TREASURY DEBT LIMIT IN TURKEY

Ahmet KADIKÖYLÜ

Özay ÖZPENÇE

Debt limit or debt ceiling practices ensure effective management of government debt and the rule-based implementation of fiscal policy. Especially considering that borrowing for financing budget deficits and interest payments has increased from year to year, debt limit implementation is important in terms of ensuring budget discipline. Although debt limit applications in countries ' financial systems differ, it is generally observed that a certain limit is applied as a ratio or quantity. It is known that there is a proportional limit to borrowing in Turkey with the law No. 4749 enacted in 2002. The debt limit, which has been applied since then, serves as a anchor for fiscal discipline in the public sector. The study examines the evaluation of debt limit implementation between 2002 and 2019 and its relationship with some budget data. Treasury borrowing data and the budget data mentioned in the study were evaluated on charts. According to the evaluations, the debt limit application ensures that the Treasury will borrow by acting in fiscal discipline and considering the budget balances during periods when the tax revenues, which are the main basis of the budget, cannot be increased sufficiently. In addition to the debt limit, another application that provides fiscal discipline is the application of primary surplus, and the provision of primary surplus in the budget is considered to facilitate borrowing and net borrowing by staying within the limits of the debt limit. In summary, while the implementation of the debt limit ensures the steady continuation of public borrowing, it is evaluated that the budget balance and the application of primary surplus have an effect on the debt limit.

Keyword: Debt Limit, Treasury, Budget Deficit, Primary Surplus, Borrowing