original Amount In US$ Millions disbursements

Projed ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Revd

P066511 2001 FSAL 780.00 0.00 0.00 0.00 385.00 -392.78 0.00

P069894 2001 PRIV SOC SUPPRT 250.00 0.00 0.00 0.00 247.50 3.50 0.00

P044175 2000 BIODIvERSITY,NR MGT 0.00 0.00 8.19 0.00 7.71 0.25 0.00

P065188 2000 EFIL 252.53 0.00 0.00 0.00 189.72 -62.68 0.00

P068792 2000 ERL 759.60 0.00 0.00 0.00 375.00 375.00 0.00

P068368 2000 MARMARA EARTHQUAKE EMERGENCY 505.00 0.00 0.00 0.00 428.12 274.78 0.00

P009073 1999 RECONSTRUC. 155.00 0.00 0.00 0.00 140.82 -1.04 0.00

P048851 1999 INDUSTRIAL TECH 4.00 0.00 0.00 0°00 3.38 2.87 0.00

P058877 1999 COMMoDmES.MKT.DEV. 369.00 0.00 0.00 0.00 215.37 169.37 95.37

P048852 1998 EMGY FLOOD RECOVERY 270.00 0.00 0.00 0.00 269.75 187.09 0.00

P009089 1998 NArLTRNSMGRJD 300.00 0.00 0.00 0.00 173.34 170.11 0.00

P008985 1998 BASICEDI 13.10 0.00 0.00 0.00 11.69 5.93 0.00

P009072 1998 CESME W.S. & SEWER. 20.00 0.00 0.00 o.0o 12.70 10.44 2.77

P009095 1997 PRIV. OF IRRIGATION 14.50 0.00 0.00 0.00 14.18 14.18 7.51

P038091 1996 PRIM HEALTH CARE SER 250.00 0.00 0.00 0.00 82.28 82.20 0.00

P035759 1998 ROAD IMPR. & SAFETY 62.00 0.00 0.00 5.00 39.22 4422 17.75

P009076 1995 PUSBUC FINAN. MGT. 150.00 0.00 0.00 0.00 70.91 97.74 12.73

P009093 1995 HEALTH 11 100.00 0.00 0.00 0.00 64.35 35.98 0.00

P009065 1993 ANTALYA WATER SUPPLY 129.50 0.00 0.00 20.00 4.89 22.99 0.34

P009023 1993 SURSAWATER&SANITA 77.00 0.00 5.10 0.00 24.02 35.25 5.01

Poo9044 1992 EANATOLIAWATERSHED 55.00 0.00 0.00 6.00 5.85 11.85 5.85

AGRIC RES

Total: 451623 0.00 13.29 31.00 2765.59 1087.25 147.33

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TURKEYSTATEMENT OF IFC's

Held and Disbursed PortfolioFeb-2001

In Millions US Dollars

Committed Disbursed

IFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic

1988/93/96 Elginkan 9.05 0.00 0.00 0.72 9.05 0.00 0.00 0.721995 Entek 24.50 0.00 0.00 24.84 24.50 0.00 0.00 24.841997/98 Finans Leasing 3.89 0.00 0.00 0.00 3.89 0.00 0.00 0.001992/99 Finansbank 10.00 0.00 0.00 35.00 10.00 0.00 0.00 35.001994/98/00 Garanti Leasing 2.63 0.00 0.00 16.02 2.63 0.00 0.00 16.021994/95/96 Global Security 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001999 Gumussuyu Kap 4.00 0.00 2.41 0.00 4.00 0.00 2.41 0.00

1998 IndoramaIplik 10.00 0.66 0.00 0.00 10.00 0.66 0.00 0.001998/00 Ipek Paper 0.00 0.00 0.00 15.00 0.00 0.00 0.00 15.002000 Isiklar Ambalaj 0.00 0.00 10.00 0.00 0.00 0.00 9.50 0.001990 Kepez Elektrik 12.35 0.00 0.00 0.00 12.35 0.00 0.00 0.001988/90 Kiris 7.60 0.00 0.00 0.00 7.60 0.00 0.00 0.001996 Kocbank 5.71 0.00 0.00 0.00 5.71 0.00 0.00 0.001996 Koclease 8.57 0.00 0.00 0.00 8.57 0.00 0.00 0.001992/97 Korfezbank 9.00 0.00 0.00 13.00 9.00 0.00 0.00 13.001990/92 Koy-Tur 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

1991 Kula 4.38 0.00 0.00 0.00 4.38 0.00 0.00 0.001993/96 Medya 0.00 0.00 4.99 0.00 0.00 0.00 4.99 0.001998 Modem Karton 20.00 0.00 0.00 10.00 20.00 0.00 0.00 10.001991 NASCO 10.18 0.00 0.00 3.55 10.18 0.00 0.00 3.551998 Ottoman 18.18 0.00 0.00 72.73 18.18 0.00 0.00 72.731997 Oyak Bank 10.00 0.00 0.00 10.00 10.00 0.00 0.00 10.001998 Pasabahce-Schott 10.81 0.00 0.00 10.81 10.81 0.00 0.00 10.811983/94/98 PinarET 10.21 0.00 0.00 0.00 10.21 0.00 0.00 0.001994/00 Pinar SUT 13.87 0.00 0.00 0.00 0.00 0.00 0.00 0.000/97 Rant Leasing 1.62 0.00 0.00 0.00 1.62 0.00 0.00 0.001999 SAKoSa 20.01 0.00 0.00 19.58 20.01 0.00 0.00 19.581986/90 Silkar Turizm 3.05 0.00 0.00 3.47 3.05 0.00 0.00 3.471993/96 Sise Ve Cam 5.76 0.00 0.00 7.68 5.76 0.00 0.00 7.681998 Soktas 9.92 0.00 0.00 0.00 9.92 0.00 0.00 O.001996 TCRA 0.00 0.10 0.00 0.00 0.00 0.05 0.00 0.00

TDD 0.60 0.00 0.00 0.00 0.60 0.00 0.00 0.001995 TEB Finansal 5.00 0.00 0.00 0.00 5.00 0.00 0.00 0.001999 Toprak Leasing 1.78 0.00 0.00 0.00 1.78 0.00 0.00 0.001997 Trakya Cam 0.00 1.18 0.00 0.00 0.00 1.18 0.00 0.001979/82/83/89/91/96/9 Turk Ekon Bank 15.00 0.00 . 0.00 20.00 15.00 0.00 0.00 20.009 Turkiye Garanti 14.55 0.00 0.00 69.09 14.55 0.00 0.00 69.091995/99 Unye Cement 18.04 0.00 0.00 0.00 18.04 0.00 0.00 0.001993/98 Uzel 20.00 0.00 0.00 15.00 7.94 0.00 0.00 5.961999 Viking 10.65 0.00 0.00 0.00 10.65 0.00 0.00 0.001999 Yalova Acrylic 2.50 0.00 0.00 1.33 2.50 0.00 0.00 1.331970/71/82/83/98 Yapi Kredi Lease 2.49 0.00 0.00 0.00 2.49 0.00 0.00 0.001995 ALease 4.44 0.00 0.00 0.00 4.44 0.00 0.00 0.001997/98 AYTAC 4.00 0.00 0.00 5.00 4.00 0.00 0.00 5.000

1994 _

Total Portfolio: 480.31 7.60 21.90 404.99 444.38 7.55 21.40 395.95

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Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Partic

2001 Akbank 20000.00' 0.00 0.00 80000.002001 Arcelik III 20000.00 0.00 0.00 100000.002000 BICT 20000.00 5000.00 0.00 0.001999 CBS Group Restr 5800.00 0.00 0.00 0.001999 Ege Seramik 18000.00 0.00 5000.00 0.002000 Erbakir 5000.00 5000.00 0.00 0.002000 Pinar Sea 4000.00 0.00 0.00 0.00

Total Pending Commitment: 92800.00 10000.00 5000.00 180000.00

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Annex 10: Country at a GlanceTURKEY: Second Basic Education Project

Europe & Uppor-POVERTY end SOCIAL Central middle-

Turkey Asia Income Development diamond'2000Population, mid-year (millions) 65 3 475 847 Life expectancyGNI per capilta (Atlas method, USS) 3,080 2,010 4,620GNI (Atlas method, USS bilIlonaJ 201 1 956 2,986

Average annual growth, 1994-00

Population (9%) 15 01 1.3 GNLabor force (9) 25 06 2 0 GI Gross

per primaryMost recent estimate (latest year available, 1994.00) capita \ / enrollmenl

Poverty (% of Pooulation below national poverty Ine)Urban population (% of total population) 75 67 78Life exoectancy at birth (years) 69 69 69Infani mortallty (per 1,000 live births) 36 21 28Child malnutrition (9 of children under 5) 8 . Access to Improved waler sourceAccess to an improved water source I9% of population) 83 90 87Illiteracy (9 o populatlion eae 15+) 15 3 10Gross pnmary enrollment (%of school-age population) 107 100 107 Turkay

Male 111 101 106 -- - Upper-middie-income groupFemale. 104 99 105

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1980 1990 1999 2000Economic ratlos'

GDP (USS billions) 70 9 150 6 183 8 199 9

Gross domestic InvestmenUGDP 18.2 24 3 23 4 24.1 TrdExports of goods and serviceslGDP 5.2 13 3 23 0 23.8 radoGross domestic savinos/GDP 11 4 20.1 19.5 168Gross naflonal savingslGDP 15 8 24 1 23 4 20.2

Current account balance/GDP -4 8 -1 7 -0 7 -4.9 Domestic InvestmentInterest paymenlslGDP 07 1 9 2 5 2.5 savings +Total debUGDP 27.0 32 8 55 6 581Total debt service/exports 28 0 29.4 354 35 7Present value of debtiGDP . .. 53 0Present value of debUexports . . 185 3

Itndebtedness1980-90 1990-00 1999 2000 2000-04

(avoraoe annual growth)GDP 5.3 3.8 -4 7 7 2 38 TurkeyGDP per capilta 29 2.2 *6.1 56 24 - - Upper-middle-income groupExports of goods and services 11 7 -7.0 19 3 50

STRUCTURE of the ECONOMY1980 1990 1999 2000 Growth of Investment and GDP (IS)

(9% of GDP) 40

Agriculture 264 18 3 16.0 15 8Industry 22 2 298 24 6 25 0 20

Manufacturing 143 19 5 14 9 154 s 'Services 514 519 59 4 592 .20 1 95 W 55m 00

Private consumption 77 0 69 0 65.4 69 2 .40General goverment consumption 11 6 11 0 152 140 GD1 C* GDPImports of goods and services 11 9 17 6 26 9 31.2

1980-90 1990-00 1999 2000 Growth of exports and Imports (9)(average annual growth)Agriculture 1 2 14 -5.6 4.1 40

Industrv 77 41 -6 3 5 2 20

Manufacturinp 7 9 4.8 -5 5 5 3 _ <_ _ _ _

Services 4 5 39 -2 9 6 3 o / 95 97 00

Private consumption 3 4 -2 6 6 5 20

General covernment consumption 4 9 65 7 1 40

Gross domestic investment 4 9 -8 9 18 4 -Exports - ImportsImports of goods and sarvices 11.0 -3 7 25 4

Note 2000 dale are preliminary estimates

* The diamonds show lour kev indicalors in the country (in bold) compared wilh Its income-group average If dala are missing, the diamond willbe incomplete

- 84 -

Turkey

PRICES and GOVERNMENT FiNANCE1980 1990 1999 2000 Inflation (S)

DomesUc prices(% change) so

Consumer prices .. 60.3 63.5 54.2 00 _

Implicit GDP deflator 88.1 58.2 55.6 50.7

Government finance(% of GDP, includes current grants) a -

Current revenue .. 21.2 25.2 28.3 95 94 97 9s g9

Current budget balanoe .. 3.6 -14.5 -11.9 GDP defltor -0CPI

Overall surplus/deficit .. -7.5 -22.2 -19.0

TRADE1980 1990 1999 2000 Export and Import levels (US$ mill.)

(US$ mllllons)

Total exports (fob) 2,910 13,025 29,325 31,665 7s,000

Textiles 484 4,586 9,830 10,049Processed agricultural products 1,365 2,224 1,840 1,687 60000

Manufactures 2,224 11,748 23,755 25,340

Total imports (df) 7,909 22,302 40,687 54,502Food 262 1,404 1,261 1,263 25,000

Fuel and energy 4,003 4,781 5,376 9,515

Capitalgoods 1.276 6,926 9,056 11,572 0

tzxport price Index (1995=100) .. 94 81 78 94 95 os 07 9 so oo

Import price index (1995=100) .. 95 78 81 iExporlt Wimports

Temns of trade (1995=100) .. 99 105 96

BALANCE of PAYMENTS

(USS millions) 1980 1990 1999 2000 Current account balance to GDP (%)

Exports of goods and services 3,672 20,300 44,547 50,116 4-

Imports of goods and services 8,113 25,652 48,721 62,190

Resource balance -4,441 -5.352 -4,174 -12.074 2-

Net income -1,137 -1.767 -2,361 -2,970 0

Net arrenttransfers 2,171 4,493 5,175 5,225 94 90.2-

Current account balance -3,407 -2,626 -1,360 -9819

Financing Items (net) 3,497 3,934 6,566 6,822

Changes in net reserves -90 -1,308 -5,206 2,997

Memo:Reserves Including gold (USS millions) .. 11,411 34,133 34,786

Conversion rate (DEC, localIUSS) 73.8 2,608.9 421,139 625,208

EXTERNAL DEBT and RESOURCE FLOWS1980 1990 1999 2000_

(USS millions) Composition ot 2000 debt (USS mill.)

Total debt outstanding and disbursed 1/ 19,131 49,424 102,131 116,072

IBRD 1,158 6,272 2,902 3,634 A 3.f34 B:101

IDA 189 157 107 101 G:28,912 C:4,176

Total debt service 1,607 7,422 18.644 20,886 D:564

lBRD 134 1,132 954 723 E:7,173

IDA 3 5 7 7'

Composition of net resource flowsOfricIal grants 185 755 80 30Official creditors 1,238 -737 -642 752

Private creditors 642 6,104 8,638 8,945

Foreign direct investment 18 700 138 112

Portfolio equity 0 -3,058 218 -5,207 F:71,512

Worid Bank programCommitments 616 153 1,165 1.787 A-IBRD E-Bitateral

Disbursements 3i13 627 377 1,291 B-IDA D -Other multlateral F- Private

Principal repayments 46 625 616 492 C -IMF G -Short-term

Net flows 267 2 -239 800Interest payments 90 513 345 238

Net transfers 177 -511 -584 562

Development Economics 9/13/01

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Additional Annex 11: [Lefter of Sector Policy]

TURKEY: Second Basic Education Project

THE MINISTER OF NATIONAL EDUCATIONPRIVATE

April 10, 2002

Mr. James D. WolfensohnPresident,The World Bank1818 H Street, N.W.Washington D.C., 20433 U.S.A.

Letter of Sector Policy

Dear Mr. Wolfensohn,

This Letter of Sector Policy sets out the main features of the Government of Turkey's ongoing BasicEducation Program (BEP), gives information on our priorities and on the Basic Education Projectsupported by the World Bank.

A comprehensive Education Reform, unprecedented in Turkish history, has been accomplished with theBasic Education Program which went into effect in the educational year 1997-1998. My government isdeternined to continue the implementation of the Education Reform which aims to establish astudent-oriented education at all levels and in all types of education in compliance with the requirements ofour age and the society we live in, to prevent the exclusion of all individuals from the education process andto improve the quality of vocational training for teachers and their employment conditions in the 21stcentury.

Within the framework of the Education Reform, with the approval in August 1997 of the Basic EducationLaw no. 4306, compulsory basic education was extended from 5 years to 8 years. The progress made in theefforts to implement uninterupted eight year basic education, our achievements and the solid foundationswe have built, following the approval of the Basic Education Law have established a sound basis forrestructuring the secondary education system in Turkey.

Law no 4306 has not only extended compulsory basic education to eight years, but it has also mobilizedsignificant new resources to finance the investments needed in the field of education as a result of thisextension. The law also established a time-table for the application of the Program and streamlinedprocedures to allow for swift action and implementation. Law no 4306, both reflected the determination ofthe government in the field of education, and has received wide support from the public, because it hasrealized the expectations of all segments of the Turkish society in the field of education. As a result of thissupport, there has been an unprecedented outpouring of voluntary private cash and in-kind contributionsfrom the public and these contributions have been a considerable source for the investments envisagedduring the implementation of the Basic Education Program.

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The Ministry of National Education aims to achieve the following objectives in basic education.

- Increase school enrollnents to 100 %.- Irnprove quality of education- Bringing down the number of students per classroom to 30- Eliminate gradually the practice of combining classes in rural schools- To end double-shift teaching

The Need for Additional Financing

The Government has requested the World Bank's assistance in the form of an Adjustable Program Loan,with a commitment of US$ 600 million in two phases, to support the Basic Education Program and thisrequest has been approved by the Bank's Board. Considerable progress has been accomplished in theimplementation of the first APL of US$ 300 million, launched in 1998 and named "the Bask EducationProject". Preparations have been largely completed to move to the second APL amounting to USS 300millions.

The success of Turkey's Basic Education Reform has created an increasing interest in the internationalarena. Over time, apart from the World Bank, other international institutions have also decided to providefinancial support to the implementation of the Basic Education Program. The European Union has decidedto finance a program in support of the Basic Education with a grant of 100 million Euro's. Theimplementation of this program has started in 2002, and program implementation period will be 6 years.

The European Investnent Bank has also recently commnunicated its intention to provide loans to supporteducation programs in Turkey. Negotiations on these loans are at the initial stage.

implementation of the Basic Education Program

Since Basic Education Law No. 4306 has entered into force in August 1997, considerable progress hasbeen made towards the implementation of the objectives set out in the field of basic education, I havereferred to above. The Ministry of National Education has carried out a numnber of feasibility studiesduring the preparation of the Program to define objectives and select activities, within this framework, keystakeholders were consulted. In December 1997, a technical team was appointed for program preparationand to coordinate the overall preparation of the Program in close collaboration with relevant line units andprovincial offices of the Ministry of National Education.

The shift to eight year compulsory basic education has required considerable investments for key inputssuch as schools, educational materials and teachers. Our priorities under the Program have been capacityexpansion to bring all children of school age into the system and to eliminate overcrowded classrooms.

Activities to Extend Basic Education

When Program activities started in 1997, largely due to economic reasons, participation of school agechildren in mrual areas and in urban shanty-towns were not at the desired level. Furthermore, in rural areasthe enrollment rates for girls were much lower than those for boys, and the school attendance rate for girlsafter the 5th grade was not satisfactory. The number of primaTy education schools available in these areaswere adequate, but high teacher turn-over due to difficult living conditions and, in some cases, securityconcerns caused shortage in teachers. There was also a shortage of basic school capacity for 6-8 grades.It was necessary to find a solution to this shortage and the solution to provide basic education to a large

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number of students was sought through bussing or regional boarding primary education schools.

Construction of Classrooms.

Our first priority was to provide sitfficient capacity for the students who were not included in the basiceducation system, and to reduce the number of overcrowded classrooms in rural and urban areas. Weaddressed the need for additional capacity in two ways; through new constructions and the renovation ofexisting schools.

To this end, we focused on investments for the construction of new classrooms and the renovation of theexisting schools and made a determined effort to realize these investments. While 7,000 classrooms werebeing built per year in basic education until 1997, this number increased to 12,103 in 1997, to 21,620 in1998 and to 26,745 in 1999. In 2000, 23,375 and in 2001, 20,140 classrooms were added. Thus, 103.983new classrooms were built in the last five years. In order to realize this rapid pace of construction, apartfrom the resources provided through Basic Education Law No. 4306 and voluntary contributions, startingfrom 1997, a significant share of the funds in the investment budget of the state budget were allocated forinvestments in the education sector.

As a result of the resolute implementation, the average number of pupils per classroom in Turkey wasreduced from 43 in 1997/1998 to 39 in 2001/2002. In the same period, in urban areas, this numberdecreased from 61 to 48. Considering that 1.3 million new students enter primary educations every year inTurkey, the relative amelioration achieved in the number of pupils per classroom is an indicator of theresolve and determination in our efforts.

School Bussing Program and Regional Primary Education Boarding Schools

Another priority objective was the transportation of students from small rural schools with the SchoolBussing Program, to larger and better equipped schools, to extend the coverage and quality of basiceducation. In areas, where difficult climate conditions do not favor the School Bussing Program we haveconstructed Regional Primary Education Boarding Schools or Pensioned Primary Education Schools.

Figures on the School Bussing Program reflects the importance my Government attaches to this issue.While the number of the students transported to better and larger schools were 120,998 in 1997, thisnumber has increased 253 % to 630,000 in 2001/2002. Transportation costs of the students in the SchoolBussing Program are covered by my Ministry and the Government also provides free lunches for thesestudents.

Construction of Regional Primary Education Boarding Schools (YIBO) and Pensioned Primary EducationSchools (PIO) has been a part of our policy, and the number of students in YIBOs has increased by 86 %from 73,079 in 1997 to 137,294 in 2001. At the same period, the number of students in PIOs haveincreased by 797.8 % from 15,723 to 141,431.

Efforts to Improve Quality in Primary Education

In the imnplementation of the first APL, our aim has been to expand access to basic education rapidly, whilesimultaneously improving education quality to improve learning achievements and prepare our children forthe challenges of the 21st century. The revised basic education curriculum includes elements, includingforeign language and computer literacy training, which are specifically directed at enabling students tocompete more effectively in the global marketplace and to further contribute to the social and economic

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progress of Turkey.

Quality improvements are inextricably linked to our objective of reaching universal participation in basiceducation. High quality schools, the School Bussing Program and YlBOs are essential to improve theoverall value and attractiveness of education to families, but at the same time they are essential forimproving quality of education. Similarly, targeted programs for low income families, including freeschool meals, books and educational materials serve both to increase attendance and improve studentperformance.

In the Program of the Government, quality improvement activities include, increases in the quality ofteachers through in-service training, curriculum improvements, distribution of textbooks and providingInformation Communication Technology (ICT) classes.

Increasing the Number of Teachers and In-service Training

One subject we attached importance in increasing the quality of primary education was the availability ofqualified and motivated teachers In order to staff rapidly increasing number of schools and classrooms, andto improve the overall efficiency of teacher allocations across Turkey, we bad to take a number ofimportant measures. Within this context:

(i) Systematic reforms have been made in the pre-service training of teachers,

(ii) Temporary measures, including the use of volunteer retired teachers to increase teachersupply, and

(iii) Changes in regulations on teacher assignments and compensations were put into effect.

188,544 additionalteachers were recruited between the years 1997-2001. 583,000 teachers (school directorsare not included in this figure) are in service at the being of the 2001/2002 educational year.Approximately 272,388 teachers received in-service training during 2001. This figure was 213,444 for theyear 2000.

Curriculum improvement

Following the adoption of uninterrupted compulsory eight-year primary education throughout the country,the education system has been restructured, in areas where it was deemed necessary, programs have beenrevised. Within this framework, in the last five years, 184 education programs have been prepared andhave been integrated into the curriculum. One subject we attach importance is the revision of thecurriculum to allow the best use of the possibilities offered by ICT classes.

Purchase of Basic Education Materials

Our aim is to increase the quality of education, particularly to students from very-low-income families,through provision of basic education materials. 10.2 million school books prepared by the Ministry ofNational Education have been distributed free of charge to primary education students in rural areas, tochildren of low-income families and to students in the earthquake zone at the beginning of the 2001/2002school year.

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Computer Education

Building an information workforce is an important challenge for us as we implement our strategy foreconomic development based on open competitive markets. In light of the increasing demand forinformation-oriented jobs that require basic infornatics skills, and the technological shift towards personalcomputing and distributed applications we recognize the need for a strategy to broaden the diffusion ofcomputer literacy. From an equity as well as an efficiency perspective, informatics literacy can play apivotal role in our economic and social development by adding a greater technological element to theservice and manufacturing sectors. Within the framework of the BEP, the Ministry of National Educationaims to broaden computer literacy, revise and enhance the existing curricula so that maximum benefit canbe derived from ICT classes and open computer laboratories to the local community astechnology-intensive leaming environments.

Positive Developments Achieved at the Implementation of the Basic Education Program

The efforts I have outlined have produced excellent results. The number of students in primary educationhas increased by 1.5 million after 1997 and the enrollment rate, which was 75.8 % in the 1996/1997educational year has exceeded 95 % in 2001/2002. Until 1997, only 90 % of children at school agecompleted five-year basic education and just 53 % of the student who had completed five-year basiceducation (mostly boys) used to continue their studies.

Girls' enrollments in rural areas made the most rapid progress. Girls' enrollments in grade six in ruralareas increased by 162 % in the first year of the Program, and have continued to make sharp gains eversince.

Furthermore, quality of the education in rural schools has been improved as a result of the School BussingProgram and the intensive in-service training for teachers.

The progress made in the efforts to implement uninterrupted eight year basic education, has led to ourachievements and the solid foundations we have built, following the approval of the Basic Education Lawhas established a sound basis for restructuring the secondary education system in Turkey.

The successes achieved in the implementation of the Basic Education Program has led to a striking increasein the number of the students enrolling in secondary education, preparing the way for extension ofcompulsory education to 12 years.

Our Targets

Despite the major progress achieved in meeting the objectives of the Basic Education Program to date,there is still important work to be done both to extend coverage and to improve quality in Basic Education.

Priority areas for our activities are indicated below:

- Extending enrollments in basic education to 100 %, and bringing in all students of school ageinto the system.

- Efforts to improve the quality of basic education will continue. In this framework:

* The construction of new classrooms will continue to bringing down the number of studentsper classroom to 30 and to eliminate gradually the practice of combining classes in rural

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schools* In-service training for teachers must continue and they must acquire the skills to teachcomputer literacy and to use fully computers as an educational tool.* Curriculum revision will continue to improve quality of education.

The main difficulties we encountered in achieving our targets were rapid population increase that makesnew investments in education essential, and the difficulties in planning new school construction andrenovation programs due to internal migration from rural areas to population centers. In addition to thesetwo main problems, the economic crisis Turkey is going through has necessitated savings in the resourcesallocated to education, just as in every field, and revision of planned investments in education. Forinstance, while we need to construct 91,738 classrooms within the next three years to achieve our aim tobring down the number of students per classroom to 30, under prevailing conditions, this objective cannotbe realized without new financial resources. Similarly, renewed efforts must be deployed to find theresources needed to renovate schools in rural and urban areas, as well as the YIBOs and PIOs.

The World Bank Support - The Basic Education Project

Our government has requested a two-phase Adaptable Program Loan amounting to US$ 600 millions fromthe World Bank as a support for the implementation of the Basic Education Program and this request hasbeen accepted by the Bank. The Loan Agreement for the first phase of the Basic Education Program wassigned on June 25, 1998. The World Bank has accepted to finance the second phase of the Project just likethe first phase. It will be determined in time whether a third phase should be launched or not.

The cooperation based on mutual understanding and trust has been maintained for many years betweenTurkey and the World Bank. This positive ground was the solid foundation for the implementation of theUS$ 300 millions worth first phase of the Basic Education Project.

The Basic Education Proiect - Phase I

The implementation of the first phase of the Project has aimed to achieve the following objectives:

i) Expanding universal eight-year basic education;ii) Improving the quality of basic education and computer supported learning and teaching;iii) Strengthening management capacity to provide basic education; andiv) Monitoring and evaluation to guide the implementation of the Program.

Within the framework of the first APL, activities have been carried out in four components. The mainpoints of these activities are indicated below:

a) Renovation and construction of additional facilities for rural and urban schools in gecekonduareas, and YIBO's to extend basic education.

b) Improving quality of education. Under this component, 3188 ICT classes have been establishedin 2802 basic education schools. Furthermore, work continues to procure 22,854 computers for the useof teachers working in rural schools. We expect to complete procurement before the end of 2002.

Within the implementation of the program, we are strengthening learning through productive use of ICT asa tool in the whole basic education curriculum. Our activities to develop the curriculum for maximum use

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of ICT are continuous. Information technology can have various objectives, ranging from importing basicskills in routine applications such as data entry or word processing, to conveying more advanced skills suchas facilitating learning in other subjects (foreign language, science, math, etc.) to research through theInternet. We are working to ensure maximum use of such opportunities offered by ICT classrooms tostudents.

c) In-service Training for Primary Education Teachers. Within the framework of expandingcomputer aided instruction, a total of 221,000 teachers were provided with computer training under theBasic Education Project, along with an intensive training program for basic education inspectors.

d) Provision of educational materials for rural schools to increase school attendance andachievement rates for children from low-income families. Within this framework, the Ministry ofNational Education is in the process of procuring educational materials for approximately 22,776 ruralschools and students in these schools. The procurement activities to purchase these educationalmaterials is expected to be completed in 2002.

Besides providing educational materials for students the Ministry of National Education continues itsactivities to provide free lunches and school uniforms for the children from low-income families. Torealize these activities, MONE uses its network of Girls' Vocational High Schools and Adult TrainingCenters. It has been observed that such assistance has a positive impact on school attendance and studentachievement.

Implementation of the Basic Education Project

Existing capacity and resources of the MONE are used to the maximum in implementing the BasicEducation Project. The Project Coordination Center (PCC) under the direct responsibility of a DeputyUndersecretary is mainly responsible for the implementation of the Project. PCC carries out its tasks incoordination with and with the support of the relevant ministerial line units. PCC, at the same time, is inclose cooperation with provincial/sub-provincial units of the MONE. In addition to the Ministry staff,consultants are recruited when necessary to support implementation of various components of the Project.

One of the most important tasks of the PCC has been monitoring and evaluation activities. On-goingevaluation provides us with essential feedback for gauging progress, making course corrections, andresponding to changing circumstances and lessons leamed.

Results of the monitoring activities are assessed regularly and at various levels. An important dimension ofthese assessments is joint evaluations made with Bank missions.

Analysis of learning outputs of the Basic Education Program is at the centre of monitoring and evaluationactivities. Activities to measure student achievement in four areas (Turkish, science, math, and socialsciences) based on existing assessment tools developed within the scope of National EducationDevelopment Project, have been completed. These activities shall be expanded to include computer literacyand foreign language through a measurement test to be applied on April 14th, 2002. Results of the testswhich will be repeated at regular intervals shall be a useful tool to measure the successes and shortcomingsof the Basic Education Project, and to overcome deficiencies.

Basic Education Proiect Phase II

The cooperation based on mutual understanding and trust between Turkey and the World Bank shall

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constitute a solid basis for the implementation of the second phase of the Basic Education Project.

Our main targets in Phase II of the Basic Education Project shall comprise the same actions that weresupported under Phase I. These targets are to expand the coverage of basic education, to improve thequality of basic education, and to expand computer assisted teaching and learning. Besides these basic

objectives, Phase II shall also support pre-school education and special needs education as an integral partof primary education.

Inclusion of special needs education within the scope of the Project is part of our efforts to integratestudents with special needs into the educational system and to extend basic education coverage. Includingpre-school education within the scope of the project shall reinforce our endeavors to expand pre-schooleducation, which is presently not at the desired level. Furthermore, an early start in areas with lowachievements in basic education, will contribute to raising achievement rates.

In order to complete the Second Phase of the Basic Education Project in a timely and efficient way,management capacity of the Ministry of National Education shall continue to be reinforced. Necessarysteps are being taken to hire sufficient number of consiltants to assist in the activities of the ProjectCoordination Center. Monitoring and evaluation mechanisms which provide guidance on theimplementation of the project shall continue to be used under Phase II of the project.

I believe thaw experience gained by all Ministry units and the staff of these units during the implementationperiod of the first Phase of BEP, shall accelerate and assist in the implementation of the second Phase.

Our activities in the second Phase of the BEP shall be implemented mainly in four areas as in the firstPhase of the project. These components are indicated below:

a) Renovating primary education schools to extend basic education coverage. The Second Phase ofthe Project shall also cover the renovation of and the construction of additional facilities in a number ofpre-education and special needs education schools.

b) Installation of additional ICT classrooms to increase quality in education.

Through the installation of additional ICT classrooms in 3000 basic education schools, the number of ICTclassrooms installed under this Project, shall be increased to over 6000. Increasing the number of schoolswith ICT classrooms shall assist us in reaching our objective of extending computer literacy andcomputer-assisted education.

In parallel with the installation of additional ICT classrooms we shall carry on our activities regarding theuse of ICT classes as a tool within the basic education curriculum to strengthen learning. Our aim is toutilize the teaching possibilities offered by ICT classrooms to the maximum to increase the quality of basiceducation. Monitoring and Evaluation studies on the use of ICT classes installed in the first Phase of theproject, and the achievement rates in these classrooms which are being carried out by consultants will becompleted by the end of June 2002. The results of these studies shall be a useful tool in determining themeasures needed for efficient use of ICT classrooms and guiding our activities on implementation anddevelopment.

In order to ensure maximum use of ICT classrooms installed in the basic education schools by the localcommunity, work continues to determnine the principles under which computer classrooms will be opened tothe local community as technology-intensive learning environments. These activities will be completed by

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June 2002.

The second Phase shall also cover installation of ICT classroom in special needs education schools.

c) In-service Training in Basic Education

In-service training activities shall continue to enable basic education school teachers to effectively use theactive learning method. Within the framework of expanding computer assisted education, teachers andprimary education inspectors shall continue to receive computer training.

Under the second phase, in-service training activities shall also cover pre-school and special needseducation school teachers.

In order to meet the need for in-service training of a great number of staff in the most effective way, anEducation Portal shall be established under the second phase, which shall improve distance educationopportunities of the Ministry.

d) Provision of educational materials for schools in gecekondu areas. Related activities carried outunder the first phase of the first phase, shall be carried on under the second phase of the Project.

As in Phase I of the Basic Education Project, monitoring and evaluation activities shall have an importantrole in Phase II in guiding our activities. Results of the Student Achievement Measurement Studies shallbe an important tool to determine the successes and failures of the Basic Education Program, and toovercome those failures.

Basic Education Program provides us with an historic opportunity to invest in our future and to prepareour children for the challenges of the 21st century. Through our efforts to achieve universal access toeight-year basic education and to improve education quality, we will elevate Turkey's stature andcompetitiveness in the intemational community. Our partnership with the World Bank in this effort willstrengthen our prospects for success.

Best Regards,

Metin Bostancyo6luMinister of National Education

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Report No.. 21831 TUType: PAD