The document discusses Turkey's economy from 1980-1994, describing a pre-crisis period characterized by large fiscal and external imbalances as well as a rising public sector borrowing requirement. Tables show high and growing PSBR ratios from 1987-1995. A stabilization program was launched in April 1994 following a crisis where the economy contracted, the Turkish Lira was devalued, reserves fell, and inflation rose sharply. The post-crisis period saw reforms aimed at liberalizing the economy.

2. 1980 – 1994 Period of Turkish Economy
Pre-crisis Period
Reasons of High PSBR
Table 1: PBRS Ratio Between 1987 and 1995
Stabilization Program, April 5th, 1994
Post-crisis Period

3. A liberalization program launched
(1980)

5. Pre-crisis
Period
I. Large and growing
fiscal and external
imbalances
II. Rising and very high
PSBR
III. Political and social
problems
IV. Real exchange rate
appreciation

6. i. Generous agricultural support policies
ii. Worsening performance of the state owned
economic enterprises
iii. The increased cost of military operations
iv. Interest payments

7. PBRS Ratio Between 1987 and 1995
Ratios to GPD, %
1987 1988 1989 1990 1991 1992 1993 1994 1995
PSBR 6.1 4.8 5.3 7.4 10.2 10.6 12.0 7.8 5.4
Financing PSBR;
Net Domestic
3.4 2.7 4.5 6.5 9.8 9.0 10.6 9.6 6.3
Borrowing
Bond 1.2 0.3 0.4 0.5 2.0 2.2 1.1 6.3 2.5
Treasury Bill 1.2 1.9 2.6 2.0 0.4 1.4 1.5 -1.8 1.1
Cash Advances from 0.5 0.5 0.2 0.1 1.7 1.6 2.7 1.3 1.2
CB
Others 0.5 0.0 1.3 3.9 5.7 3.8 5.3 3.8 1.5
Net Foreign
2.7 2.1 0.8 0.9 0.4 1.6 1.4 -1.8 -0.9
Borrowing

10. Aftermath of the Crisis
The Turkish economy contracted by 6%
In the first quarter of 1994, the Turkish Lira (TL)
was devalued more than 50% against the US$
The Central Bank lost half of its reserves
Interest rates skyrocketed
Inflation rate reached three digit levels

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