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Public Policy Analysis in Turkey

Past, Present and Future

Edited By Onur Kulaç, Elvettin Akman and Cenay Babaoğlu

This book presents a broad and comprehensive perspective on analysis of public policy in Turkey. Each of the twenty-six chapters presents historical development, legal background, actors, problems, and recommendations of different policies. The scope of this book is to fill the void in the literature with regards to the analyses of public policies in Turkey.

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6 Municipal Borrowing Policy in Turkey

Extract

Çiğdem Akman

6   Municipal Borrowing Policy in Turkey

Introduction

Borrowing is considered as an essential financing tool for domestic administrations as it is for central government. In Turkey, municipalities need to borrow because of numbers of reasons such as high urbanization rate, expansion of municipal authority, task and responsibility, increasing and varying requests and expectations of residents, deviation between their income and expenditure, technological advancements, insufficient share from tax collections, extensive investment projects, difficulty in increasing income, poor utilization from alternative service options, and ineffective utilization from financial resources by administrations.

Municipal borrowing is strictly regulated by the respective law in Turkey; e.g. reason for borrowing, type of borrowing, lower and upper limits of borrowing, measures taken for ensuring debt service, and type of sanctions that would be applied in case of insolvency. In general, when borrowing policy is considered, it is possible to see an approach regulated by law. In this regard, municipalities are bestowed limited debt management autonomy; balanced budget and financial discipline principle are adopted, and transparency and accountability understandings are tried to be sustained. Although it is evident that municipalities are assigned limited autonomy on borrowing, when borrowing figures of municipalities along fiscal years are taken into consideration, adoption of this approach and principle seems accurate decision.

In the present study, it was aimed to expose current borrowing policy and the factors needed to pay attention to create effective borrowing policy for Turkish municipalities. In...

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