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April 05, 2013

Turkey’s Successful Modernization of Treasury Operations

 Posted by Yasemin Hurcan[1]

Turkey book
In ten years that followed the 2001 economic crisis in the country, Turkey managed to halve its debt to GDP ratio. As a result, Turkey was selected as a benchmark country for debt reduction in the World Bank’s 2012 report “Golden Growth: Restoring the Lustre of the European Economic Model”. A recently published book[2] entitled “Treasury Operations in Turkey and Contemporary Sovereign Treasury Management” discusses how the Turkish Treasury managed to decrease its debt by, amongst other things, restructuring the Treasury’s operations and management. The publication is available as an e-book.

Turkey postEach section of the book was written by one or more members of staff of the Turkish Treasury who actively took part in the reforms of the early 2000s, when Treasury operations in Turkey went through radical changes. The book looks at the Treasury’s operations and management as part of an integrated balance sheet. As such, it covers not only cash and debt management but also guarantees issued by the Treasury, public-private partnership projects, non-guaranteed public liabilities and other contingent liabilities, financial receivables, and risk management.

After discussing the weaknesses in Treasury operations and management which contributed to the 2001 crisis, each chapter of the book elaborates on how the scope of Treasury management has changed in the decade since. While its focus is on the history of the transformation of the legal and operational structures of the Turkish Treasury, it also addresses contemporary ideas and practices of treasury management through the experience of Turkey.

The first three chapters discuss public debt management, its transformation and interaction with macroeconomic policies, and debt management policies. These chapters explain how the Turkish Treasury changed the legal and institutional framework of public debt management to, amongst other things, improve the coordination with monetary and fiscal policies. The following five chapters cover risk management practices at the Treasury, including an evaluation of: (i) the methods used to assess debt sustainability and undertake sensitivity analyses; (ii) systemic risks from a debt management viewpoint; (iii) the management of assets and liabilities; (iv) benchmark borrowing strategies and the main outcomes of these strategies; and (v) credit risk management. Chapters 9, 10, 11, and 12 look at: (i) the general framework of domestic and external debt from an historical perspective and the development of domestic debt markets; (ii) cash management practices, as second-tier Treasury operations, and the process of moving  from cash rationing to active cash management; and (iii) management of treasury receivables through monitoring and sanctions. The final two chapters discuss the operational risk and accounting practices in Treasury operations.

It is to be hoped that the book will be useful both to students of political and financial developments in Turkey, but also to practitioners in other middle-income countries who are contemplating reform of their national treasuries.


[1] Yasemin Hurcan is a Technical Assistant Advisor at the Public Financial Management 1 Division in the Fiscal Affairs Department of the IMF. 

[2] This book is the English translation of “Hazine Islemleri ve Cagdas Hazine Yonetimi” which was published in Turkish in 2012. 

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy. 

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