Indicators of Target 12-13-14-15

32. Net Official Development Assistance (ODA), total and to the least developed countries, as a percentage of OECD/DAC donors' gross national income

33. Proportion of total bilateral, sector-allocable ODA of OECD/DAC donors to basic social services (basic education, primary health care, nutrition, safe water and sanitation)

34. Proportion of bilateral ODA of OECD/DAC donors that is untied

35. ODA received in landlocked developing countries as a proportion of their GNIs

36. ODA received in small island developing States as proportion of their GNIs

37. Proportion of total developed country imports (by value and excluding arms) from developing countries and from LDCs, admitted free of duty

38. Average tariffs imposed by developed countries on agricultural products and textiles and clothing from developing countries

39. Agricultural support estimate for OECD countries as a percentage of their gross domestic product

40. Proportion of ODA provided to help build trade capacity

41. Proportion of official bilateral HIPC debt cancelled

42. Debt service as a percentage of exports of goods and services

43. Debt relief commuted under HIPC initiative

44. Total number of countries that have reached their HIPC decision points and number that have reached their HIPC completion points (cumulative)

Indicators of Target 16

45. Unemployment Rate of young people aged 15-24 years, each sex and total

Indicators of Target 17

46. Proportion of population with access to affordable essential drugs on a sustainable basis

Indicators of Target 18

47. Telephone lines and cellular phone subscribers per 100 population

48a. Personal computers in use per 100 population

48b. Internet Users per 100 population

Status and Trends

Turkey, starting from the early-1980s, has embarked on an intense reform process towards a more outward-oriented economic development strategy, and has taken important steps in order to create a competitive and open macroeconomic structure by adopting the principles of a market economy. Accordingly, Turkey launched a series of economic, legal and institutional reforms at the beginning of the 1980s. The reform process started with the liberalization of the foreign trade regime and the financial sector, and culminated with the liberalization of the capital account in 1989, the latter changing the whole pattern of economic policy.

Despite the commitment to build a modern institutional structure, the Turkish economy could not reap the fruits of the reform process. In the 1990s the economy was characterized by increasing public deficits, high inflation and volatile growth. The country has experienced two severe financial crises over the last decade, in 1994 and in 2001. In the aftermath of these financial crises, the economy suffered serious contractions. The increased uncertainties in the economy caused by global developments intensified this contraction. After the crisis of February 2001, the crawling peg exchange rate regime was abandoned and a floating exchange rate regime was adopted. Furthermore, a new program, "Turkey's Program for Transition to a Strong Economy," was launched in May 2001. Policies under the economic program aim at creating sustainable growth and a stable economic environment. These policies are based on three main pillars; a strong fiscal adjustment, deep-rooted structural reforms and a monetary policy focused on price stability.

In spite of the external shocks (terrorist attacks and the Iraq War) macroeconomic stability has been achieved by through the strict implementation of the economic program in line with the structural reforms during 2001-2004. In this context, a wide range of structural reforms that cover almost all areas of economic life have been introduced. The efforts in this area rest on three pillars: public sector reform, financial sector reform and enhancing the role of the private sector.

The Customs Union agreement with the EU, the Free Trade agreement with EFTA countries, membership of GATT and later the WTO, membership of the Black Sea Economic Cooperation, the Economic Cooperation Organization and the Organization of Islamic Conference also indicate the multifaceted patterns of Turkey's global trade integration during the 1990s and afterwards. As a result of the economic program aimed at promoting foreign trade, the foreign trade volume has doubled in the last five years, from $82.2 billion in 2000 to $160.7 billion as of end-2004.

Figure 4: Foreign Trade Volume

Target 12: Develop further an open, rule-based, predictable, non-discriminatory trading and financial system (Includes a commitment to good governance, development, and poverty reduction-both nationally and internationally)

Following the economic crisis of 2001 ambitious and extensive economic reform programs are being implemented. Public sector reform is aiming at increasing efficiency, establishing good governance and enhancing administrative capacity, introducing discipline in budget management and enhancing transparency and accountability. More specifically, these reforms range from the rationalization of public employment and social security reforms to agricultural reforms. The public sector reform program also lays the foundation for the medium term sustainability of public accounts via public expenditure and tax reforms.

Financial sector reforms are aiming at strengthening the regulatory and supervisory framework, promoting efficiency and competition in the banking sector, facilitating sound banking practices and thus establishing confidence in the sector. Today, as the stability of the banking system has become more solid than ever, a new Banking Law, fully consistent with Basel Core Principles and EU requirements, was approved by Parliament on 2 July, 2005.

As for enhancing the role of the private sector, Turkey has been liberalizing many key sectors in the economy - including telecommunications, energy, petroleum and gas, civil aviation, tobacco etc. - and has established independent regulatory and supervisory boards. To create an investment friendly environment, important steps were taken to clear red tape and promote investments in the country by revising the foreign direct investment (FDI) framework with the FDI Law.

The Turkish economy is going through remarkable changes. The economy grew by almost 26% over a three-year period. Growth reaching 10% in 2004, mainly led by the private sector, has put Turkey among the fastest growing countries in the world. This outstanding growth was accompanied by rapid disinflation. The CPI inflation came down to single digit levels for the first time in the last three decades. The end-year CPI inflation fell to 9.3% in 2004. Interest rates on government borrowing declined substantially while maturity continues to lengthen. The public net debt stock registered a significant decline and came down to 63.5% of GNP at the end of 2004, pointing to an improvement in the order of 25 percentage points of GNP just in three years. All in all, the entire set of economic indicators changed for better and highlighted the exceptional economic performance.

The macroeconomic instability of the past years also explains the fluctuations in unemployment as the financial crises were followed by serious bankruptcies and job losses. Since the early-1990s, Turkey's unemployment figures have fluctuated between 6.5% and 10.5%. It is observed that the continuing high growth trend experienced since 2002 was not reflected in the employment figures. The unemployment rate in Turkey rose to 10.5% in 2003, increasing by 0.2 percentage points with respect to 2002. Maintaining the same level as the previous year, the unemployment rate in the non-agricultural sectors stood at 15%. The unemployment rate in rural areas increased by 0.8 percentage points and reached 6.5%. The unemployment rate among the young educated population declined from 29.1% in 2002 to 27.8% in 2003. At the same time, the labor force participation rate was 48.3% in 2003, a decrease of 1.3 percentage points on the previous year.

In 2004, the unemployment rate in Turkey was recorded at 10.3%, with a slight decrease of 0.2 percentage points compared to the previous year. In the same year, the labor force participation rate was observed at 48.7% (50.5% for the same period in 2003).

Target 13: Address the special needs of the least developed countries
(Includes: tariff and quota-free access for least developed countries' exports; enhanced program of debt relief for heavily indebted poor countries (HIPC) and cancellation of official bilateral debt; and more generous ODA for countries committed to poverty reduction)

Turkey is committed to doing her share in addressing the needs of the least developed countries. In this respect Turkey is a donor country for the Poverty Reduction and Growth Facility established by the International Monetary Fund in 1999. Since its establishment, each year Turkey has made regular contributions to this facility through which many eligible low-income countries are able to borrow on concessional terms to finance their pro-poor public spending. Turkey is planning to continue supporting this facility through her contributions in the coming years.

Turkey has also welcomingly participated in multilateral institutions founded to meet the investment and financial needs of developing and indebted countries. In this regard, Turkey has joined the following institutions as a donor/recipient country:

Target 14: Address the special needs of landlocked developing countries and small island developing States (through the Program of Action for the Sustainable Development of Small Island Developing States and the outcome of the twenty-second 22nd special session of the General Assembly).

The main constraint of the landlocked and transit countries is isolation from international trade. Inadequate transport infrastructures and heavy transit procedures have negative effects not only on the countries in question but also on their trading partners. These negative effects constitute a deterrence for investment.

Turkey is of the view that the interests of the landlocked and transit countries are not so different from each other. Therefore, correct projections concerning transport possibilities in the future, improvement in infrastructure, harmonious transport regulations (such as in weight capacities) for those landlocked and transit countries sharing the same region are all important issues to be taken into account in alleviating the burden imposed by the geography on the countries in question. Needless to say, while doing so, international norms on transport and transit should be taken into consideration. Reasonable transit costs are also important for the consumers in these countries for reaching cheaper products.

With these views, Turkey has strongly supported the adoption of the "Almaty Program for Action" in the "International Ministerial Conference of Landlocked and Transit Developing Countries and Donor Countries and International Financial and Development Institutions on Transit Transport Cooperation," Almaty, Kazakhstan, 28-29 August. 2003. Turkey is also among the first signatories of the "Intergovernmental Agreement on the Asian Highway Network," which was opened to signature in 2004.

In the same context, Turkey co-sponsored the Resolution "International Meeting to Review the Implementation of the Program of Action for the Sustainable Development of Small Island Developing States," submitted to the General Assembly of the United Nations on 14 July, 2005.

Turkey has provided significant assistance to CIS countries and other countries in the region. The Turkish Agency for Cooperation (TAC) was established during the 1980s to coordinate the technical assistance programs for developing countries. In 1992, the Turkish International Cooperation Agency (TICA) was founded as a legal entity for the provision of technical assistance to the newly independent Central Asian, Caucasus and Balkan countries. Since its establishment, TICA has targeted to contribute to the economic and social progress of these newly independent developing countries, mainly Turkey's neighbors. In the period of 1992-2004 TICA has completed 2,956 financial and technical assistance projects in many countries. TICA has organized educational programs and has provided experts according to the demands of the countries. The total amount of TICA's financial and technical assistance (ODA) is was approximately $200 million during the said period. Turkey is willing to promote global partnerships within the framework South-South Cooperation principles.

Target 15: Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term

Turkey itself is a country with a high debt problem. The net public debt stock increased rapidly during the 1990s, reaching 60% of GDP in 1999. The additional costs imposed by the increase in the financing requirement of the budget, due to the need to restructure the banking system following the crises of November 2000 and February 2001, led to considerable increases in the domestic debt stock in 2001. Furthermore, as a result of the increase in the foreign currency denominated debt stock, due to the considerable devaluation of the Turkish Lira, the ratio of the general government gross debt stock to GDP rose from 65.4% in 2000 to 102.6% in 2001.

In the following years, the strict implementation of the economic program favorably affected the markets. The achieved political stability and fiscal discipline, together with the impact of the newly implemented borrowing strategy brought about a decrease in the ratio of the net public debt stock to GNP from 90.5% in 2001 to 63.5% by end-2004.

Indicator 32: Net ODA, total and to LDCs, as percentage of OECD/DAC donors' gross national income

Table 29: Net ODA amount and net ODA as percentage of gross national income (GNI)

Source: OECD

Table 30: Net ODA amount as percentage of gross domestic product (GDP)

Source: SIS and SPO

Indicator 33: Proportion of bilateral, sector-allocable ODA of OECD/DAC donors to basic social services (basic education, primary health care, nutrition, safe water and sanitation)

Not applicable since Turkey is not a OECD/DAC country.

Indicator 34: Proportion of bilateral ODA of OECD/DAC donors that is untied

Not applicable since Turkey is not a OECD/DAC country.

Indicator 35: ODA received in small island developing States as proportion of their GNIs

Not applicable.

Indicator 36: ODA received in landlocked developing countries as a proportion of their GNIs

Not applicable.

Indicator 37: Proportion of total developed country imports (by value and excluding arms) from developing countries and from LDCs, admitted free of duty

Not applicable.

Indicator 38: Average tariffs imposed by developed countries on agricultural products and textiles and clothing from developing countries

Not applicable.

Indicator 39: Agricultural support estimate for OECD countries as a percentage of their Gross Domestic Product

Table 31: Turkey's Total Support Estimate (TSE) expressed as share of its GDP

Source: OECD, Agricultural Policies 2004 at a Glance

Indicator 40: Proportion of ODA provided to help build trade capacity

There is no data available.

Indicator 41: Proportion of official HIPC debt cancelled

There is no data available

Indicator 42: Public Debt Service as a percentage of exports of goods and services

Table 32: Total Debt Service (as % of exports of goods and services)

Source: Central Bank of Turkey and SPO

Figure 5: Debt Service as percentage of exports

Indicator 43: Debt relief commuted under HIPC initiative

There is no data available

Indicator 44: Total number of countries that have reached their HIPC decision points and number that have reached their HIPC completion points (cumulative)

There is no data available

Target 16: In cooperation with developing countries, develop and implement strategies for decent and productive work for youth

Education is considered as one of the fundamental means of accelerating development, increasing employment and raising national competitiveness. This would facilitate the provision of decent and productive work for the young.

One of the main components of the education system is curriculum design. The unity of an overall goal among the preschool, primary, general and vocational technical secondary school programs has not yet been achieved . The current programs are strict, behaviorist, memorizing oriented and behind the new international approaches. International studies, such as PISA, TIMMS and PIRLS, show that Turkey's success rate is not at a desirable level. Efforts to develop curriculum programs compatible with the needs of next generations are underway.

The Ministry of National Education has prepared and proposed projects within the context of the EU Education Programs, such as Socrates and Leonardo, so as to improve cooperation with European countries. Nearly 3,000 A-Type projects and two B-Type projects have been accepted for the 2005-2006 period. Efforts are continuing to increase the number of these projects and to make them more efficient.

One important mission of the Turkish education system is to provide universal schooling, in particular to girls and women. The Development of Vocational and Technical Education Project (METGE) has been was initiated in 1993, and was extended to all vocational and technical schools by 2002. The project aims at improving human capital through lifelong educational programs that take into account local needs. In conformity with this aim, technical cooperation proposals to encourage various public and private institutions to participate actively in and to contribute to the activities of the vocational and technical education schools and institutions have been prepared. In this context, protocols have been signed and put into action for close cooperation.

The Ministry of National Education has targeted to integrate the ICT to its education system. The ICT is envisaged to be an integral part of the Turkish education system. The strategy is to provide for widespread computer aided education at every stage of education, particularly at primary education level. In this context, the Basic Education and Secondary Education Projects, in collaboration with the World Bank, aim at equipping primary and secondary schools with information and communication technologies.

Table 33: ICT data as of 2003-2004 academic year

The labor force participation and employment rate, particularly of women, is low in Turkey, as well as education and the productivity level of the labor force. On the other hand, The unemployment rate, especially among young people, is high, while the agriculture and informal sectors constitute a large proportion of employment in Turkey. There is a mismatch between supply and demand in the labor market due to the fact that an association between the education system and the labor market could not be fully established and that the labor market does not have a flexible structure.

Due to the increasing competition in the agriculture sector there has been a significant outflow of workers to other sectors. This causes a rise in unemployment, since sufficient jobs cannot be created for the unskilled young labor force migrating from rural to urban areas.

Efforts are underway to increase the institutional capacity of the official employment agency, Turkish Employment Organization (ISKUR). ISKUR also has educational programs aiming at improving vocational and technical qualifications for of the unemployed.

The "Active Labor Market Programs Project," which is co-financed by the European Commission and the Turkish Government, is being implemented in order to enhance the institutional capacity of ISKUR and increase employability through assisting ISKUR to in the design, development and implementation of effective employment measures and services aligned with the European Employment Strategy (EES).

After the completion of the institutional transformation (e-ISKUR) project, institutional information and data will be available for job seekers and employers, who will be able to access all the needed services using an Internet-based platform. The data will also be accessible by clients through electronic self- service equipment at appropriate centers in the provinces.

The primary objective is to provide an employment oriented and stable growth environment for reducing unemployment with pro-poor strategies. To this end, policies aimed at addressing the problems encountered in the labor market, especially among women and the young, harmonization of vocational education with labor policy, implementation of active employment policies in order to increase employment while improving the skills of the labor force, supporting entrepreneurship and SMEs which have high capacity to create new jobs, and achieving rural development based on creating jobs and increasing income.

Indicator 45: Unemployment rate of 15- 24 year-olds, by gender

Table 34: Unemployment rates (2000-2004)

Figure 6: Unemployment rates of 15-24 years-olds

Source: SIS

Target 17: In cooperation with pharmaceutical companies, provide access to affordable essential drugs in developing countries

Currently there is no major obstacle in accessability to essential drugs. All drugs listed on the WHO Essential Drugs List are available in Turkey, and are covered under the reimbursement scheme to ensure accessibility. Moreover, Turkey has a fairly well-developed generic pharmaceutical industry and a number of pharmaceutical production companies which produce according to Good Manufacturing Practices (GMP).

The implementation of Universal Health Insurance is expected to start from the beginning of 2006. Through this scheme the whole population will be covered under the universal health insurance and there will not be any have no problems in gaining access to essential drugs.

Indicator 46: Proportion of Population with access to affordable essential drugs on a sust ainable basis

Turkey appears to have almost reached the target with regarding this particular indicator , with more than 95% of its population having no obstacle problems in accessing essential drugs (Source: UNDP, Human Development Report, 2003).

Target 18: In cooperation with the private sector, make available the benefits of new technologies, especially information and communication

The ultimate benefit that Turkey expects from its transition into an information society is to improve international competitiveness and social welfare by increasing resource s and cost efficiency through effective use of information as the most valuable input in each area of economic and social life.

The primary instrument of this transformation is the e-Transformation Turkey Project. The basic components of the project are: formulation of policies and strategies, technical infrastructure and information security, education and human resources, legal infrastructure, standardization, e-government, e-health and e-commerce.

The e-Transformation Turkey Executive Committee has adopted the Document of Policy of Transformation into an Information Society, which has been prepared by the collective studies of the related public institutions and non-governmental organizations. The major component of the e-Transformation Turkey Project is e-Government. In this context, an e-Government portal focused on citizen and business requirements is foreseen, through which users will be able to access integrated public services from a single point, and studies to such effect have begun.  

Important steps have been taken in the area of education in order to provide sufficient human resources for an information society and to increase the number of Internet users. Under a protocol signed within this framework by the Ministry of National Education (MoNE) and Türk Telekom A.S., 4,534 schools throughout Turkey will be provided with Asymmetric Digital Subscribers Line (ADSL) Internet access and services by the end of 2005.

Thanks to the increase in the number of cellular phone subscribers in Turkey, communication has become easier in the last decade. There are currently three GSM operators in the market, all of which provide access to the benefits of high technologies. However, it is certain that the price of communication by both cellular phones and telephone lines is more expensive than in developed countries. By means of the liberalization program access to information and communication is projected to be cheaper in the future with the contributions of the private sector.

Concerning the enhancement of the private sector, the tender process of the privatization of Türk Telekom, the fixed telephony services operator in Turkey, has been completed as of 1 July, 2005. Thanks to this privatization, the political authority's withdrawal from operational activities in the market will be completed, and the state will only be responsible for the decision-making process and regulation. As a result of the liberalization process in the telecommunications sector the market is expected to improve rapidly.

Moreover, the draft bill of the Sectoral Code, which is currently undergoing the ratification process, will eliminate deficiencies in the telecommunications sector by providing interconnection and number portability services as well as strengthen customer protection and pricing.

Indicator 47: Telephone lines and cellular phone subscribers per 100 population

Table 35: Telephone lines and cellular phone subscribers per 100 population

Source: Telecommunications Authority of the Republic of Turkey

Indicator 48a: Personal computers in use per 100 population

Indicator 48b: Internet users per 100 population

Table 36: Personal Computer and Internet Usage per 100 population

Source: UN Millennium Indicators Database and Telecommunications Authority of the Republic of Turkey

Figure 7: Developments in the Information and Communications Sector

Relevant Policies

The relevant policies planned to be implemented towards achieving Goal 8 of the MDG are mainly set out under the the 8th Five-Year Development Plan. This plan has been prepared within the framework of the Long-term Strategy and is the basic document setting out Turkey's approach for the solution of its main medium-term economic and social problems. The Preliminary National Development Plan (2004-2006) and EU Accession Economic Program (2005-2007) are the other main documents prepared within the EU accession perspective.

In the EU Pre-Accession period, the main objectives of the medium-term economic program are as follows:

•  to sustain the strong growth performance,

•  to sustain low single digit inflation and continue with the decline in interest rates,

•  to further decrease the net public debt stock to GNP ratio,

•  to bring the budget into a broad balance at the end of the program,

•  to introduce structural reforms that will put the social security system on a sound footing, reduce the size of the unregistered economy, lower unemployment and improve the investment climate.

Improvements in the Investment Environment:

The Government enacted a "Decree on Improving the Investment Climate in Turkey" in December 2001 as part of a national strategy to increase the overall level of income and productivity and to raise the level of competitiveness of firms operating in Turkey. The decree established a coordinating body, the Coordination Council for the Improvement of Investment Climate," with a mandate to identify and remove regulatory and administrative barriers to private investment. Among the many achievements in the early phases of the program are:

•  The Foreign Direct Investment Law, which totally revises the FDI framework, was enacted in June 2003. The administrative barriers to investment and impediments to the entrepreneurial spirit have been removed one by one. There now exits no distinction between a local and a foreign investor, and in this context 3,095 foreign companies had invested in Turkey since the enactment of the law up until end-2004.

•  The time required to complete certain procedures, such as start-up permits, has been significantly brought down by eliminating unnecessary steps and by delegating the authority to local agencies.

•  Turkish Customs has made significant strides in reducing its internal processing/clearence times, mainly due to the automated information system.

•  Legislation that enables the deduction of R&D expenses from the personel and corporate income tax base has been enacted in July 2004.

•  A new "Turkish Commercial Law" compatible with EU directives has been drafted.

•  The Law on Protection of Intellectual Property Rights has been amended in March 2003 such that it now provides a more reliable environment for intellectual property rights, and dictates strict actions to be taken against piracy of published materials.

•  Progress has been made on the planning of the comprehensive tax reform, the main objectives of which are to fight against the informal economy and bring about a predictable and stable tax policy.

In addition to these financial, legal, administrative and executive policies, the government, in collaboration with civil society and the UNDP, supports the implementation of the Local Agenda 21 Program as a major commitment to the international summits such as the Earth Summit, Habitat Summit and the World Summit on Sustainable Development (WSSD). The implementation of the program in Turkey was chosen as the "Best Practice" in the world in the WSSD in 2002. By early-2005, the Program had entered into its third phase, called "Localizing the Millennium Development Goals and the WSSD Plan of Implementation through the Local Agenda 21 Governance Network," which is the only project in Turkey directly carried out within the framework of the MDGs and WSSD outputs.

In particular, concerning Targets 12, 16 and 18 and their special emphasis on the good governance, youth employment and the expansion of the ICT, the LA 21 Program in Turkey has contributed significantly in these aspects. The program that has been carried out in more than 60 cities aims at the establishment and maintenance of a good governance network, mainly through empowering the young and women with the principles of transparency, accountability and volunteering.

Turkey fully implements Article 170 (*) of the Plan of Implementation of the WSSD, working with the established local youth and women councils in achieving the MDGs. These local youth and women councils not only form the basis of the governance network but also facilitate the expansion and implementation of other projects, such as poverty-reduction, employment and ICT projects (**).

(*) WSSD, Article 170: Promote and support youth participation in programs and activities relating to sustainable development through, for example, supporting local youth councils or their equivalent, and by encouraging their establishment where they do not exist.

(**) Within the LA 21 Governance Network several projects on poverty-reduction, employment and ICT have been carried out. In collaboration with the UNDP and IULA-EMME (International Union of Local Administrations - Secretariat of Easter Mediterranean and Middle East), the Supporting Local Projects Program has been launched to facilitate the institutionalization of the civic local councils. In addition, the Social Risk Mitigation Project has been carried out. Also in the context of Target 18, the "Enabling the Youth for e-Governance in Turkey" Project has been launched in partnership with the LA 21 Program, Microsoft-Turkey and Cisco Systems-Turkey, facilitating the spread of the ICT, especially among the young and women. All these projects comprise capacity-building and funding opportunities in order to increase the social capital of the young and women, helping them to join the active labor market and to produce solutions to the problems at the a local level.

Benchmarks and Monitoring Capability

The main sources of data are statistics, reports and other relevant documents produced by the SPO, SIS, the Telecommunication Authority of the Republic of Turkey and the Turkish Central Bank. The international sources are provided mainly from the statistics of the World Bank, the IMF, the OECD and the WTO.

Challenges

There are a number of challenges in front of Turkey for achieving the targets within Goal 8 of the MDGs. Most of these are related directly or indirectly to the potential macroeconomic risks that the country may face. For example, high and volatile oil prices as well as exchange rate fluctuations have been the main risks that world economies faced after 2001. Rising oil prices had negatively affected some advanced and developing countries, especially in 2004. The negative impact of higher oil prices was observed on the Turkish economy as well. However, this impact was limited. While increasing oil prices resulted in higher inflation in many countries, Turkey managed to bring down its inflation to single digits in 2004 thanks to its strong macroeconomic policies. The sharp decline in the dollar against the Euro posed another risk for a notable number of countries in 2004. The falling dollar led to substantial losses for many countries, in particular in Europe. Moreover, emerging market economies, including Turkey, have enjoyed favorable financial market conditions since 2004. With abundant global liquidity combined with an increasing interest in emerging market bond issues, demand for Turkish eurobonds has been strong.

Debt burden is another challenge in front of macroeconomic stability. High public debt poses a serious problem for many emerging market economies. Turkey, too, has struggled with its huge public debt. However, public debt has been on a decreasing trend in the aftermath of the 2001 crisis. To run down the public debt a tight fiscal policy has been implemented. The quality of debt structure has improved while the average maturity of debt has lengthened. Interest rates on government borrowing have dropped substantially. It is encouraging that the share of public debt linked to a flexible exchange rate and foreign currencies have been declining. Foreign exchange-denominated total debt was brought down to 39% in early 2005 from 56% in 2001.

Besides the macroeconomic challenges, insufficient funds for public investment in social expenditure such as education and health care might have negative impacts on efforts to reduce poverty and overcome underdevelopment. For this reason, investment expenditures should be directed to investments that are essential for development. These types of investments can be classified as: rural development, urban development, health, education, environment, technology and innovation.

Some challenges towards transparency and democratic governance have been overcome during the 2000s, especially in the context of EU accession. A strong public consensus and political power to achieve democratic governance does exist among the people. The concepts of "social partnership" and "participatory governance" are now respected more than ever in the country.

Central government institutions and local authorities improve towards information sharing, transparency and accountability by means of the ICT, such as the live TV channel broadcasting of Grand National Assembly meetings.

Go back to Contents