Turkey : Strengthening the Framework for Sub-National Borrowing
Local government finance has taken on increasing importance in Turkey, with the evolving fiscal decentralization and the growing role of local administrations in public investment. The focus of this policy note is on sub-national borrowing as an es...
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| Format: | Report |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/425611486110135962/Turkey-Strengthening-the-framework-for-sub-national-borrowing-selected-issues-a-policy-note http://hdl.handle.net/10986/26063 |
| Summary: | Local government finance has taken on
increasing importance in Turkey, with the evolving fiscal
decentralization and the growing role of local
administrations in public investment. The focus of this
policy note is on sub-national borrowing as an essential
component of the framework for sustainable sub-national
finance. Sound management of sub-national borrowing is
important for ensuring debt sustainability. Past problems
with fiscal deficits by local administrations in Turkey have
led to two major debt restructurings. The Government has
undertaken many laudable improvements in the system of
fiscal management and control of local administrations in
recent years, in particular by regulating the procedures for
borrowing, raising the requirements for accounting and
reporting, and tightening the terms for Treasury guarantees
of foreign borrowing. The rest of the policy note is
organized as follows. The next section summarizes the
framework for sub-national borrowing in Turkey and reviews
areas for further development, including in particular, an
effective insolvency mechanism. Section three presents
rationales for a sub-national insolvency mechanism and
describes how the entry points for reform have contributed
to varying modalities across countries. Section four
discusses key design issues for a sub-national insolvency
mechanism, driven by the fundamental difference between
public and private insolvency. Final section five presents
possible medium-term reform options for Turkey. |
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