Abstract
On August 4, 1958, a moratorium was declared in Turkey. Before this fiscal event arose, liberalization policies had been abandoned. After that, the Democrat Party had to adopt the policy of interventionism. Hence, the investments were realized by the public sector rather than the private sector. While importing became more profitable, this event caused foreign exchange reserves to run out. In addition, inflation increased. Put differently, the prices of goods and services showed quite a high increase. The common feature of these problems was that they were expense-oriented. This situation meant a budget deficit. Nevertheless, to meet the budget deficit, the method of borrowing was applied. However, because borrowing was not used efficiently, the moratorium arose. In this study, these points are explored and some suggestions are presented to avoid such problems in the future.
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