Lessons in Fiscal Consolidation for the Successor States of the Soviet Union

George Kopits

No 1993/054, IMF Working Papers from International Monetary Fund

Abstract: This paper reviews lessons in fiscal consolidation for the former Soviet Union that emerge from the experience of Central and Eastern European economies in transition. A central lesson is the need to support the macroeconomic stabilization with a front-loaded fiscal adjustment. Consistent with this adjustment path, structural reform in the tax and expenditure areas should be aimed at allocative efficiency and fairness, and its sequencing be predicated largely on administrative constraints. In the face of the uncertainty of fiscal projections, formulation of contingency measures is necessary. In addition, elimination of submerged fiscal imbalances, stemming from quasi-fiscal activities of state-owned nonfinancial enterprises and financial institutions, is just as important as correcting the measured budget deficit.

Keywords: WP; break; CEE economy; government; economy; CEE experience; governments in CEE; government operation; contingent government liability; CEE experience point; single-enterprise industry; market economy; nonfinancial enterprise; interest-yielding government paper; Budget planning and preparation; Government debt management; Fiscal consolidation; Baltics (search for similar items in EconPapers)
Pages: 26
Date: 1993-06-01
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