Abstract

The previous sections identified the need for the Baltic countries and other EU accession countries to pursue prudent fiscal policies. This will be crucial to maintaining high and sustainable growth in a low-inflation environment and protecting their external positions. At the same time, EU and NATO accession will require shifts in the composition of spending and changes in taxation within a relatively short period of time. This may be complemented by steps to lower the tax burden, in particular on labor income and corporate profits. Moreover, transfers from the EU, although potentially sizable, will need to be complemented by national cofinancing and, upon EU accession, national payments to the EU.

Medium-Term Fiscal Issues Related to EU and NATO Accession
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