Edited by Erdem Başçı, Sübidey Togan and Jürgen von Hagen
Chapter 3: Fiscal Policy Challenges, Sustainability of Public Finances and EU Accession: The Case of Turkey
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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