Transcript PPT

REFORM PROCESS IN TURKISH
PUBLIC FINANCE MANAGEMENT
and
FISCAL POLICY
Z. Zeren ÇAKMAK
Finance Expert
DG Budget and Fiscal Control
Ministry of Finance
Pre-Reform Status in Turkey
The Turkish economy came up against economic
crises at more frequent intervals especially after
the financial liberalization process in 1989.
With the crises in 1994,1999 and 2001, the
"sustainable growth" discussions accelarated in our
country.
The problems seen in the public finance
management came along with the macro-economic
problems such as unbalanced growth, not able to
bring up the inflation to the desired levels and high
public sector borrowing requirement.
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Problems in the Public Finance Management
before the Reform
A medium and long term financial program could not be followed
considering obtainable resources,
The General Accounting Law No:1050 which was put into force in
1927 and regulates the financial issues did not respond the needs of
the era,
The financial discipline could not be ensured,
There was no sufficient link between the development plan and
programs, and budgets,
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Problems in the Public Finance Management
before the Reform
The budget implementations are limited to the fiscal year,
There is no multi-annual budgeting,
The top-down approach is dominant in the budget preparation,
The initial budget appropriations are not binding,
The efficiency cannot be ensured in resource allocation and
usage.
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Reform Studies
The fact that a sustainable financial discipline
cannot be ensured is the one of the main significant
reasons for the problems in the macro-economic and
financial area, which led the way for the reform
studies.
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Reform Studies
 In 1995, the "Public Finance Management Project" was carried out
between the Ministry of Finance and the World Bank.
 Further studies were carried out on the outcomes of the project
with the World bank.
 In the 8th Five Year Development Plan, the programs of 2001,
2002 and 2003 and the 58th Government Urgent Action Plan, the
reform need has been emphasized.
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Reform Studies
 At the end of 1999, within the framework of IMF 17.th
stand-by agreement, IMF Fiscal Affairs Department
prepared Fiscal Transparency ROSC.
 In the report, after addressing to Turkey’s problems in its
fiscal system, the important elements concerning the
medium term expenditure framework were indicated
among the measures to be taken by the government.
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Reform Studies
 Within the scope of the reform efforts;
 Say2000i system has been established,
 The Law of Central Bank has been amended,
 Public Procurement Law and Public Procurement Contracts Law
have entered into effect,
 Public Finance and Debt Management Law has entered into
force,
 Revenue Management has been restructured.
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Reform Studies
 Funds have been removed substantially,
 E-Budget system has been established,
 Analytical Budget Classification system has been adopted and
 Public Finance Management and Control Law No. 5018 has
entered into force,
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Law No. 5018
Changes brought by Public Finance Management and Control
Law No. 5018
 Fiscal Discipline
 Fiscal Transparency
 Accountability
 Accruals Accounting
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Law No. 5018
 Accounting Unity in the Public and Issue of Financial Statistics
 Effective, Economic and Productive Use of Resources
 Determination of Policies and Priorities
 Internal Control
 Internal Audit
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Law No. 5018
 Performance-Based Budgeting
 Strategic Planning
 Medium Term Spending Framework
 Medium Term Program
 Medium Term Financial Plan
 Three-Year Budget Projection Involving Income and Expense
Expectations of the Present Year and Following Two Years
 Establishing Relations Between Planning and Budgeting
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Reforms and Fiscal Policy
 As a result of these reforms made in the field of
Financial Management, substantial achievements have
been generated in this field in our country.
 Within this context, fiscal discipline has been
strengthened, transparency has been enhanced and
accountability has come to the forefront.
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Fiscal Policy
 Decreasing of budget deficit,
 Following a strong primary surplus policy,
 Acceleration of privization
have been the main elements of fiscal policy during the
last 10 years.
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Fiscal Policy
 Thanks to the prudent and steady financial policies
implemented, the ratio of public debt stock to GDP has
been reduced dramatically.
 Again
thanks
to
the
fiscal
discipline
implemented
determinedly, the ratio of interest expense to GDP
decreased rapidly.
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Fiscal Policy
 As a result of the political and economic stability and the
macroeconomic and structural policies implemented, the
ratio
of
budget
deficit
to
GDP
has
substantially
decreased since 2003.
 Great importance is attached to the policy of having
primary surplus while providing sustainability in public
finance.
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Budget Deficit/GDP (%)
20,0
5,5
8,0
2008
2,2
2007
2,1
2006
1,4
0,6
2005
1,8
1,1
4,0
1,6
3,6
5,2
(%)
8,8
12,0
11,5
16,0
2012
2013
Bütçe
0,0
2002
2003
2004
2009
2010
2011
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Primary Surplus/GDP (%)
10,0
1,2
2012
2013
Bütçe
0,0
0,7
2,0
1,3
1,9
3,5
4,2
4,9
4,0
4,0
3,3
(%)
6,0
5,4
6,0
8,0
0,0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Interest Expenditure/GDP (%)
20,0
16,0
14,8
12,9
(%)
12,0
10,1
8,0
7,0
6,1
5,8
5,3
5,6
4,4
4,0
3,3
3,4
3,4
2011
2012
2013
Bütçe
0,0
2002
2003
2004
2005
2006
2007
2008
2009
2010
EU Defined Debt Stock/GDP(%)
80
77,9 74,0
67,7
70
Maastricht Criteria: % 60
Medium Term Program
59,6
60
52,7
46,5
50
46,1
39,9
40
40,0
42,3
39,1
36,2
35,0
33,0
31,0
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Source: Treausry
* MTP
2015*
2014*
2013*
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
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THANK YOU FOR YOUR
ATTENTION
[email protected]
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