The project sponsor is the Metropolitan Municipality of Izmir, the 3rd largest metropolitan area of Turkey serving a population of nearly 4 million inhabitants. Izmir has a diversified economy and a strong socio-economic profile with a GDP per capita 30% above the national average. Given its favorable geographic location as the main port on the Aegean coast, Izmir has been one of the most vibrant cities in Turkey and a preferred destination for international trade and foreign direct investment.

The Metropolitan Municipality of Izmir has received a BB+ rating from Fitch, in recognition of its strong revenue base, prudent financial management and stable political administration. It derives most of its revenues from the share of national taxes collected within its metropolitan area (80% in 2011). Operating margins have averaged 57% since 2006 and are projected by rating agencies to remain above 40% over the next 3 years. Capital expenditures represent the bulk of Izmir’s budget and are primarily associated with the large investments needed to modernize the City’s public transportation system. Including off-balance sheet liabilities, total debt was 93% of revenues and debt service coverage ratio was at 2.5 as of 2011.

The Mayor, Mr. Aziz Kocaoglu, is in the middle of his second term in office. The next elections are due in 2014. He belongs to the Republican People’s Party (CHP), the main opposition party in the national parliament, which holds an absolute majority in the Municipal Council in Izmir.

The total Project cost is estimated at EUR 68 million. The proposed IFC’s investment is a EUR 45 million long-term A loan for IFC’s own account.

58.53 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	58.53
Equity

* These investment figures are indicative

The Project is located in the metropolitan area of Izmir, the main port city on the Aegean coast of Turkey.

The installation of an Intelligent Traffic System infrastructure will contribute to the City''s efforts to create a more efficient road transportation system in Izmir, reducing travel times and fostering higher productivity and economic growth. Moreover, there will be a number of environmental and social benefits due to reduced air pollution, traffic accidents, noise and congestion in the City center. In addition, strengthening its fleet of fire trucks and other emergency vehicles will enable the City to provide a more effective response to its citizens in case of emergencies.

The Metropolitan Municipality of Izmir has so far borrowed mainly from the Turkish Treasury and other Turkish public sector institutions (Vakifbank, Illerbank). IFC would help the municipality diversify its funding sources and transition to private sector financing. At a time when commercial banks are cutting their lending in the region, due to the ongoing turmoil in Europe, IFC would provide the municipality with the long-term financing it needs to implement its priority investments. Moreover, IFC would leverage its broad experience in the urban transport sector to share with Izmir global best practices in project design and implementation.

This project will support a new traffic management system and replacement of emergency response vehicles, which will have no or minimal environmental impacts respectively. Thus, the project has been classified as Category C according to the IFC''s Environmental and Social Review Procedure. The client will be required to commit to applying the labor standards established by the IFC Performance Standard 2: Labor and Working conditions (PS 2).