Turkey - Public Expenditure and Institutional Review : Reforming Budgetary Institutions for Effective Government

Abstract

This Public Expenditure and
 Institutional Review presents the findings of an analysis of
 the budget, and institutions of public expenditure
 management, and accountability, fundamental to policy
 decisions, and economic management. It builds on extensive
 analysis undertaken by the Special Ad Hoc Committee on
 Fiscal Transparency, and Public Finance, and, the review
 suggests that the current economic crisis is deep-rooted in
 the institutions of collective decision making in
 government, confirming that unless fundamental improvements
 are made to the processes for formulating public policy,
 allocating resources, and implementing budgets, any economic
 recovery will almost certainly be fragile, and short-lived.
 Thus, from the perspectives of system performance, and
 structural and institutional aspects, an improved budgetary
 system should enable the government to achieve aggregate
 fiscal magnitudes, based on expenditures, sustained by tax,
 and non-tax resources; the budget should generate the
 adequate information to ensure funding of key policy
 objectives; and, public accountability should generate
 incentives to support performance objectives. The report
 identifies aggregate fiscal management as a major weakness,
 compromised by the significant growth of off-budget
 activity, while the weakness of the budget system in terms
 of ability to support decision-making, is equally
 pernicious. A series of actions to restore fiscal discipline
 are outlined for the short-term (2001), and initiatives for
 a multi-year budget commencing in 2002 are included.
 Recommendations include strengthening the aggregate fiscal
 program management capacity; reviving policy formulation
 capacity, and institutional framework to define budgetary
 policy; and, initiating budget control devolution,
 introducing a budget performance approach.