Question

Why is the public sector borrowing requirement ratio considered as an

important indicator? Please briefly explain the 1990s and post-2001 crisis

story of this ratio in terms of its effects in Turkish economy

Answer 1

Public sector borrowing requirements are just an alias for fiscal deficit. At the end of financial term when the figures are analysed if the net expenditure of the government exceeds the net gain of the government through taxes and other sources then the economy runs into a fiscal deficit. In a situation where the government needs to spend more than its earning the government borrows money from the reserve to meet the expenses. A short term public sector borrowing requirement is not indicator of problem. But when the borrowing turns into a long term habit this is an indicator of declining economy. Because of the debts that the country is putting itself in. It is also a sign that either the economic policies formulated are not efficient or are not implemented efficiently

The public borrowing requirement is a very important indicator in the consideration and view of crisis.The targeted values of post 2001 crisis expenditure programme were achived,the load and burden of the paymment of interest was continued to increased on the domestic financial markets.Also , the expenditure of interest as the ratio of the revenue of tax increased to about 77.1 percent in the year 2000 and it rose to about 10.3 % in the year 2001.Since in 1995 the economy of turkish has been in the big dept trap.The the literature of turkish economy it is called as PONZI FINANCE.The total dept of turkey from foreign has roughnly increased to $130 billions at the laast of year 2002 ,The international monmetry fund came to the Turkey to impose the programme in the yeart 1998 ,but there was constant increase in the outstanding debt.The short term liabilities of foreign debt have reduced overtime of the same period.The short term foreign debt stock whicvh was about Z$22.9 billion at the 1999 end and increased to $28.3 billion in 2000 end was drastically reduced to $15.2 billion in the year 2002 .

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