The article titled “Testing Minsk’s Financial Fragility Hypothesis for Turkey’s Public Finances”, authored by C. Kemal CAN and İsmail CANÖZ from IMU Faculty of Political Sciences, was published in the Public Finance Quarterly journal.
In the article, the authors measured the degree of fiscal fragility in Turkey from a Minsk perspective and revealed that the government should at least sporadically implement hedge financing and pursue countercyclical fiscal policies to restore stability. In the study, two financial fragility indices were used based on Minsky’s hypothesis to examine the recent trends in Turkish public finances, and it was evaluated that the financial balances tended to deteriorate in the recent period and that there was a progress towards (ultra) Ponzi financing, as can be seen from the falling values of the fiscal fragility index. According to the results presented in the study, it was emphasized that currently, the financial performance in Turkey is gradually waning and the current fiscal stance is not on a par with previous years. On the other hand, it was emphasized that the findings of the study signal a looming financial crisis and that this trend should be reversed as soon as possible with the help of appropriate remedies, otherwise economic development policies may be adversely affected. For this reason, the authors included policy proposals such as abandoning cyclical fiscal policies, creating public confidence by creating a primary balance, implementing a full-fledged tax reform, restructuring contingent liabilities, properly reviewing expenditures, and reducing extravagance in order not to adversely affect sustainable growth. However, it was also noted that despite the abundance of alternative fiscal policies, the current Covid-19 pandemic is a major obstacle to achieving the intended results regarding financial stability.