Proceeding book

Figure 3. The Appearance of Current Deficits as Foreign Payment Balances in the Last Period of Turkey

As seen on Figure 3, Turkey’s foreign current account deficits experienced remarkable decrease Dollar-based from 2014 to 2015. In other words, the fact that was capital inflow decreased, but the current account deficits position decreased due to foreign currency values substantially taken into positively. It is not wrong to interpret because of new foreign payment policies. In this respect, preventing the foreign capital from escaping abroad can be expressed as the most important success of these policies, which is clearly visible in Figure 3. Given that the current account deficit is one of Turkey's most important financial problems, it is clear that how important and meaningful such a reduction in current account deficit positions after the 2008 crisis. Certainly, the understood effect levels of these policies require to comparison the other macro results in the same period that also include central government budget options in the practice.

However, the structural positive impact of new foreign payment policies cannot be ignored in this external financial balance problem, which is the most important problem of Turkey. It can be said that the negative effect of the negative effect on the balance of payments for the year 2015 is the decrease in foreign capital inflow. Indeed, this situation has caused a significant deviation in the foreign exchange reserves of the Central Bank of the Republic of Turkey. It means that foreign direct investment inflow remained at $9.2 billion in the first 11 months. But we should pay attention that $3.7 billion of this was real estate investment in 2015. Despite an increase in portfolio investments in the January-November period of 2014, it was inevitable that the external payment policies would be questioned again, as a decline of approximately $15 billion in the three-month period until 2015 has taken place (Deloitte, 2015: 4-6).

According to us, an important factor in Turkey's failure to implement new payment policies that took place in the post-crisis period of 2008 is that in the same period in 2014, foreign currency inflows amounted to 19 billion dollars, and in 2015 approximately 15 billion dollars’ worth of money was withdrawn. As a consequence of the new foreign payment policies and, of course, as a result of these policies, the price of the dollar against the Turkish lira has risen rapidly, exceeding 3.72 liras in the last month of 2016, as foreign currency inflows fall in this direction (Maliye Bakanlığı, 2016: 48-50).

In addition, it can say related to the current account deficits’ importance its meaningful in the two alternative structural terms for Turkey. First, deviations in capital inflows are likely to be linked to increasing export trends, partly by 2015, relative to 2014. That is, the dependence of foreign capital has partially decreased after the increase in exports, and the foreign capital seen in the import-oriented business has decrease is also partly due to the fall effect as seen on presently days. Therefore, even if capital inflows decrease for Turkey, it is not seen important matter to ensure budget balances related to cope with current account matters. Secondly, financial reserves decreased in 2015, as seen on the figure 3, is perceived probably as if its the important financial matters. However, Turkish Public Central Bank's financial power that it's foreign exchange deposits have been in the pretty good conditions has been ignored in the same period since 2008 crisis. The most striking concrete indicator of this situation is undoubtedly the net increase in net financial assets in Turkey in 2015, which again points to a further decline in current account deficits in 2017 and a more stable public budget. But, in this point the more important point under consideration for us is that American Dollar may increase keeping on that effect directly budget deficits together with current deficits. Increasing Dollar is not only negatively financial phenomenon related to foreign payments issues, but also the is fact that affect negatively on export sector improvement to ensure the desired economic growth levels that maintain essentially to contribute in all macro financial balances.

5. 
   Conclusion
   

The new political economy of Turkey's external payment problems, which set new goals with the changes in practice after the 2008 financial crisis, aimed at significant balances of external payments along with significant structural changes. It seems difficult to say at present that after 2008, the reduction of current account deficits with a different political approach and the achievement of financial success in institutional relations have produced very striking positive results. The institutional formations arrived could not also resolve in inferior institutional features including suffer from increased macroeconomic volatility to the extent especially if even after controlling for institutional as the financial alteration options in Turkey.

The decline in the gap between import and export options after the global financial crisis of 2008 was again due to the positive impact of these policies and financial relaxation was a matter of short turnaround in the balance of payments. Indeed, of course, the main aim here is to improve Turkey's long-standing macroeconomic imbalances positively, as well as create a stronger banking infrastructure than before with strong monetary policies. It is possible to say that these targets have been achieved, at least partially, through striking new foreign payment policies. But the new political economy of the foreign payments in Turkey could not direct the aimed foreign payments balances to ensure increasing export levels in the scope of exchange rate effecting positively currently deficits. In this point, it can say that Turkey has been also rather exposed to the collapse of international trade and trade credit, other effective features of the 2008 crisis.

It is possible to base this on two main factors in the context of these policies: Firstly, the aimed structural alterations directly related to financial institutions like banks have not come true in the desired levels. And this phenomenon have resulted in banks' control in practices as especially in increasing interest rates, which route exchange rate policies. The rise in the value of the national currency has led to a further increase in current account deficits by increasing imports. Secondly, foreign capital inflow has not been sufficiently in the spite of current deficits decreased due to the rates of exchange extremely alternating after 2008 year, which is a confidence element. Although the new political economy of the foreign payment issues have a very well theoretical contains, the concerned results have been far from the desired political aim to ensure integrating to nowadays which is in especially the globalization process.

After 2008 crisis, it is eventually important that financial reserves’ level. But its financial net accounts related to Central Bank Accounts provided towards to deal with probably financial crisis in the future due to its potential importance have more importance. Even if Turkey's new foreign payment policies have based on the public budget financial options, but still it appears that need the other radical alterations including macro economic balances as well as banking regulations. That's why, the foreign payments problem should not be considered the only one matter of the financial issues of Turkey, even if it's merely removing from other financial things for evaluating probably financial crisis in the future. Beyond 2008 crisis to the future the being talked of major structural changes should put forward also the complicated financial applications options like especially the other reasons of extremely slow down of national investments and expressive rise in interest rate to ensure the new approaches of foreign payments.

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1^ Bu çalışma İstanbul Üniversitesi BAP Birimi tarafından desteklenmiştir.

2^ Julian Shovlin (2011), Julian Shovlin Applied Finance: The Good and the Bad Merger/Acquisition (Topic 9), December 11, 2011, https://appliedfinancejulianshovlin.wordpress.com/ (30.01.2017).