“…^Furthermore, there is unquestioned interdependence between fiscal policy (budgetary aggregates) and the transition process (changes in macro- and microeconomic performance of the country).Indeed, one can hardly expect a successful balanced-budget policy during the entire journey from plan to
market.To the extent that fiscal imbalances reflect the costs of necessary adjustments, they may be temporarily justified (as 'transitional' deficits).Thus, the most difficult issue in designing and implementing fiscal policy during transition is choosing a proper balance between the need to achieve macroeconomic stability (which require fiscal discipline) and the need to pursue structural,
market-oriented (and fiscally costly) reforms.In practice, in the short run, this can lead to conflicts between quality and quantity of fiscal adjustment. …”
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