The financial instruments used by international financial institutions (IFIs) regarding the Southeast European countries: a critical assessment of their underlying philosophy and orientation

Abstract

After the fall of the communist regimes in the Southeast European countries, what was attempted was a systemic transformation which was called transition. The economic transition aimed at transforming the nature of economic relations, since their coordination would be passed from the state to market mechanisms. In order to enable this transformation, what was necessary was to finance the attempted changes. However, since the countries in the region lacked sufficient equity capital, they resorted to foreign borrowing and, thus, international finance has to date been the main source of capital. The involvement of International Financial Institutions (IFIs) in the transition process was almost direct but after the cessation of hostilities in Kosovo in 1999 there has been a dramatic increase in financing throughout the area. The level of financing in conjunction with the immediate and increasing needs of countries was the main factors that configured the balance of powers among recipient countries and international financial institutions. The implementation of financial policies by Institutions is being conducted by means of specific financial instruments. he present article aims at examining and evaluating the instruments used by institutions to finance the transition of Southeast European countries, as their suitability, orientation and philosophy have been repeatedly questioned. In order to make this assessment feasible, an examination will take place with regard to the financial instruments of the major creditors of the region, namely the IMF (International Monetary Fund) the World Bank Group and the European Union, who are also managers of the vast majority of financings.transition, international financial institutions (IFIs), Southeast Europe, financial instruments