Balance of Payments and International Monetary Assistance, A case study: Turkey

Essay by OsuyelUniversity, Bachelor'sA-, November 2006

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The balance of payments is a summary of all Turkey's relationship with the rest of the world. The balance of payments can define why the value of the Turkish Lira was appreciated. A current account deficit occurs when the current account does not balance. The reason for Turkey to have current account deficit is great level of debts and credits on goods, services, incomes and returns. Current account deficit is also because of a greater part of our investment coming from other foreign countries.

Foreign investment increases foreign debt. This is not a bad thing as it increases the country's productivity causing greater technological advancements and higher levels of employment and growth. Turkey is a young country with a potential for economic development. One of the main problems is the balance of payments and international monetary debt formation.

The balance of payments can explain the economy is nearing a recession.

It is important managing the economy because of this ability. This may encourage the government to fund a budget deficit. The current account deficit can increase as the government is spending money it doesn't have which causes money to be borrowed from banks or other credit institutes. In this respect budget and current account deficits can occur in this case. This is not bad as the countries' growth rate can be increased however the increase of debts might be a problem. In this essay I am examining the balance of payment and international monetary assistance. In the first section of the essay I examine the balance of payment and current account deficit and in the second section international monetary assistance is explained. In this Turkey is given an example to clarify the issue of balance of payments.


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