Aspects of fiscal performance in some transition economies under fund-supported programs

Abstract

This paper contains a selective review of some of the key fiscal issues faced by transition economies. The twelve countries that provide the empirical background for this study have all been under Fund programs for at least some of the time since they initiated their transitions from plan to market. The focus of the paper is on medium- and longer-term fiscal issues, such as government solvency and the evaluation of the sustainability of the government''s fiscal-financial-monetary program. The purpose of the paper is to assist the design and implementation of the future Fund programs and to improve the quality of the debate about the design and conduct of fiscal policy in transition economic generally. The outline of the paper is as follows. Following the introduction, which contains a brief discussion of the roles of the Fund, Section 2 sets out a framework for evaluating the sustainability if the fiscal -financial-monetary program of the state. Section 3 contains some numerical material on public debt, deficits (including quasi-fiscal deficits) and monetary financing or seigniorage. Section 4 discusses eight specific budgetary issues I consider to be of special relevance to transition economics. Section 5 concludes by summarising the lessons from this study in a number of propositions