The effects of municipalities debts in Turkey on general budget: Analysis of 1980-2009 period

In Turkey funding to meet the needs of municipalities after 1990 is often resorted to borrowing. Especially in this period, the Treasury guaranteed external debt has become a very attractive source for the municipalities. Because the Treasury guarantee loans not paid back, Treasury owed to debs that assumed by municipalities.Municipalities can not pay the debt by the Treasury as a result of this unforeseen amounts of cash because of problems occurred. Consisting of cash problems, both, tax and non-tax revenues collected to finance public expenditures and the Treasury's use of cash deficits as well as higher than expected interest expenses, led to an increase in borrowing. After all these expenses have created an impact to increase the budget deficit.The guaranteed loans which is serious burden on Treasury. have been limitationsby the legal regulations came into force in the 2000s. In this regard, guaranteed loans undertaken by municipalities and the Treasury guaranteed external debt stock has experienced decreases. However Treasury overdue receivables, as a result of the accumulation of earlier periods, with the domestic debt of municipalities to other public institutions has increased over the years. And under the name of the institution of legal regulations, some of the liabilities of the receivables has been deleted. Deleted these receivables gave rise to an enhancing effect on budget deficits again.As a result, a major cause of budget deficits of the 1990s, municipalities Treasury guaranteed external debts that were assumed by the Treasury, a major cause of budget deficits in the 2000s is "institution of reconciliation" with the deletion of the receivables.Key Words:1.Budget deficits2.Municipalities3.Borrowing4.Treasury guaranteed borrowing5.Reconciliation.