Progress in reform Budget system reform in transitional economies:

Progress in reform

Budget system reform in transitional economies:

Budget system reform in transitional economies:
The case of the former Yugoslav Republics*
Jack Diamond and Duncan Last**

* This document was originally published by the Fiscal Affairs Department of the International Monetary Fund and it has been included in the current edition of the Public Budget International Journal upon permission granted by the institution.
The views expressed in this Working Paper are those of the authors and do not necessarily represent those of IMF.
**The authors would like to acknowledge the input of their many colleagues in the Fiscal Affairs Department who have worked on the former Yugoslav republics and produced the various technical assistance materials on which this review is based. Special acknowledgement goes to Mr. Feridoun Sarraf and Mr. Brian Olden for their helpful comments.

VI. Progress in reform

The progress attained in moving from these short-run reforms to more sustainable medium-term reforms has differed between republics. Usually, this has been dictated by the speed at which political and economic stability could be restored. The two republics which moved quickly ahead were essentially outside the war zone. These were Slovenia, which made rapid progress in the second half of the 1990s, and FYR Macedonia, whose problems were protracted by internal ethnic divisions and the political dispute with Greece, yet in recent years still made notable progress. In the last few years, but more noticeable after the change in government in 2000, Croatia has also begun to progress on the medium-term reforms. Serbia has only recently started to plan its reform strategy to catch up, but starting from a position where it can team from the successes and failures of the other republics. For the most part, reform in Bosnia has been externally driven, if not forced, leading to the question of the longer-term sustainability of some of their reform efforts. To a lesser extent, reforms in Montenegro have also been externally driven. While nearly all republics still suffer fiscal strains, the second phase of reforms is underway in all republics to some degree, although they all have different starting points. Even in those that are more advanced, there remain unresolved issues (such as the status of the indirect budget users, the zavods) and the coverage of general government in their fiscal reporting.