World Bank2013-08-092013-08-092000-09-15https://hdl.handle.net/10986/14987This country economic memorandum shows that fiscal imbalances are key to understanding Turkey's inflation problem, and its volatile growth. Its findings suggest that the country's inability to sustain high growth can be closely linked, among many factors, to the lack of macroeconomic stability. Unsustainable fiscal policy, has put repeated pressure on its currency, and led to chronic, and high inflation. Thus, when facing crises, fiscal policy has been unable to withstand, or influence on the business cycle; instead contractionary policies have been implemented to achieve monetary stability, actually worsening the real impact of shocks. It is also suggested that previous attempts at stabilization, failed precisely because they did not address the structural sources of fiscal deficit. Following an analysis on Turkey's macroeconomic framework, the report reviews the reform agenda on the infrastructure, agriculture, and banking sectors, and the country's medium-term prospects, but emphasizes the influence of the policy environment on total factor productivity growth, as a key explanatory factor, recommending structural policies to generate at least a primary surplus of three percent of GNP, prioritize social security, and social assistance, and avoid unsustainable contingent liabilities, by deregulating energy and telecommunications sectors, and, pursue financial sector reform.en-USCC BY 3.0 IGOMACROECONOMIC STABILIZATIONECONOMIC GROWTHPUBLIC SECTOR DEFICITFISCAL SUSTAINABILITYECONOMIC RECOVERYSOCIAL SECURITYREFORM POLICYSOCIAL ACTION PROGRAMSINFRASTRUCTURE DEVELOPMENTRURAL DEVELOPMENTAGRICULTURE SECTOR ADJUSTMENTBANKINGFISCAL ADJUSTMENTSMONETARY ANALYSISECONOMIC CRISISSTRUCTURAL ADJUSTMENTPRODUCTIVITY GROWTHCONTINGENCY PLANSDEREGULATIONFINANCIAL SECTOR REFORMINFLATIONARY PRESSURES ADMINISTRATIVE REFORMAGRICULTUREAUTHORITYAUTONOMYBALANCE SHEETSBANK PRIVATIZATIONBANK PROFITSBANKING SECTORBANKING SUPERVISIONBANKING SYSTEMBUDGET PROCESSCAPITAL MARKETSCENTRAL GOVERNMENTCOMMERCIAL BANKSCOMPETITIVE BIDDINGCOMPETITIVE BIDDING PROCESSCOMPETITIVE MARKETSCONSUMER PRICE INDEXCONSUMERSCPIDEBTDEBT FINANCINGDEBT SERVICEDECREEDEFICITSDEMAND FOR MONEYDEPOSIT INSURANCEDEREGULATIONDEVELOPED COUNTRIESDEVOLUTIONDISINFLATIONDISTORTED INCENTIVESECONOMIC EFFICIENCYECONOMIC GROWTHECONOMIC RATE OF RETURNECONOMIC REFORMELECTRICITYELECTRICITY DEMANDELECTRICITY GENERATIONEMERGING MARKETSEVASIONEXCHANGE RATEEXPORTSFINANCIAL AUTONOMYFINANCIAL INTERMEDIATIONFINANCIAL RATIOSFINANCIAL RISKSFINANCIAL SECTORFINANCIAL SECTORSFISCALFISCAL BALANCEFISCAL COSTSFISCAL CRISISFISCAL DEFICITFISCAL POLICYFISCAL REFORMSFISCAL SITUATIONFISCAL SUSTAINABILITYFISCAL YEARFORESTRYGDPGNPGOVERNMENT BORROWINGGOVERNMENT GUARANTEESGOVERNMENT INTERVENTIONGOVERNMENT ROLEGOVERNMENT SUBSIDIESGOVERNMENT'S REFORM PROGRAMGROSS NATIONAL PRODUCTGROWTH RATEHEALTH SERVICESHUMAN CAPITALIMPORT TARIFFSINCOMEINCOME SUPPORTINFLATIONINFLATION RATESINPUT USEINSOLVENCYINSTITUTIONAL FRAMEWORKINSTITUTIONAL REFORMSINSURANCELABOR MARKETLAWSLEGAL FRAMEWORKLEGISLATIONLICENSESLIVING STANDARDSLOAN GUARANTEESMACROECONOMIC STABILITYMARKET DISTORTIONSMARKET PRICESMARKET RISKMONOPOLIESNATIONAL INCOMENATIONAL LEVELNEW ENTRANTSNOMINAL INTEREST RATESPENSIONSPER CAPITA INCOMEPOLICY ENVIRONMENTPOLITICAL REFORMSPOWER PLANTSPRIVATE BANKSPRIVATE SECTORPRIVATE SECTOR PARTICIPATIONPRIVATIZATIONPRIVATIZATION OF STATEPRODUCTIVITYPRODUCTIVITY GROWTHPUBLIC DEBTPUBLIC EXPENDITUREPUBLIC EXPENDITURE MANAGEMENTPUBLIC OFFERINGPUBLIC SECTORPUBLIC SECTOR BORROWINGPUBLIC SECTOR REFORMRATIONALIZATIONREAL GNPREAL SECTORREGULATORY AUTHORITYREGULATORY FRAMEWORKRESOURCE ALLOCATIONRETIREMENTRETIREMENT INCOMERISK MANAGEMENTSAVINGSSOCIAL INSURANCESOCIAL INSURANCE SYSTEMSOCIAL PROTECTIONSOCIAL PROTECTION SYSTEMSOCIAL SECURITYSOCIAL SECURITY REFORMSOCIAL WELFARESTATE ASSETSSTATE BANKSSTATE ENTERPRISESSTATE OWNED ENTERPRISESSTATE-OWNED ENTERPRISESSUSTAINABLE GROWTHTAXTECHNOLOGICAL CHANGETELECOMMUNICATIONSTOTAL FACTOR PRODUCTIVITYTOTAL FACTOR PRODUCTIVITY GROWTHTRANSPARENCYTREASURYUNDERVALUATIONUNEMPLOYMENTVALUE ADDEDWAGESWORLD TRADE ORGANIZATIONWTOWorld Bank10.1596/14987