## Budgetary Subsidies in Centrally Planned Economies in Transition

_IMF Working Papers, January 1, 1991_

## Source details

**Canonical URL:** [Budgetary Subsidies in Centrally Planned Economies in Transition](https://www.imf.org/en/publications/wp/issues/2016/12/30/budgetary-subsidies-in-centrally-planned-economies-in-transition-887)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/30/budgetary-subsidies-in-centrally-planned-economies-in-transition-887/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/30/budgetary-subsidies-in-centrally-planned-economies-in-transition-887/index.json)
- [Bundle manifest](/en/publications/wp/issues/2016/12/30/budgetary-subsidies-in-centrally-planned-economies-in-transition-887/bundle-manifest.json)

## Bibliographic details
- Authors: Robert Holzmann
- Published: January 1, 1991
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451925883.001

---

### Executive summary and core findings
- The paper analyzes budgetary subsidy policy issues that arise when centrally planned economies move toward a market economy.
- Successful subsidy reduction must be embedded into an overall economic reform program.
- During program execution, former implicit subsidies are likely to become budgetized.
- Enterprise restructuring and the introduction of social safety net provisions impose additional pressure on the budget and necessitate careful policy design.
- Comprehensive budgetary reform is required to prevent budgetary slippages during the transition process.

### Policy implications and recommendations
- Embed subsidy reduction within a broader, coherent economic reform program to ensure sustainability.
- Anticipate and plan for the budgetization of former implicit subsidies as price liberalization and market reforms progress.
- Design enterprise restructuring programs with explicit attention to their fiscal impact to avoid uncontrolled budgetary pressures.
- When introducing or expanding social safety net provisions during transition, calibrate program design to limit adverse fiscal consequences.
- Implement comprehensive budgetary reform measures to strengthen public financial management (PFM) and prevent budgetary slippages during transition.

### Analytical themes and topics covered
- Budget planning and preparation
- Expenditure and public financial management (PFM)
- Government subsidies and their transformation during transition
- Housing and consumer goods pricing implications
- Inflation and price liberalization effects
- National accounts and trade prices
- Enterprise reform, enterprise restructuring, and implications for the enterprise sector
- Transition from a socialized enterprise model to market mechanisms

---


_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/budgetary-subsidies-in-centrally-planned-economies-in-transition-887_