subnational governments are critical.
Box 3 lists systemic measures to promote understanding of fiscal risks by policymakers, the public, and the markets, while Box 4 summarizes specific steps that can be taken to control fiscal risks on a program-by- program basis.
Given the increasingly serious fiscal implications of contingentgovernmentliabilities, the IMF and the World Bank should extend the scope of their fiscal analysis to address contingent fiscal risks; require countries to disclose information on their exposure to all types of fiscal risks; and help
-budget investment expenditure) narrowed from 7.2 percent of GDP in 2003 to 4½ percent of GDP in 2004 leading to a slight decline in the debt stock to 41 percent of GDP. However, the improvement in the public finances is clouded by the recent augmentation of the government’s off-budget investment program for 2005-2010 to 110 trillion dong (15½ percent of 2004 GDP). In addition, slow progress in SOCB reform, together with high credit growth, has likely led to a large build-up of bad loans and contingentgovernmentliabilities in the banking system.
The government has recently
This paper reviews lessons in fiscal consolidation for the former Soviet Union that emerge from the experience of Central and Eastern European economies in transition. A central lesson is the need to support the macroeconomic stabilization with a front-loaded fiscal adjustment. Consistent with this adjustment path, structural reform in the tax and expenditure areas should be aimed at allocative efficiency and fairness, and its sequencing be predicated largely on administrative constraints. In the face of the uncertainty of fiscal projections, formulation of contingency measures is necessary. In addition, elimination of submerged fiscal imbalances, stemming from quasi-fiscal activities of state-owned nonfinancial enterprises and financial institutions, is just as important as correcting the measured budget deficit.