Public Financial Management Reforms in Turkey: Progress and Challenges, Volume 2

Table of Contents

1. Frontmatter

2. Asset and Liability Management

   1. Frontmatter

   2. Chapter 1. Extended New Treasury Single Account: New Tool for Government Cash Management in Turkey

      Barış Can

      Abstract

      Treasury Single Account (TSA), which is a cash pooling system that enables public cash resources to be managed centrally and efficiently, is essential for equalizing cash flows in terms of time and place. In this way, TSA system in Turkey was initially established in 1972; however, the TSA was greatly different from that of other countries in many aspects, especially its coverage was narrow. Since its establishment, the structure of TSA has been revised many times in order to converge to international good practices; however, these revisions have been done for its operational structure rather than its scope. With the latest amendment in Law No. 4749, New Extended Treasury Single Account (New TSA) system, which enables almost all public resources to be managed by single hand without disturbing the administrative and financial autonomy of public administrations, was established in 2018. By Law, the President of the Republic of Turkey has the authority to extend the scope of TSA. Within the limits of the powers conferred by the Law, the President of the Republic issued Presidential Decree on the scope of new TSA, on August 8, 2018. In this study, the historical development of Turkish TSA is represented. Thereafter, the main motivation of the establishment of the New Extensive TSA and its structure is discussed. This study aims to clarify the structure of the New TSA by considering its theoretical, operational structure, banking architecture, accounting structure, and IT infrastructures and to highlight its likely contributions to public financial management in Turkey.

   3. Chapter 2. Public Debt Management Reforms in Turkey

      Mete Saat

      Abstract

      The public debt became a vital economic problem with rising debt burden for all budget deficit producing countries in the last decade. Turkey is not an exception, but it has made great improvement in its public debt risk management practices since 2002. With the help of fiscal discipline, the efficient debt management practices helped to rebuild the confidence in the money market and improved confidence reduced the risk perception. The risk management tools were used to shape the new borrowing policy, and government debt stock was gradually transformed into a lower risk profile against interest and exchange rate fluctuations. The market confidence and improved debt profile ensured to reduce the cost of borrowing and lengthened the average maturity of borrowing. In this chapter, Turkey’s journey to contemporary public debt risk management practices and outcomes are discussed.

   4. Chapter 3. The Role of Risk Management in Public Debt Management: The Case of Turkey

      Hakkı Karataş

      Abstract

      Turkey recorded a significant sucess in managing its public debt after 2001 onwards. Specifically, central government budget deficit decreased from 11,6 percent as a share of GDP to 1,5 percent during 2001–2017. Similarly, the European Union defined general government debt as a share of GDP has been reduced from 72,1 percent to 28,3 percent during the same period. Turkey not only decreased deficit and debt levels but also improved the structure of its debt, thanks to the risk management practices implemented in this period. The aim of this paper is to analyze the role of risk management practices of Turkish Treasury in public debt management.

   5. Chapter 4. Management of Contingent Liabilities in Turkey

      Şebnem Tosunoğlu

      Abstract

      Rise in off-budget government programs may cause fiscal instabilities. Evaluation of a country’s public fiscal performance includes a thorough consideration of fiscal risks associated with government budget (Polackova 1998, p. 9).

   6. Chapter 5. The Management of State-Owned Real Estate in Turkey

      Pınar Güven

      Abstract

      In Turkey, the term “Treasury” refers to the sum of state’s cash assets and non-cash assets, namely, real assets. Although only the government’s cash sources are considered as treasury, non-cash sources in the form of real properties are actually one of the most important sources of finance in the state.

3. Intergovernmental Fiscal Relations Reforms

   1. Frontmatter

   2. Chapter 6. Strategic Planning and Budgeting in Local Governments

      Hüseyin Güçlü Çiçek, Süleyman Dikmen

      Abstract

      The strategic planning concept has emerged as an old strategy and activity, which is used to seize the enemy as in the military sense (Nutt and Backoff 1992: 56).

   3. Chapter 7. The Implications of the Latest Administrative Reforms About Intergovernmental Transfers

      Zeynep Burcu Bulut-Çevik

      Abstract

      Intergovernmental fiscal transfer is a fundamental item of intergovernmental fiscal system and a significant revenue source for subnational governments.

   4. Chapter 8. Revenue Decentralization and the Soft Budget Constraint Problem in Intergovernmental Fiscal Relations: The Case of Turkey

      Tekin Akdemir, Birol Karakurt

      Abstract

      The soft budget is a concept that was first introduced by Kornai to illuminate the paternalistic behavior of the socialist economies (see Kornai 1986, p. 3; Kornai et al. 2003, p. 1095).

   5. Chapter 9. Fiscal Decentralization and Macroeconomic Management in Turkey

      Asuman Çukur

      Abstract

      There is a broad interest in fiscal decentralization around the world. But there are considerable differences in the way that fiscal decentralization is implemented among various countries. As a result, outcomes of fiscal decentralization also differed among countries. Fiscal decentralization in Turkey poses many challenges especially for the macroeconomic management. Turkish fiscal decentralization is characterized by high local government expenditures with limited local government own revenues which causes local governments to heavily depend on the intergovernmental transfers and borrowings to fulfill their responsibilities. In this context, this chapter reviews the impact of fiscal decentralization on the macroeconomic management in Turkey where the related research is limited.

4. Accounting, Financial Reporting and Auditing in Public Sector

   1. Frontmatter

   2. Chapter 10. Public Sector Accounting Reform in Turkey: Moving Cash to Accrual Accounting

      Necdet Sıtkı Yakupçebioğlu

      Abstract

      Political events and wars in the first quarter of the twentieth century resulted in the disintegration of empires and kingdoms and foundation of new states instead of them, the Republic of Turkey was founded on the Anatolian territories of the Ottoman Empire.

   3. Chapter 11. The Adoption and Implementation of International Public Sector Accounting Standards in Turkey

      Ali Topakkaya, Nazire Kont

      Abstract

      In recent years, significant developments have been experienced in the field of international accounting standards. Compliance with international accounting standards provides some advantages. It is very important to ensure comparability both within countries and within entities, and to address similar transactions in similar terms.

   4. Chapter 12. Public Internal Audit Reforms in Turkey: Structure, System, and Roles

      Halis Kıral

      Abstract

      The biggest changeover relating to public finance management and control system in Turkey took place with the Public Financial Management and Control Law No. 5018 (the Law), which was enacted on December 10, 2003 to align Turkey’s public financial management and control (PFMC) system with international standards and European Union (EU).

   5. Chapter 13. Reforms of Turkish Court of Accounts

      Elif Ayşe Şahin İpek

      Abstract

      The subject of this study is the evaluation of the change process experienced by the Turkish Court of Accounts. This evaluation is made by i) independence of TCA, ii) change in audit area of the TCA, iii) change in institutional capacity of the TCA, iv) change in relations of the TCA with the GNAT, and v) change in the institutional capacity of the TCA.

5. Backmatter