Fiscal Policy and the Economic Restructuring of Economies in Transition

IMF Working Papers, March 1, 1993

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Fiscal Policy and the Economic Restructuring of Economies in Transition

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Bibliographic details

• Authors: Vito Tanzi
• Published: March 1, 1993
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451921205.001

Overview and Scope

• Focus: major fiscal issues faced by the previously centrally planned economies in their transition to market economies.
• Three main topics examined:
  • (a) the extent to which the budget deficit should be a guide to policy;
  • (b) the reforms that must be carried out in tax legislation and tax administration;
  • (c) the required changes in public expenditure and in the setting up of institutions to manage public spending.
• Note: Also published in Staff Papers, Vol. 40, No. 3, September 1993.
• Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Key Findings and Themes

• Budget deficit as a policy guide:
  • The paper assesses the appropriate role and limits of the budget deficit in guiding fiscal policy during transition.
• Tax reforms:
  • Identifies necessary reforms in tax legislation.
  • Emphasizes the importance of improvements in tax administration.
• Public expenditure and institutions:
  • Outlines required changes in public expenditure composition.
  • Discusses setting up institutions to manage public spending effectively.

Policy Recommendations (implicit from focus areas)

• Use budget deficit analysis carefully as one of several policy guides during transition.
• Reform tax legislation to suit market economy structures and broaden the tax base.
• Strengthen tax administration to improve compliance and revenue collection.
• Reorient public expenditure toward efficient and sustainable spending priorities.
• Establish and strengthen public institutions for effective public financial management and expenditure control.

Subjects and Keywords

• Subject: Budget planning and preparation, Expenditure, Fiscal policy, Government debt management, Public financial management (PFM), Revenue administration
• Keywords: budget deficit, Budget planning and preparation, country, government, government assistance, government assumption, Government debt management, government encounter, nonessential government, sick pay, state enterprise, tax, tax issue, tax system, unemployment compensation, Western Europe, WP