This paper discusses payments arrears in the Russian Federation and Ukraine, with emphasis on the gas and electric power sectors. Payments arrears, which were triggered primarily by the dislocations experienced during the transition from a centrally planned to a market economy, have reached significant proportions in these two countries. Governments have aggravated the problem by not honoring their own bills and by condoning payments arrears outside the budget. The paper argues that the solution to the problem lies in the implementation of comprehensive systemic reforms and outlines possible measures.
This paper discusses payments arrears in the Russian Federation and Ukraine, with emphasis on the gas and electric power sectors. Payments arrears, which were triggered primarily by the dislocations experienced during the transition from a centrally planned to a market economy, have reached significant proportions in these two countries. Governments have aggravated the problem by not honoring their own bills and by condoning payments arrears outside the budget. The paper argues that the solution to the problem lies in the implementation of comprehensive systemic reforms and outlines possible measures.
"In Albania, consumers with guns stolen from the government threatened to shoot the utility officials who attempted to disconnect defaulting customers." This situation and others less dramatic, but every bit as corrupt, aggravated the utility non-payment issue and pushed it into the foreground. This study reviews the non-payment problem in the electricity sector in Eastern Europe and the former Soviet Union during 1990-1997. In addition to non-payment, the review also covers the problem of low cash collections and the preference in some countries for the use of cash substitutes such as barters, offsets, and promissory notes. The objective of the study is to identify which policies and measures addressing the problem of non-payment in the electricity sector worked in practice and which did not. Therefore, it includes stories of both success and failure. It is aimed at equipping Bank staff and decision makers with a set of practical tools that can be of use when the political will exists to tackle the problem.
This paper assesses the main issues faced by the energy sector in a transition economy such as Romania and their macroeconomic dimension. It examines how the size of quasi-fiscal subsidies, owing mainly to inappropriate prices and the lack of financial discipline, has led to an increased focus on the energy sector under the IMF-supported programs. The paper analyzes the macroeconomic impact of recent reform measures and discusses the next steps to improve price policy and collection in energy utilities. Shifting to targeted budgetary subsidies appears also to be a crucial reform step.
This paper examines the level and structure of fiscal revenues from the Baltics, Russia, and other former Soviet Union countries’ (BRO) energy sector and suggests reforms in energy tax policy. Revenues from the oil and gas sectors are about half the level that might be expected from international comparisons. Low oil revenues result from infrastructure constraints on oil exports, weak tax administration, and inappropriate tax structures. Low gas revenues are due to low statutory tax rates, a tax structure that does not capture monopoly or resource rents, and weak tax administration. Taxation of oil products could be increased.
This paper analyzes some leading indicators of currency crises, and proposes a specific early warning system. This system involves monitoring the evolution of several indicators that tend to exhibit an unusual behavior in the periods preceding a crisis. When an indicator exceeds a certain threshold value, this is interpreted as a warning “signal” that a currency crisis may take place. The variables that have the best track record within this approach include exports, deviations of the real exchange rate from trend, and the ratio of broad money to gross international reserves, output, and equity prices.
'State-Owned Banks in the Transition: Origins, Evolution, and Policy Responses' reviews the experience with state banking over the last decade in the transition economies of Europe and Central Asia. State ownership of banking systems has undermined economic reform efforts and has distorted emerging markets. This study compares various approaches to reform and calls attention to the significant costs associated with continued state ownership. It concludes with lessons from experience and recommendations for policymakers on approaches to reducing state ownership of banks in the region. The findings indicate that restructuring of state banks has proven time consuming and costly, and governments are better off moving swiftly to privatize or liquidate their remaining state banks rather than attempting to rehabilitate them. This report includes seven case studies of individual state banks that have been reformed or privatized over the past decade. The case studies highlight the challenges of implementing various reform measures and illustrate how such challenges have been addressed in difficult economic and political contexts.
With NATO expanding into central Europe, Ukraine has become a pivotal state for the future of European stability, yet it is a country about which little is known in the west. Politics and Society in Ukraine fills that gap, providing the first comprehensive and detailed study of the contemporary Ukrainian political system. Beginning with a discussion of the legacy of the Soviet Union, the authors illuminate Ukraines regional and ethnic tensions, governmental system, efforts at reform, and foreign policy. They consider all of those issues from a comparative perspective that readers unfamiliar with Ukraine will find illuminating. The authors are three of the leading authorities on Ukrainian politics, and each has extensive experience in the country. This book provides much-needed analysis of a crucial country. }With the expansion of NATO, Ukraine is frequently described as the linchpin of security in Central Europe. And after Russia, it is the largest and most important of the post-Soviet states. Yet it is a country about which most westerners know very little, subsumed as it was for decades beneath the Russian Empire and the Soviet Union. Ukrainian Politics and Society is the first comprehensive study of politics in post-Soviet Ukraine, and is therefore vital reading for anyone concerned with European security, or with politics in the former Soviet Union.The authors extensive experience in Ukraine allows them to explain the paradoxes of Ukrainian politics that have led to so many false predictions concerning the future of the Ukrainian state. Their examination of nationality politics shows why ethnic and regional differences have tended to recede rather than to spin out of control, as they have elsewhere in the region. At the same time, these differences hamstring the countrys political system, and the authors show how difficult a task it is for democratic institutions to provide effective government in a country with little consensus. By viewing economic reform in its profoundly political context, the authors expose the chasm between the theory and practice of economic reform. Understanding of how to make profits has not been lacking, but government regulation to ensure that profit-seeking behavior leads to functioning markets has been conspicuously absent.By examining in detail how Ukrainian politics has followed theoretical expectations and where it has contradicted them, the authors arrive at conclusions with implications well beyond Ukraine. Ukraine must first build a state and a nation before it can successfully reform its economy or build a genuine democracy. For Ukraine and its people, the task is daunting. For the west, whose security increasingly relies on stability in Ukraine, this book provides the knowledge necessary to approach the problem, as well as good reason not to ignore it. }
This comprehensive and detailed examination of the challenges faced by the newly independent state of Ukraine argues that its lackluster economic performance during the 1990s was the unfortunate result of a combination of the hasty adoption of public policies not clearly understood and a prolonged struggle to build governmental institutions. With a focus on both how the government used financial repression to balance budgets, dampen inflationary pressures and, at the same time, maintain formal and informal subsidies to state enterprises. It makes original contributions to the debate on economic reform by focusing attention on Ukraine's critical choices in the areas of state institution-building, fiscal policies and monetary reform, and the government's preference for financially-repressive policy measures.
