RELATIONSHIP BETWEEN PRIVATIZATION AND FISCAL SPACE

Abstract

The occurance of the financial crisis at global dimensions lead to the governments to look for new resources or ways to be able to use the current resources more efficiently. The term Fiscal Space which appeared in 2000s. is a result of these kind of quests for a solution. The fiscal space, that came to order with its millennium development goals, can be defined as to find extra resources for certain goals.  The logic of the fiscal space is to create there sources needed to make projects that can finance themselves in the longterm. In this respect, the goal of creating extra resources for public expenditure and improving the quality of the services form a connection between fiscal space and privatization implementations.

The most important goal of the privatization implementations in terms of public authority is to generate revenue through sales. However, though public authority’s impementing privatization in order to make profits is useful in the short term, it leads to the emergence of draw backs in the long term. For this reason, spending the revenues gained from privatization implementations on new investment instead of spending it on the current expenditure of the government generates fiscal space.

While legal and institutional structure of privatization makes it possible to create fiscal space in some countries, it doesn’t allow fiscal space in some countries. The generation of fiscal space in Turkey appears in medium-term programmes recently. On the other hand, the generation of fiscal space with privatization implementations is possible partly according to the legal framework in ourcountry.