Turkey
Recent Economic Developments
Author: International Monetary Fund
Publication Date:
03 Dec 1996
ISBN:
9781451837988
Language:
English
Keywords:
ISCR; CR; central bank; exchange rate; Turkish lira; private sector; wholesale price index; long-term debt; debt service; credit rating; balance of payments; gross investment; nominal wage
Download PDF (5.7 MB)

This paper reviews economic developments in Turkey during 1992–96. The Turkish economy rebounded in 1995, with real gross national product rising by 8.1 percent, reversing the decline of 6.1 percent in 1994. A strong pickup in activity in the second and third quarters of 1995 more than compensated for the continued weakness in the first quarter and a slight decline in the fourth quarter caused by uncertainty in the run-up to the elections. Industry performed strongly, with a growth rate of 12.1 percent, followed by services (6.4 percent) and agriculture (2.6 percent).

Abstract

This paper reviews economic developments in Turkey during 1992–96. The Turkish economy rebounded in 1995, with real gross national product rising by 8.1 percent, reversing the decline of 6.1 percent in 1994. A strong pickup in activity in the second and third quarters of 1995 more than compensated for the continued weakness in the first quarter and a slight decline in the fourth quarter caused by uncertainty in the run-up to the elections. Industry performed strongly, with a growth rate of 12.1 percent, followed by services (6.4 percent) and agriculture (2.6 percent).

I. The Real Economy

In recent years, the Turkish economy has experienced sharp fluctuations in growth, and high and persistent inflation. In April 1994, a stabilization program, precipitated by a financial and exchange market crisis in the early months of the year, led to a marked reduction in aggregate demand, output, and inflation as substantial fiscal and monetary tightening coincided with the onset of a sharp recession. However, heavy public borrowing in the narrow domestic financial market, coupled with an erratic exchange rate policy, pushed up interest rates and rekindled the inflationary process in the latter part of the year. The program for 1995 introduced a crawling peg to check inflation but again the initial reduction in inflation was reversed after a few months as continued high domestic interest rates attracted large short term capital inflows, resulting in a rapid expansion in money and domestic demand. In conjunction with a reversion to backward indexation of the exchange rate, inflation picked up again in the second half of the year.

1. Domestic output

The Turkish economy rebounded in 1995, with real GNP rising by 8.1 percent, reversing the decline of 6.1 percent in 1994. A strong pickup in activity in the second and third quarters of 1995 more than compensated for the continued weakness in the first quarter and a slight decline in the fourth quarter caused by uncertainty in the run-up to the elections. Industry performed strongly, with a growth rate of 12.1 percent, followed by services (6.4 percent) and agriculture (2.6 percent) (Table A1).

Table A1.

Turkey: GNP and its Components

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Source: Data provided by the Turkish authorities.

After a decline of 8.3 percent in 1994, the manufacturing sector turned around in 1995, recording a growth rate of 13 percent. Private sector manufacturing, which had been badly affected by the recession in 1994, enjoyed a strong recovery across all sectors as both exports and domestic demand picked up. Private industrial production rose by 18.8 percent and manufacturing capacity utilization 1/ increased from 70.9 percent in 1994 to 77.8 percent in 1995 (Tables A2 and A4). By contrast, the public manufacturing sector, which had been less affected by the recession in 1994, managing a 2.6 percent growth in industrial production, saw output fall in 1995 by 1.3 percent.

Table A2.

Turkey: Production Index of Manufacturing Industry, 1991-95

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Source: State Institute of Statistics.

Beginning in 1993, changes based on 1992 = 100.

Table A3.

Turkey: Production of Major Industrial Commodities

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Source: State Planning Office, Main Economic Indicators, April 1996.

Pithead production.

Public sector.

Table A4.

Turkey: Rate of Capacity Utilization in Manufacturing Industry 1/

(Weighted by production value)

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Source: Data provided by the Turkish authorities.

Data on capacity utilization are collected from monthly and quarterly surveys. The quarterly series is based on a larger sample, hence it is not directly comparable with the monthly series. The annual figures in this table are averages of the quarterly data.

Provisional

Available data for 1996 show total industrial output increasing by 8.4 percent in the first quarter compared with the same period in 1995, when the economy was still in recession. Although industrial output in April 1996 was 1.6 percent lower compared with April 1995, when production rebounded strongly from the recession, output in May 1996 increased by 15 percent over the same month of the previous year. Over the five-month period of January to May 1996, the manufacturing sector grew by an average of 7.4 percent: machinery production grew by an average of 30.3 percent, the production of electricity, gas, and water increased by an average of 12.2 percent, and mining production increased by an average of 4.8 percent.

The share of agriculture in GNP has held steady at around 15 percent in recent years. Value added in agriculture (in constant prices) grew by 2.6 percent in 1995 after two consecutive years of decline, as the output of cotton, beans, and oilseeds recovered from previous troughs (Table A5). However, this outcome was below expectations as unfavorable weather conditions affected several industrial crops as well as fruits and nuts: the output of hazelnuts, sugar beet and olives plunged, and wheat production (18 million tons) was also disappointing in terms of quality as well as quantity.

Table A5.

Turkey: Agricultural Production, Major Crops, 1991-95

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Source: State Institute of Statistics.

Agricultural policy in Turkey has several objectives, including stabilizing the prices of agricultural goods and meeting the nutritional needs of the population, while ensuring steady, adequate incomes for farmers and promoting the export potential of the agricultural sector. These objectives are pursued primarily through domestic price support schemes, import controls, concessional credits, 1/ and input (e.g., fertilizer) subsidies. 2/ The implementation of these measures involves a large number of organizations, including several SEEs, Agricultural Sales Cooperative Unions (ASCUs), agricultural credit cooperatives, state-owned banks, and other agencies.

Prior to the 1994 stabilization program, approximately 20 agricultural products were covered by agricultural support schemes. Since then, the coverage has been reduced to nine, the major ones being cereals, tobacco, and sugar beet. The support schemes for cereals, sugar and tobacco are administered by TMO (the state cereals board), TSFAŞ (the state sugar producing firm, also known as ŞEKER), and TEKEL (the state tobacco and alcoholic beverages monopoly). 1/ These three are the largest and most influential agricultural SEEs. Their statutes charge them with providing price support through intervention purchases and stockpiling, as well as with other responsibilities such as determining the level of production through forward contracts with growers, handling sales and marketing activities, disbursing subsidies, and administering investment, import and export policies. For other crops, such as hazelnuts, cotton and sunflower seeds, the price support schemes are administered by Agricultural Sales Cooperative Unions (ASCUs), which are commercial organizations formed by an association of three or more agricultural sales cooperatives, authorized to set prices for their members’ commodities.

Factors such as the level of production, the international price, consumer demand, and the rate of inflation are taken into consideration in setting the support price for a commodity. Support prices are announced every year–in February for tobacco, around the end of May in the case of wheat, and in September for sugar beet–and are adjusted each month in line with market conditions (Table A6). Support prices have tended to be highly variable, and the support schemes have traditionally been a financial burden for the agricultural SEEs, as high support prices often meant that they were obliged to purchase large quantities from farmers and hold substantial inventories. However, the situation was quite different in 1995 as, because of low domestic production, TMO and TSFAŞ found themselves with insufficient inventories and had to resort to importing wheat and sugar to satisfy the domestic market. Due to the poor wheat harvest in Turkey in 1995 and the increase in global wheat prices, TMO purchased only about 30,000 tons of domestically grown wheat (compared to its usual 1.5 million or so tons) despite a nominal doubling of the wheat support price, as most of the wheat was sold to the private sector at a higher price.

Table A6.

Turkey: Selected Agricultural Support Prices, 1991-95

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Source: State Planning Organization.

The price support schemes are funded in different ways, depending on the administering agency. TMO, TEKEL and TSFAS purchase the cereal, tobacco, and sugar beet output from farmers using their own resources, and then charge the Treasury what is termed “duty loss,” i.e., the amount of the purchase plus a 10 percent margin. Compensation is made from a budget appropriation after approximately twelve months, upon completion of an audit. 2/ In recent years, the support purchases by these SEEs have imposed substantial costs on the budget (see the chapter on fiscal developments). The ASCUs which administer price support schemes are funded by the Turkish Agricultural Bank, which extends credit at below-cost interest rates to these cooperatives during times of need. As explained further below, from time to time, these loans have been assumed by the Treasury.

2. Domestic demand

After a marked decline in 1994 and in the first quarter of 1995, domestic demand picked up strongly in the second and third quarters of 1995. (Table A7). Imports mirrored this trend, growing by 30 percent in 1995 after a 22 percent decline in 1994.

Table A7.

Turkey: Aggregate Demand and GNP

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Source: State Planning Organization.

Changes as percent of previous year’s GNP.

The recovery in domestic demand was driven primarily by private sector investment and consumption. Private sector Stockbuilding was a major contributor to growth in 1995, as inventories were replaced following the 1994 recession when production and imports fell dramatically and stocks were run down. The contribution of Stockbuilding in the private sector to growth was as much as 3.4 percent in 1995, compared with -2.8 percent in 1994. Private fixed investment, which fell by 5.7 percent in 1994, recovered by 11 percent in 1995, despite an environment of high real interest rates; imports of investment goods rose to US$10.5 billion, a 52 percent increase over the previous year. The upsurge was facilitated by generous investment allowances 1/ and optimism surrounding Turkey’s entry into a customs union with the European Union. The value of foreign direct investment approvals grew from US$1.5 billion in 1994 to US$2.9 billion, a 93 percent increase, although actual foreign investment inflows were only US$0.9 billion.

As a share of GNP, private investment increased from around 16 percent in the early 1990s to 20.9 percent in 1995 (Table A8). Since the late 1980s, the government has stepped up its efforts to encourage private manufacturing investment by expanding the range of investment incentives. The main incentives include: complete or partial exemption from customs duties and other surcharges for imported investment goods; tax credits allowing a certain percentage of the initial investment to be deducted from the tax base; VAT refunds for domestically produced capital goods and equipment; and exemptions from building and construction charges. 2/ To qualify for these incentives, potential investors have to apply to the Undersecretariat for the Treasury and Foreign Trade for an investment incentive certificate. Prior to 1993, incentive certificates were issued on sectoral criteria, but since then, incentives have been region- rather than sector-specific. To date, some 44,000 incentive certificates have been issued. Applications for textile and clothing investments have grown particularly rapidly, accounting for over 45 percent of all incentive certificates awarded in recent years. In 1995, a record 4,954 certificates were issued, based on a total investment value of over TL 2,000 trillion (US$44 billion). Data on investments realized with these certificates are not available, 1/ although it is estimated that some 60 percent of all certificates issued to date are still open.

Table A8.

Turkey: Macroeconomic Balances

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Source: State Planning Office

Contribution to GNP growth.

Private consumption, which fell by 6 percent in 1994, rebounded in 1995, rising by 7.7 percent in real terms. Although the real growth of private consumption between 1994 and 1995 was lower than the real growth of GNP, the share of private consumption in GNP (measured in current prices) rose from 66.3 percent in 1994 to 69 percent in 1995. This reflected the strong growth in consumer prices relative to the GNP deflator. Private disposable income increased in real terms by 8.7 percent in 1995, even though real wages were almost unchanged and remained below their 1993 levels. Wages are relatively small as a share of national income, accounting for around 25 percent of total income in 1994.

Public sector fixed investment increased from 1991 to 1993, although less rapidly than private investment, but fell by 43.4 percent in 1994 and further by 2.3 percent in 1995. The declines mainly reflected cuts in investment outlays in the context of the 1994 stabilization program. In contrast to the private sector, the public sector reduced inventories in 1995, as poor harvests led the agricultural SEEs to run down their stocks.

Fiscal tightening during the initial stages of the 1994 stabilization program reduced public consumption expenditure by 5.6 percent in 1994, but this was largely reversed in 1995 when public consumption grew by 4.5 percent. As a share of GNP, public disposable income and public consumption fell from 9.5 percent and 10.8 percent, respectively, in 1994 to 8.6 percent and 9.8 percent, respectively, in 1995.

3. Price developments

During the period 1990-1995, inflation in Turkey averaged 75 percent a year. Inflation has been driven by persistent public sector deficits, coupled with the policy of real exchange rate targeting in pursuit of external competitiveness, and sustained by deep-rooted public skepticism about the durability of any fiscal adjustments (see Appendix IV for a study on inflation determinants in Turkey). Following large price adjustments made in the context of the April 1994 stabilization program, the sharp recession and favorable seasonal conditions slowed monthly inflation during the summer of 1994. However, following a shift in exchange rate policy during the third quarter, inflation picked up briskly in the last quarter to above program targets. Overall, in the 12 months from January to December 1994, wholesale prices rose by 149.6 percent and consumer prices by 125.5 percent (Table A9).

Table A9.

Turkey: Wholesale and Consumer Price Index

(Percentage change over same period of the previous year)

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Source: Data supplied by the Turkish authorities.

The wholesale and consumer price indices exhibit a high degree of seasonality as agricultural developments have significant effects during the summer months. Looking at seasonally adjusted data, inflation remained pronounced in the first quarter of 1995, with wholesale prices increasing by 18 percent, seasonally adjusted, during January to March. During the second quarter, inflation moderated somewhat to 11.7 percent, seasonally adjusted, although the decline was well short of the program target. However, the rapid growth of domestic demand, the accelerated depreciation of the lira, and the weakening of fiscal policy toward the end of the year, opened the way for a resurgence of inflation in the latter half of the year. By year-end, wholesale prices were increasing by around 4 percent a month, seasonally adjusted, partially held in check by the postponement of key public sector price adjustments until after the December elections. Over the 12 months from January to December 1995, wholesale and consumer prices rose by 64.9 percent and 78.9 percent, respectively. However, trend inflation 1/ was closer to 80 percent by end-year (Table A10).

Table A10.

Turkey: Price Indices and Trend Inflation

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Source: Staff estimates.

Annualized rate of increase of an index constructed from the seasonally adjusted WPI and CPI.

Available data for 1996 show an acceleration in inflation: wholesale prices increased by 43.7 percent (48.8 percent, seasonally adjusted) in the first 6 months, while 12-month inflation reached 79.8 percent (79.9 percent, seasonally adjusted) in June, with trend inflation around 90 percent. (The government’s end-year wholesale price inflation target is 65 percent). Public sector prices rose by 54.7 percent and private sector prices by 40.8 percent in the first 6 months of 1996, the former reflecting adjustments to public sector prices (of electricity, cigarettes, alcohol, and tea) delayed from 1995, as well as higher petroleum and sugar prices.

4. Employment

Turkey’s labor force has increased at an average annual rate of 1.7 percent since 1992, reaching 21.7 million in April 1995. The labor force participation rate has declined steadily from 58 percent in 1989 to 55 percent in 1992 and 53.9 percent in April 1995, mainly as a result of increased schooling rates 2/ and migration from the rural areas to urban centers, where the participation rate for women is substantially lower (around 16 percent, compared to over 50 percent in the rural sector, where many women are classified as unpaid family workers).

Data from the bi-annual Household Labor Force Survey (HLFS) 1/ show that employment increased at an average rate of 2 percent a year between 1992 and 1995 (Table A11). A significant proportion of this employment is concentrated in the informal sector: agriculture accounts for as much as 46.6 percent of total employment, followed by services (37.9 percent) and industry (15.5 percent). Of the total labor force, about 40 percent—some 8 million people–are wage earners. Around two thirds of these are insured, i.e., registered with a social security institution.

Table A11.

Turkey: Labor Market Developments 1/

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Source: State Planning Organization.

Based en results of the State Institute of Statistics’ Household Labor Force Survey (revised series).

Population over 15 years of age.

Open unemployment stood at 7.2 percent in April 1995 and 6.6 percent in October 1995. In the urban areas, unemployment averaged 11.9 percent in 1994, 2/ falling to 10.6 percent in April 1995 as economic activity picked up. Rural unemployment was estimated at 4.4 percent in April 1995. Educated youths (aged 15-24, with a high school or university degree) in search of appropriate jobs accounted for about 30 percent of the unemployed in the urban areas.

The large agricultural and informal sectors in Turkey appear to serve as a cushion for employment during periods of low activity. In 1994, when GNP declined by 6 percent and the number of layoffs in the formal sector jumped sharply, HLFS data (Table A11) indicate that unemployment rose by only 0.4 percent, and employment actually increased compared with the previous year. Part of the explanation for this may be due to shifts from the formal sector to agriculture and the informal sector (mostly petty trade, which is classified under “services.”)

Employment creation is viewed as a major challenge in the coming years, given the rapid rate of population growth (2 percent a year) and the age structure of the population (35 percent is under 14 years of age). The problem may be even more difficult to the extent that, in line with trends in Europe and the rest of the world, economic growth in future will be driven by technology- rather than labor-intensive investment. Hence, the government is looking to small-and medium-sized enterprises (SMEs) to be the driving force behind employment creation. Policies for boosting employment creation, particularly in SMEs, include: providing preferential financing and other support to encourage SMEs; mobilizing local resources and creating rural industries so as to discourage rural-urban migration; reducing the cost of employment by eliminating certain taxes and charges (such as contributions to the Housing Fund and the Saving Fund); and implementing training policies to raise the presently low skill level of the workforce.

5. Wages and industrial relations

The approximately 5.5 million insured workers comprise about 1.5 million civil servants, 1 million public sector workers, and 3 million private sector employees. Civil servants include the staff of ministries and municipalities, certain technical and administrative personnel, and employees of some public enterprises. They are considered a separate category of workers, not a subcategory of public sector workers. Civil servants are distinct from public sector workers in several respects, e.g., they subscribe to their own pension fund, they may not engage in collective bargaining (although they are allowed to form unions), and their wage increases are set unilaterally by the government in the budget decree. In the rest of this section, references to the public sector apply only to public sector workers, and not to civil servants.

Almost all of the insured public sector workers have signed collective wage agreements, with the exception of contractual workers and workers in certain subsectors of the defense and petroleum industries. By contrast, fewer than half of the 3 million or so insured private sector workers are covered by collective agreements.

According to the Ministry of Labor, some two thirds of all insured workers in the formal sector are members of trade unions. This number may be an overestimate as unions have an incentive to overstate their membership so as to obtain the right to sign collective agreements. (Only unions with memberships representing at least 10 percent of the workforce in a sector or 50 percent of the workforce in a single factory may engage in collective bargaining). Collective wage agreements are made on an enterprise basis; however, trade unions may be formed on a sectoral basis. In the public sector, workers’ unions negotiate with the Public Sector Employers’ Union, which represents the management of state owned enterprises. A wage contract, once signed, is usually valid for two years. Prior to April 1994, wage contracts in the public sector were de jure backward indexed and included an extra “welfare” component determined by the rate of economic growth. The 1994 stabilization program eliminated both practices. Thus, there is no wage indexation, and wage increases over the two year period are spelt out in the contract. Aside from the base wage, other elements such as bonuses and benefits are also subject to negotiation.

According to the available information, nominal and real wage growth appear to have slowed in recent years after a sharp rise in 1989-91. 1/ Indeed, since 1993, nominal wage increases appear to have been generally below the inflation rate, resulting in real wage losses for some workers (Table A12). The 1995 public sector workers’ wage agreement, concluded after an extended strike, specified an average increase of 51.6 percent in 1995 and 39.4 percent in 1996. In real terms, public sector workers* wages fell by 21.7 percent in 1995. According to partial data, the private sector fared slightly better, with an overall real wage increase of 1.6 percent in 1995. (This figure covers data on only 240,000 of the 3 million insured private sector workers).

Table A12.

Turkey: Wages and Labor Costs, 1991-95

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Source: State Planning Organization.

Average over the calendar year. (The minimum wage set each year is effective from September to the following August).

Represents only the wages of workers covered by collective labor agreements.

Based on data provided by the Public Sector Employers’ Union.

Nominal wages deflated by the consumer price index.

As noted above, civil servants’ wage increases are set unilaterally by the government in the budget decree. The wage increases are usually implemented in two stages, the first in the beginning of January and the second in the middle of the year. In 1995, there were three wage increases: 19.6 percent in the first quarter, 36.2 percent in the second quarter, and an additional 57.6 percent in the fourth quarter. As a result, only one increase is scheduled in 1996, recently set at 50 percent. The government has frozen the number of civil service positions at the existing level of 1.5 million for the next five years.

Minimum wages are set by the Minimum Wage Commission, which convenes once a year, usually in April. The announced (legal) minimum wage is effective from September to August of the following year, and is currently TL 8.5 million (about US$105) a month. Real minimum wages rose by some 50 percent between 1989 and 1993 (Table A12) but more recently, the increases in the minimum wage have not kept pace with the inflation rate–in real terms, the minimum wage fell by 22 percent in 1994, and by 5.3 percent in 1995. There are no precise estimates of the number of people earning the minimum wage. Although some 1.5 million are declared minimum wage earners, this figure may be an overestimate as it is a common practice for workers to under-report their income so as to reduce their social security contributions.

The wage gaps between the formal and informal sectors, and between the private and public sectors, are reported to be substantial, although no detailed data are available on the extent of wage dispersion across industries and regions. As noted earlier, the private sector wage data are based on a small sample of 240,000 out of 3 million. The workers excluded from the sample–mostly those in the informal sector–earn much lower wages than those reported in the sample.

Studies on income distribution in Turkey are few and far between. The most recent surveys on income distribution were conducted in 1978 and 1987. The State Institute of Statistics has completed a new survey but the results have not been published yet. However, indications are that income inequality has widened in recent years. The share of wages and salaries in national income fell from 35 percent in 1993 to 25 percent in 1994, whereas the share of interest in national income rose from 10.3 percent in 1993 to 14.3 percent in 1994.

Under Turkish laws on employment protection, workers may be dismissed for economic reasons or for disciplinary reasons. However, firms making mass dismissals for economic reasons are not allowed to hire replacements until after at least six months have passed. Turkey recently signed ILO agreement No. 58, which states that every dismissal may be brought before a local tribunal. There is, at present, no unemployment insurance in Turkey. However, workers who are dismissed for economic reasons are entitled to lump sum severance pay amounting to at least one month’s salary for each year worked in the same company, at the wage level prevailing at the time of separation, subject to a ceiling based on the retirement bonus for the highest state official under the Civil Servants Act.

II. Public Finances

1. The structure of the nonfinancial public sector

The nonfinancial public sector in Turkey consists of five main subsectors: the consolidated budget which includes the central government proper, the budgetary funds, and the annex budget; extrabudgetary funds (EBFs); local governments; the social security institutions and revolving funds; and nonfinancial state economic enterprises (SEEs). The first four constitute the general government.

The consolidated budget includes the legislative, judicial and executive organs of the state, certain budgetary funds, and some autonomous organizations, for which resources are provided in the annex budgets. Extrabudgetary funds (EBFs) include entities operating in several areas: administration of the privatization program, development of infrastructure, social programs, provision of export and investment incentives, and the Turkish defense industry. Revenues of these funds come principally from earmarked taxes, trade related levies, user’s charges, and direct transfers from the central government. The Privatization Agency (PA) resources come primarily from privatization proceeds, the bulk of which has been used to subsidize companies in the PA portfolio pending their final sale (see Appendix I).

Since 1993, efforts have been underway to improve supervision of the EBFs. A new centralized cash management system, the Joint Fund Account (JFA), has been set up at the central bank and incoming and outgoing flows from the Treasury to the EBFs are recorded. Further progress in strengthening controls is expected under the Public Financial Management Project, an IBRD-funded project in which the IMF is also assisting the authorities: a computerized accounting system is to be put in place to allow a more comprehensive monitoring of budgetary and funds operations. Local governments include provincial governments, municipalities, special status cities, a few enterprises operated by local authorities, such as local water and sewerage systems, and a provincial fund. Financial resources for local government are provided through earmarking of tax revenue; these resources are supplemented through local real estate taxes, tourist taxes, nontax revenues from sales of business licenses, and municipal fees and fines. The social security system, consisting of the Social Security Organization for the Craftsmen, Tradesmen and Other Self-Employed (BAG-KUR), the Pension Fund for civil servants (EMS) and the Social Insurance Institution for employees (SSK), is described in Appendix II and further below. The Revolving Funds mainly cover departmental sales of goods and services, the most important of which are generated by hospitals, universities, military barracks, and certain ministries. There are presently over 3,000 revolving funds; the amount of resources passing through these funds is not known with any precision because they are not subject to budgetary control procedures. A pre-specified amount of their gross revenue averaging 10 percent of gross income is transferred to the budget.

2. Overall trends

During 1991-93, fiscal policy was strongly expansionary, with the public sector borrowing requirement (PSBR) increasing from 10.7 percent of GNP in 1991 to 15.0 percent in 1993 (Table A13). 1/ The increase in the PSBR was due in the main to a rapid rise in expenditures of the general government, notably personnel and transfer payments. Implementation of a major stabilization program in April 1994 yielded a drop of almost 6 percentage points in the PSBR in 1994, with reduced borrowing needs being achieved in all major components of the public sector, including the consolidated budget and the SEEs. In 1995, the deficit of the general government increased modestly, but further reduction in the borrowing needs of the SEEs ensured an additional decline in the overall borrowing need of the public sector, from 9.3 percent in 1994 to 8.3 percent in 1995. 2/

Table A13.

Turkey: Breakdown of the Public Sector Borrowing Requirement, 1991-95

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Sources: SPO; and Fund staff estimates.

Sum of individual components may not be equal to total due to rounding.