Fiscal Affairs Department, International Monetary Fund, 700 19th Street, N.W., Washington, DC 20431, USA. E-mails: sgupta@imf.org; lleruth@imf.org; ldemello@imf.org; schakravarti@imf.org

Abstract

This paper assesses changes in the size and scope of government in 24 transition economies. While these governments have reduced public expenditures in relation to GDP, and public employment as a share of population, some indicators suggest that the size remains high (eg, rising indebtedness, a heavy regulatory burden, arrears, and the prevalence of noncash transactions). At the same time, the scope of government activities – although evolving – has not necessarily become appropriate. This paper provides some recommendations for aligning the scope of government with the increasing market orientation of these economies.