Fiscal Reform Over Ten Years of Transition

IMF Working Papers, June 1, 2000

Source details

Authors: George C. Tsibouris, Vito Tanzi
Publication date: June 1, 2000
Paper analyzes fiscal reforms in transition economies during the decade leading up to 1998.
Central thesis: Macroeconomic stabilization, price liberalization and privatization—the core reforms visualized by the shock therapy approach—are necessary but not sufficient conditions for a complete transition to a market economy.
Additional requirements identified:
- Creation of new fiscal institutions.
- Changes in incentives and processes.
- Changes in the role of government.

Fiscal reform in transition economies requires deep institutional change beyond initial macroeconomic and structural reforms.
Emphasis on transforming government operations and priorities to support a market economy.
Attention to both revenue- and expenditure-side reforms, including:
- Revenue administration and tax system reforms.
- Expenditure management, including pension spending and wage bill control.
Privatization highlighted as necessary but needing complementary fiscal and institutional reforms to ensure sustainable transition outcomes.

Develop and implement new fiscal institutions tailored to market-economy functions.
Reform tax administration core functions to strengthen tax revenue mobilization.
Reassess and realign the role of government to reduce inappropriate government apparatus and support private sector development.
Address pension spending and other expenditure items to manage general government expenditure and the general government balance.
Use privatization as part of a broader fiscal reform program that includes incentive and process changes.

Fisical Reform Over Ten Years of Transition: WP/00/113
- Fisical Reform Over Ten Years of Transition: WP/00/113 (Markdown version)
- Fisical Reform Over Ten Years of Transition: WP/00/113 (PDF)