Budget deficits and financing of budget deficits in Turkey

The aim of this study; is to provide information about the reasons, measurement and financing methods of budget deficit which is one of the important problems of developed and developing countries, and how the budget deficits have been financed in Turkey.In general, budget deficits result from social and military expenditures, political structure of countries and inefficiency of economic policies which have been applied. Budget deficits can be financed using various methods. These financing methods are domestic borrowing, external borrowing, monetization and taxes. In case of domestic borrowing for financing budget deficits, domestic transfer of resources occurs and total money supply and total demand increase. On the other hand, external borrowing increases domestic savings and accelerates development process. When budget deficits are financed by monetization, money supply increases and inflation can raise. In addition, tax policy that will be executed in a country can be efficient in economical development and decreasing budget deficits, increasing savings and investments.Some measures should be taken in order to decrease budget deficits which deeply affect The Turkish Economy. Expenses of transfer, interest and personnels, which have an important share in public expenditures, should be decreased, and primary surplus in budget should be achieved. Tax system should be reformed and tax revenues should be increased. For an increase in tax revenues, decrease of tax rates, expansion of tax base and decrease of unregistered commercial activities are required. For the realization of all these, transparency of economical process should be increased and budgetary discipline should be ensured.Keywords: Budget Deficits, Financing of Budget Deficits, Public Expenditures