Reports on Observance of Standards and Codes

Turkey and the IMF

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Prepared by the Fiscal Affairs Department

June 27, 2000


Executive Summary

  1. Introduction
  2. Description of Practice

    A. Clarity of Roles and Responsibilities

    B. Public Availability of Information

    C. Open Budget Preparation, Execution, and Reporting

    D. Independent Assurances of Integrity

  3. IMF Staff Commentary


Executive Summary

This report provides an assessment of fiscal transparency practices in Turkey in relation to the requirements of the IMF Code of Good Practices on Fiscal Transparency—Declaration on Principles based on the authorities’ response to the IMF fiscal transparency questionnaire and other documents provided by the authorities.

Although significant steps have recently been taken to improve transparency of fiscal operations, Turkey’s fiscal management practices fall short of the requirements of the fiscal transparency code in a number of important respects. Budget coverage is limited because of a large number of budgetary and nonbudgetary organizations collecting and spending public resources which, moreover, are subject to differing accounting and reporting requirements; budget preparation and execution are fragmented among a number of institutions; budget formulation is not based on a comprehensive costing of the government’s policies nor cast against a medium-term macroeconomic framework; and financial relations within the public sector need clarification in key aspects.

The report identifies broadening the coverage of the budget, improving budget preparation, and addressing long-standing shortcomings in budget classification and accounting systems as priority areas to improve fiscal management and transparency. While some of the above shortcomings have begun to be addressed within the IMF-supported three-year disinflation and adjustment program signed in December 1999, measures undertaken so far have not yet been fully formalized so as to ensure a long-lasting improvement of fiscal management and transparency practices in Turkey.