Macroeconomic Policies for EU Accession

Macroeconomic Policies for EU Accession

Edited by Erdem Başçı, Sübidey Togan and Jürgen von Hagen

What macroeconomic requirements must Turkey meet in its quest to accede to the European Union? This book, with its distinguished contributors – well-known economists and policymakers – examines and analyses these macroeconomic challenges confronting Turkey. Although the focus is on the specific situation of Turkey, the lessons are informative for other candidate countries and the findings directly relevant to the process of European integration.

Chapter 3: Fiscal Policy Challenges, Sustainability of Public Finances and EU Accession: The Case of Turkey

Graham C. Scott

Subjects: economics and finance, financial economics and regulation

Extract

3. Fiscal policy challenges, sustainability of public finances and EU accession: the case of Turkey Graham C. Scott* 3.1 INTRODUCTION This chapter examines the implications of EU succession for the fiscal policies and public finances of Turkey. I begin by summarizing recent fiscal and economic events leading into and emerging from fiscal and financial crisis and the causes of what occurred. The chapter reviews the record of attempts to reform fiscal institutions over the past decade and suggests what shaped the agenda and explains the slow progress until the aftermath of the crisis. Turkey’s very ambitious and well-designed reforms of fiscal institutions, which are now under way, are described, together with some thoughts on the risks and challenges of implementation. EU accession is then discussed within this context and some final remarks summarize the key messages. Turkey’s rapid descent into economic and fiscal crisis and its remarkably successful response to it are well documented and I need only summarize the key features of these events to set the stage for my reflections on these events and to inform readers who are not familiar with recent developments in Turkey’s government finances. The Organization for Economic Co-operation and Development (OECD, 2004) report captures the situation succinctly in its executive summary, which also provides a concise précis of this chapter. Turkey is at a crossroads. After hitting the most severe crisis in its recent history in 2000–2001, the economy bounced back and is now among the fastest growing economies in...

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