Akbank Project The project fits well with the World Bank Group strategy in Turkey, which stresses stabilization measures such as controlling the fiscal deficit and reducing inflation through, inter alia, tax and social security reform and privatization.  This strategy aims to improve the economic environment for sustainable growth and diminish the role of the government in those areas where the private sector is capable of assuming responsibility.  IFC has sought to complement this approach by supporting viable private enterprises that are being hampered by present conditions.    In the absence of a corporate bond market, commercial banks are the main source of debt financing for Turkish industrial enterprises.  There has been strong demand in Turkey over the past few years for external funding for investment purposes, but sources of term finance are limited to a handful of development banks and bank-owned leasing companies that are funded by their parent companies. IFC''s primary focus in the Turkish financial sector has been to support the development of sound financial intermediaries and to enable them to extend the scope and the tenor of their lending activities.  IFC''s investments have also broadened the use of prudential operating guidelines, setting the standards for the banking, leasing, and securities brokerage sectors.    One of IFC''s primary objectives has been to increase the tenor of lending to private sector enterprises in Turkey.  While the biggest and best of the Turkish companies have been able to raise longer-term financing and many are increasingly able to do so for projects in the infrastructure and energy areas (with IFC''s help in many cases), less well known companies have access only to short maturities.  Thus, bank lending has been used primarily for trade financing, while productive investment has had to be financed from internal cash generation.  The increased availability of term loans to finance investment will enable Turkish enterprises to leverage their internal resources, and if debt/equity ratios are prudently maintained, should provide a boost to economic growth.  Feedback from IFC''s financial sector clients indicates that the enterprise sector is increasingly demanding term, as opposed to trade, financing from banks, and IFC''s recent loans have been structured to meet this need.    While building on this objective, the proposed project has two additional roles for IFC:     - to introduce Akbank to the institutional investor community for a dual structured and non-structured transaction, and    - to provide credit for term lending to SMEs.  During 1999, through its established access to international capital markets, Akbank has borrowed $350 million in syndicated loans and $650 million in a securitized transaction. The proposed project, however, is the first opportunity for Akbank to break into the institutional investor market through a dual structured and non-structured transaction, which will allow the Bank to diversify and increase the maturity of its funding base.  With longer maturity funding, Akbank''s strategy is to increase term lending to SMEs, and develop new retail products such as mortgages and customer loans, which have become an increasingly important focus of the Bank''s activities.