Everyone has their own problems. If you hear the parties in struggle, they have fantastic claims and they think they are right. They are telling with passion the unfair treatment they are facing. However, there appears an atmosphere where small losses in the way to victory do not count and where anything is serving to the end is lawful. The trick here is not to push the country to this mood. If the authorities responsible for the adjustment among institutions become a party, such occasions become inevitable. We have sensed this atmosphere before 1980, and it was not nice. But there is nothing we can do. If we cannot change the atmosphere fundamentally, we should deal with the steps that can be taken in the coming period to secure economic stability. Rule based fiscal policy has become more important today than it was yesterday. The domestic and international atmosphere reveals that Turkey had better built economic stability on a solid ground as soon as possible. Nonetheless, when it comes to action, there are a number of stories.

There are three important issues pertaining to fiscal rule discussions. First one is the issue as to which parameter the rule will be established on, how the rule will be defined, and how the failure to fulfill the rule for a particular year will be compensated for in the following year. Statements heard so far does not give a concrete hint as to how the rule will be defined, how public deficit will be explained, whether or not there will be specific targets for each public agency, and how the coordination of the rule among public agencies will be ensured.  As a result, it appears upon what we have heard so far that there is no concrete project in force yet. In this respect, this issue will be discussed more extensively. This is the first point.

The second issue is related with concretely monitoring whether or not the rule is fulfilled and creative accounting techniques are used. At this point we can also only complain about the lack of transparency of public accounts. For instance, I do not understand how the revenues of the Social Security Institution increased by 50 percent from November 2009 to December 2009. Just until yesterday, experts of the issue could not explain it, too. But as a result of that increase, budget transfers to the SSI decreased by December 2009. It was one of the reasons why the 2009 budget reflected a surprisingly successful performance. If I cannot get the reason of the jump in premium revenues just looking at the figures when the rules are not changed, it implies that it will be even harder for me to understand whether or not the rule is fulfilled. There exists a problem pertaining to the transparency of public accounts. Given that the weak transparency of public accounts is an already existing handicap for Turkey, there is a strong need for a mechanism that will control whether the rule is fulfilled or not and that will inform the public in this respect.  TEPAV's opinion on this issue suggested the formation of an independent monitoring mechanism that will operate under the body of National Assembly. This option can still work. Otherwise, we will continue asking questions about developments that confuse our mind as reflected in TEPAV Fiscal Monitoring Reports. On the other hand, it is evident that there is a problem considering the extent to which Turkey is ready to switch to a rule based fiscal policy. And let this be the second point.

And the third one: In fact, we could have kept going happily for a while saying 'Let us launch a fiscal rule. How do you think it should be?' Honorable Deputy Prime Minister of Turkey says it will be launched in May, but based on what he and Esteemed Prime Minister said about the IMF issue, we do not have any reason to believe them this time. However, domestic as well as the international conjuncture points to another factor in the context of fiscal rule discussions: timing. It appears that Turkey needs to implement a fiscal rule immediately without losing any further time. We had better not get caught by turbulence. And let this be the third point.

Let us admit: we seem highly unprepared for a fiscal rule. If we have had enough time, we would be glad to discuss the issue at length. However, I believe that we do not have time to think about how to set, execute and built the credibility of a fiscal rule. It will be the best in terms of various aspects to locate the economy on solid grounds. We had better cut this issue short and sign a deal with the IMF.

Otherwise, there will be no point left in having provoked the quarrel. No progress will be made until the elections; what comes from politics will go to the economics. As the saying goes, easy comes easy go.

Please fasten your seat belts. Otherwise, you will get caught by the turbulence on foot.

This commentary was published in Referans daily on 25.03.2010