Rasit Pertev

In the latter half of the 1990s, budget deficits and debt levels in Turkey were allowed to reach such high levels that the country's macroeconomic stability was severely undermined. High inflation and volatility of the real exchange rate caused growth rates to oscillate excessively. In order to address this instability, the Government of Turkey embarked on a path of disinflation in early 2000, requiring a reduction of government expenditures in all sectors. Given the bloated level of annual budgetary and other fiscal support which agriculture had come to absorb by this time, reforms of agricultural subsidies had a significant role to play in this fiscal stabilization program. For this reason, the Government initiated a politically demanding but thorough realignment of agricultural support policies, aimed at improving the efficiency in their support to the sector at greatly reduced levels. Three years into the program, the agricultural subsidy reforms have contributed significant...