Publication: Turkish Cypriot Community: Coping with the Turkish Lira Depreciation Shock
Loading...
Date
2018-11
ISSN
Published
2018-11
Author(s)
Editor(s)
Abstract
The Turkish lira (TL) has depreciated to an extent not seen since the 2001 crisis, reaching its lowest level in September 2018 (TL 6.37/US 1.00 dollar), losing 66 percent of its value against the US dollar since January 2018. This Regular Economic Report focuses on the likely impact of the depreciation on the Turkish Cypriot (TC) economy. Although the magnitude of the 2001 depreciation eventually turned out to be double the current depreciation, the reaction of the economy in 2001 offers useful insights into understanding the situation today. The report also discusses the financial situation of Local Communities Bodies (LCBs), whose budgets are highly dependent on transfers from the central administration. With the TL depreciation, fiscal pressures will arise at the central level, as with the local level, where the quality of service delivery is likely to be eroded as a result. To encourage spending reductions, the central administration could toughen its approach and reject budgets based on implausible revenue projections. It could encourage wage bill reductions by enforcing current limits on staffing and overall wage spending. It could also assist LCBs to improve the efficiency of services, such as water supply and solid waste management, by encouraging joint service arrangements among small LCBs. But much of the power to improve the situation lies with the LCBs themselves, as they have a considerable degree of fiscal autonomy despite the limits imposed by central regulations. They can increase basic tax rates up to the rate of inflation and impose higher valuations; and are also free to increase water tariffs (subject only to pro forma review) and the rate of various service charges within a range set by central regulation. Although their ability to reduce the number of civil servants is limited, they have considerable control over the numbers and wages of contracted staff and front-line service providers. The first section of this report discusses recent economic developments in the TCc with a focus on the likely economic impact of the TL depreciation. The second section assesses the state of the LCBs’.
Link to Data Set
Citation
“World Bank. 2018. Turkish Cypriot Community: Coping with the Turkish Lira Depreciation Shock. © World Bank. http://hdl.handle.net/10986/34531 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Bulgaria : Public Expenditures for Growth and Competitiveness(Washington, DC, 2012-03)Bulgaria's economy performed relatively well during the crisis and the economy is reviving. In comparison with other Tenth European Union (EU10) countries, for Bulgaria the drop in Gross Domestic Product, or GDP growth was below the median, fiscal performance deteriorated less, and public debt stayed among the lowest in the entire EU. In late January 2011 the EC concluded that in 2010 Bulgaria had made significant progress in deficit reduction and is on track to exit the excessive deficit procedure in 2011. The large macroeconomic imbalances observed in 2005-08 had been corrected by 2010 with relatively little negative impact on growth relative to other EU10 countries. Since late 2010 Bulgaria's recovery has been driven by net exports; investment and consumption are recovering more slowly. As long as the economic environment remains favorable and structural reforms are implemented as planned, the economy should reach and even exceed its pre-crisis level in 2012. This report is intended to inform policy makers, the international community, and civil society about Bulgaria's recent economic performance and its options for reforming public spending to enhance competitiveness and growth. It first reviews Bulgaria's growth strategy and its fiscal adjustment over the last several years and the medium-term challenges it confronts. The report then analyzes Bulgaria's export performance to identify comparative advantages and outline policy options to enhance competitiveness in the medium term. Reforms should focus on improving the productivity of the public sector to enhance service delivery, improve the business environment, and upgrade infrastructure. The report identifies two general areas for reform: (i) the wage bill and public employment; and (ii) management of public investment.Publication Tanzania Economic Update, October 2012(World Bank, Washington, DC, 2012-10)Tanzania continues to stand out as a model of sound economic performance in the African continent, with a growth rate of over six per cent in 2011 and 2012, surpassing other regional economies and demonstrating impressive resilience to the global economic crisis. This is the second issue of the Tanzania economic update series. The series aim to engage a broad audience in a discussion of the state of the economy in general, as well as in specific debates of topical importance in Tanzania. The current issue seeks to get the discussion going on how to achieve the structural transformation of the rural economy so that rural households can also benefit from the country's remarkable growth performance.Publication Lao PDR Economic Monitor, January 2014 : Managing Risks for Macroeconomic Stability(Vientiane, 2014-01)The sector focus for this issue concerns school based management, current conditions and recommendations for the future. Lao PDR's education system faces challenges in meeting its goals of providing all students with access to education and improving learning outcomes. The study presents a framework explaining how school based management can help improve education quality. The Lao economy is estimated to grow at 8.1 percent in 2013, fueled by a vibrant resource sector, continued FDI-financed investment in hydropower, and accommodative macro economic policies. Growth is projected to moderate to 7.2 percent in 2014, reflecting a small projected slowdown in some real sectors, mainly mining and construction. Inflationary pressures, mainly through food prices, are not showing signs of dissipating by end 2013. In FY12/13, the fiscal deficit widened markedly due to a combination of a large increase in public sector wages and benefits, and a decline in grants and mining revenues. The FY13/14 budget plan indicates a narrower fiscal deficit of about 4.3 percent. The risk of debt distress remains moderate, according to the recent Joint IMF-World Bank Debt Sustainability Analysis (DSA) 2013. While the Bank of Lao PDR maintains nominal exchange rate stability of the Lao kip against major currencies, foreign exchange policy should probably give more consideration to reserve management and competitiveness. Foreign exchange reserves and net foreign assets continued to fall in the third quarter of 2013.Publication Myanmar Economic Monitor, October 2013(Washington, DC, 2013-10)This economic update provides an overview for 2012 and 2013 in Myanmar, years during which the economy continued to accelerate. The main drivers of growth were increased gas production, services, construction, foreign direct investment, and strong commodity exports. Inflation has been on the rise in recent months, but the outlook is positive with the economy projected to grow more. This will be on account of a continued increase in gas production, increased trade, and stronger performance in agriculture. Risks to the outlook include the challenge of maintaining the reform momentum. Externally, a slowdown in Chinese domestic investment and a decline in global commodity prices would hurt commodity exporting countries such as Myanmar. The policy watch section presents a number of planned or recently implemented policy reforms which reflect the country's continuing drive to improve the business environment. A special feature article presents a summary of findings from a recent assessment of Myanmar s Public Financial Management (PFM).Publication Lithuania - Social sectors public expenditure review(World Bank, 2009-06-01)This report aims to provide technical assistance to the Government of Lithuania in preparation for the June 2009 budget amendment and beyond. This Public Expenditure Review (PER) includes a number of recommendations on short run fiscal consolidation (mainly through spending cuts) as well as efficiency-enhancing reforms that could eventually generate fiscal savings and reduce the fiscal deficit over the medium term. In the context of increased social needs arising from the crisis, this report also tries to identify the changes needed in social assistance benefits to better protect the poor and vulnerable during the crisis and beyond in a cost-efficient way. In agreement with the Government, social sectors (social protection, health, and education) have been chosen as the focus of analysis, given the room for short and medium term adjustments and the large implications of those on the overall budget. The PER also analyses the public wage bill and public administration. Finally, macroeconomic risks as well as the overall fiscal scenario and risks (including an exploration of revenue measures that could bring fiscal savings over 2009-10) are also analyzed to provide the context for the subsequent sectoral sections.
Users also downloaded
Showing related downloaded files
Publication State and Trends of Carbon Pricing 2024(Washington, DC: World Bank, 2024-05-21)This report provides an up-to-date overview of existing and emerging carbon pricing instruments around the world, including international, national, and subnational initiatives. It also investigates trends surrounding the development and implementation of carbon pricing instruments and some of the drivers seen over the past year. Specifically, this report covers carbon taxes, emissions trading systems (ETSs), and crediting mechanisms. Key topics covered in the 2024 report include uptake of ETSs and carbon taxes in low- and middle- income economies, sectoral coverage of ETSs and carbon taxes, and the use of crediting mechanisms as part of the policy mix.Publication Supporting Youth at Risk(World Bank, Washington, DC, 2008)The World Bank has produced this policy Toolkit in response to a growing demand from our government clients and partners for advice on how to create and implement effective policies for at-risk youth. The author has highlighted 22 policies (six core policies, nine promising policies, and seven general policies) that have been effective in addressing the following five key risk areas for young people around the world: (i) youth unemployment, underemployment, and lack of formal sector employment; (ii) early school leaving; (iii) risky sexual behavior leading to early childbearing and HIV/AIDS; (iv) crime and violence; and (v) substance abuse. The objective of this Toolkit is to serve as a practical guide for policy makers in middle-income countries as well as professionals working within the area of youth development on how to develop and implement an effective policy portfolio to foster healthy and positive youth development.Publication Europe and Central Asia Economic Update, Fall 2024: Better Education for Stronger Growth(Washington, DC: World Bank, 2024-10-17)Economic growth in Europe and Central Asia (ECA) is likely to moderate from 3.5 percent in 2023 to 3.3 percent this year. This is significantly weaker than the 4.1 percent average growth in 2000-19. Growth this year is driven by expansionary fiscal policies and strong private consumption. External demand is less favorable because of weak economic expansion in major trading partners, like the European Union. Growth is likely to slow further in 2025, mostly because of the easing of expansion in the Russian Federation and Turkiye. This Europe and Central Asia Economic Update calls for a major overhaul of education systems across the region, particularly higher education, to unleash the talent needed to reinvigorate growth and boost convergence with high-income countries. Universities in the region suffer from poor management, outdated curricula, and inadequate funding and infrastructure. A mismatch between graduates' skills and the skills employers are seeking leads to wasted potential and contributes to the region's brain drain. Reversing the decline in the quality of education will require prioritizing improvements in teacher training, updated curricula, and investment in educational infrastructure. In higher education, reforms are needed to consolidate university systems, integrate them with research centers, and provide reskilling opportunities for adult workers.Publication Impact Evaluation in Practice, Second Edition(Washington, DC: Inter-American Development Bank and World Bank, 2016-09-13)The second edition of the Impact Evaluation in Practice handbook is a comprehensive and accessible introduction to impact evaluation for policy makers and development practitioners. First published in 2011, it has been used widely across the development and academic communities. The book incorporates real-world examples to present practical guidelines for designing and implementing impact evaluations. Readers will gain an understanding of impact evaluations and the best ways to use them to design evidence-based policies and programs. The updated version covers the newest techniques for evaluating programs and includes state-of-the-art implementation advice, as well as an expanded set of examples and case studies that draw on recent development challenges. It also includes new material on research ethics and partnerships to conduct impact evaluation. The handbook is divided into four sections: Part One discusses what to evaluate and why; Part Two presents the main impact evaluation methods; Part Three addresses how to manage impact evaluations; Part Four reviews impact evaluation sampling and data collection. Case studies illustrate different applications of impact evaluations. The book links to complementary instructional material available online, including an applied case as well as questions and answers. The updated second edition will be a valuable resource for the international development community, universities, and policy makers looking to build better evidence around what works in development.Publication Digital Progress and Trends Report 2023(Washington, DC: World Bank, 2024-03-05)Digitalization is the transformational opportunity of our time. The digital sector has become a powerhouse of innovation, economic growth, and job creation. Value added in the IT services sector grew at 8 percent annually during 2000–22, nearly twice as fast as the global economy. Employment growth in IT services reached 7 percent annually, six times higher than total employment growth. The diffusion and adoption of digital technologies are just as critical as their invention. Digital uptake has accelerated since the COVID-19 pandemic, with 1.5 billion new internet users added from 2018 to 2022. The share of firms investing in digital solutions around the world has more than doubled from 2020 to 2022. Low-income countries, vulnerable populations, and small firms, however, have been falling behind, while transformative digital innovations such as artificial intelligence (AI) have been accelerating in higher-income countries. Although more than 90 percent of the population in high-income countries was online in 2022, only one in four people in low-income countries used the internet, and the speed of their connection was typically only a small fraction of that in wealthier countries. As businesses in technologically advanced countries integrate generative AI into their products and services, less than half of the businesses in many low- and middle-income countries have an internet connection. The growing digital divide is exacerbating the poverty and productivity gaps between richer and poorer economies. The Digital Progress and Trends Report series will track global digitalization progress and highlight policy trends, debates, and implications for low- and middle-income countries. The series adds to the global efforts to study the progress and trends of digitalization in two main ways: · By compiling, curating, and analyzing data from diverse sources to present a comprehensive picture of digitalization in low- and middle-income countries, including in-depth analyses on understudied topics. · By developing insights on policy opportunities, challenges, and debates and reflecting the perspectives of various stakeholders and the World Bank’s operational experiences. This report, the first in the series, aims to inform evidence-based policy making and motivate action among internal and external audiences and stakeholders. The report will bring global attention to high-performing countries that have valuable experience to share as well as to areas where efforts will need to be redoubled.