Public Finances and Economic Transition

Abstract

This paper analyzes developments in general government expenditures and revenues for 26 reforming ex-socialist economies (RESEs) over the period 1989-1994. The data indicate that, rather than uniformly converging to a “Western European” norm, RESEs have followed a variety of patterns, depending on how successful they have been in economic reform in general and in tackling the increase in the demand for social protection in particular. The paper conducts an empirical investigation of spending patterns and the sustainability of revenues  required to maintain current government spending, and concludes that there are strong indications that the fiscal accounts will remain under pressure in a number of RESEs in the foreseeable future.