The cost of the election period's 'budget discipline': the coalition - ERDAL TANAS KARAGÖL

The cost of the election period's 'budget discipline': the coalition

One of the most discussed issues before the June 7 election was the election promises. Besides what the parties promised, the discussion of how these promises would be kept generated an agenda. The budget, shown as the resource, was one of the items that the AK Party was the most successful with in the economy.

The budget deficit in 2014 was equal to 1.3 percent of the gross domestic product. This situation is one of the indicators the AK Party government got the highest grades in the economy report. The budget deficit that was 22.7 billion liras in 2014, in spite of the June 7 elections, not implementing the election economy, has come true by making no concessions to the financial discipline.

However, before the election, the opposition parties - with a behavior just opposite of the ruling party - stated that they would use the tools of the election economy generously.

Topics, such as the payments promised to retirees, and increasing the minimum wage, which seemed to be the most effective way to easily affect the voters, have been the examples of the election economy in which each party has different wishes.

While the opposition parties were making their election promises based on the existing budget opportunities, AK Party, which prepared and put into practice this budget without applying the election economy, in order not to cause fragility in the budget, showed severe determination.

Having such a low rate of the budget deficit to the national income has been a “sacred” indicator.

Well, is a little cost change in this “sacred” indicator higher than the cost of the political uncertainty today?


We could definitely answer “no” to this question, especially considering the current situation we are in today.

The truth is that in the world there are election economies and the election economies can be used in a way not to cause big deficits in the budget. Because spending on these before the election period, to come to power as the one-party rulership or for the continuity of the political stability, in a way reduces the cost of possible uncertainty after the election. However, regarding how important the budget disciple is, the continuity of the political stability, to be in the power or government is just as important. Namely, in this sense the political stability has a cost and this cost can be afforded by the increase in the budget.

As it happened in the elections after 2002, in the June 7 election a method which we called the election economy, that would make things easier for the rulership, was not used. Actually this situation shows how sensitive and determined the AK Party is on the budget issue. But it is seen that, the cost of the election result that came out is greater than the cost the election economy will generate.

Namely, with the budget discipline, the risk premium of the country is reducing; but on the other hand, the cost of the political uncertainty is heavier.

This cost is more than the cost that will emerge with the increase of the public expenses and budget deficit. Already, in spite of the 1 or 2 percent change in this indicator, the budget deficit/ GDP rate would continue to meet the Maastricht criteria.


The welfare loss of the sub and middle level income group that emerged as a result of the slow-down of the economic growth in the period after 2012, in a period in which the public finance was strong and especially the budget deficit was at such a low, could easily be eradicable.

It is a known fact that the rate of the budget deficit in many developed countries is above the Maastricht criteria. When the high budget deficit rates are seen, in 2014 in England, the rate of the budget deficit to the GDP was 5.7 percent, in France it was 4 percent, in the USA it was 2.8 percent. This rate was seriatim 3, 4.5 and 5.8 percent among Italy, Portugal and Spain as the countries most affected from the global financial crisis.

Thus, when compared with many countries, Turkey has a lower budget deficit. Thus, the topics, such as the minimum wage and the increase in the retiree salaries, which are highly demanded by the voters, will not cause a serious problem in the economy.

In spite of this, the reasons for postponing the improvements, even not expressing them well enough before the elections, should also be spoken about.

Rather than gaining the continuity of the political stability with an effective election economy, the Turkish economy has a big loss now with the political uncertainty.

Was it really worth it for this?


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