Inter-Enterprise Arrears in a Post-Command Economy: Thoughts From a Romanian Perspective

Daniel Daianu

No 1994/054, IMF Working Papers from International Monetary Fund

Abstract: The paper considers that strain is the main source of inter-enterprise arrears in post-command economies. Strain can be linked with the structure of the economy and the size of resource misallocation. Inter-enterprise arrears “soften” markets and operate as a self-protecting device against the pressure for change. As temporary quasi-inside money, arrears fuel inflation. A paradox of policy credibility in undertaking structural adjustment is emphasized. Rising exports can be a possible side effect of arrears and a constraining factor: the size of the economy is seen as affecting the relationship between arrears and exports. An operational framework for containing arrears would Include: “breaking up” structure; Imposing a disciplining “straitjacket” on structure; industrial policy (“picking losers among losers”) and targeted external assistance. Containing arrears can not be a one shot policy-drive; here one deals with a process that will overlap in time with the evolving environment.

Keywords: WP; Inter-enterprise arrears; enterprise behavior; nonviable enterprise; market economy; enterprise reform; structural adjustment; freedom enterprise; enterprises running; Arrears; Real interest rates; Exports; Inflation; Budget planning and preparation; Eastern Europe; Western Europe (search for similar items in EconPapers)
Pages: 30
Date: 1994-05-01
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Citations: View citations in EconPapers (14)

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