Why should the fiscal rule be different than that proposed in official arrangements?
Güven Sak, PhD
23 February 2010
I suppose it was a couple of years ago. Back then, I was of the opinion that "Turkey does not necessarily need the IMF. The way to get rid of the IMF is to take rapid steps in the direction of rule-based fiscal policy." However, then we had not experienced the 2008 global crisis or wasted the budget funds for the sake of elections as was done over the 2008-2009 period. The PIGS issue which substantially occupies the agenda nowadays, was not existent at all. Back then, I wrote many commentaries on this issue. Also TEPAV published policy notes. And then these times came. Today, let us make a contemporary contribution to the 'how must the fiscal rule be' discussion. Let me explain why I think that the fiscal rule framework the Treasury currently works on is wrong. Let me explain why the rule
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Importance of the institutional structure
Fatih Özatay, PhD
21 February 2010
The Sunday commentary of the last week ended with the following questions: Why are there such significant income gaps between different countries? How did some countries close rapidly the income gap between them and developed countries while some others put themselves into more bitter situations? How did Turkey manage to make no progress?
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Is a way out for Greece without the IMF likely?
Fatih Özatay, PhD
18 February 2010
Greece is in the Eurozone. Therefore, it has more obligations to fulfill compared to other EU member countries. Particularly there are public budget and public debt restrictions Greece has to comply. However it appears that Greece failed to do so not only during the crisis but also before the crisis. What is more, recent news suggests that the country has undertaken some liabilities which have the potential to increase public debt in the future. EU has institutions responsible for inspecting the liabilities imposed on Greece for being in the Eurozone. However, they have missed this incident out...
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Have you checked the survey by the Istanbul Chamber of Industry?
Güven Sak, PhD
18 February 2010
Turkey's economy has been demonstrating a dual structure for a certain time. There are 'well-off firms' on the one hand and 'firms the endurance of which are tested everyday' on the other hand. And this atmosphere is dangerous for the near future and measures to prevent it should be taken. Moreover, Istanbul Chamber of Industry (ISO) president Mr. Tanıl Küçük is quite right in saying that the government has failed in the task of implementing measures. Along with 2008 and 2009, the government is about to waste 2010. Today let us first take a look at the state of the economy survey conducted by ISO which points to the dual structure in the economy. This way the data, which pleased analysts for signaling a weak light of recovery, would be located on the right perspective.
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Greece should sign a deal with the IMF
Fatih Özatay, PhD
15 February 2010
The world has been facing interesting developments. The state of affairs in Greece is of greater importance for Turkey. It will be useful to discuss under which circumstances the state of affairs in Greece leads to another financial crisis. We can name two specific conditions which are not independent from but can trigger each other. The first condition is as follows: the bonds Greece issued to finance budget deficit have lost value significantly due to the rising credit risk. Therefore, banks holding these bonds have faced losses manifested in the fall of the value of their assets. But how important is this?
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The economy recovers, but...
Fatih Özatay, PhD
11 February 2010
On Monday a critical data was announced. Industrial production increased by 7.5 percent compared to the same period in the last year when elements like seasonal factors and the differences between the labor force size are ignored. This is a significant surge. Another important development is that by the first months of the 2009, industrial production enjoyed a rise.
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What Tekel and university exam candidates have in common
Güven Sak, PhD
11 February 2010
This week I shared with you my opinion on TEKEL workers issue. In the meanwhile, the students who will take the university entrance exam this year were drawn into the 'coefficient' trouble. Have you thought what students to take the university entrance exam this year and the workers that will be given the 4C status with the closure of Tekel tobacco processing facilities have in common? Do not directly conclude that there is no link between these two groups; think about it. What they have in common is that they could not foresee the near future because of rapidly changing decisions of the public authority. Inability to foresee the future makes it harder to make decisions and damages the investment climate. It makes raise difficulties for those willing to plan their future. It is depressing
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What is this ‘TEKEL workers’ issue about?
Güven Sak, PhD
09 February 2010
It is evident that given the current milieu, TEKEL workers are profoundly righteous; there is no need to hum and haw. There exists the risk of a deep social disaster introduced by the global crisis. And the government does not seem to have taken conscious action to protect social peace.
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USA-Turkey: Medium term budget
Fatih Özatay, PhD
04 February 2010
On Monday, US budget for 2010 fiscal year was declared. According to this, the budget which recorded a deficit of 10% of the GDP in 2009 will have a higher deficit in 2010 (10.6 %) whereas the budget deficit is targeted to be reduced as of 2011. Experts on the US economy are in a fierce discussion on the budget, which I will refer to in my commentaries time to time. Today, I specifically want to touch upon something which came to my mind as soon as I saw the public debt and interest payment estimates in the budget. And that 'something' would be comparing the figures for the US and for Turkey. Let us proceed with Table 1 and 2 without wasting time.
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Greece is definitely European Union’s concern
Güven Sak, PhD
04 February 2010
Public finance problems of Greece are an issue not only for Greece itself. In this context, the declaration made by Papaconstantinou, Finance Minister of Greece is not wrong. Declarations by France and Germany however, do not completely reflect the truth. Greece is a concern for the European Union. It is of course bad that Greece used creative accounting methods and made the budget seem better than it actually was. But the fact that the process of convergence to the European Union reduces the domestic savings rate in late-comer countries should be addressed as a structural issue. This issue is closely related also with Turkey. After this incident in Greece, EU accession discussions for Turkey will move toward a different platform. The statements presented in Radikal daily on last Monday pr
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