Fiscal Space for Infrastructure Borrowing in South-Eastern Europe : A Suggested Approach

The seven countries of South Eastern Europe (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, FYR Macedonia, Romania, and Serbia and Montenegro) are in the process of transition, undertaking significant fiscal adjustment as they seek to move to a path of sustainable growth. Previous high debt has been reduced and/or restructured for most countries, which have committed to a path of fiscal responsibility as one of the key ingredients in the recovery process. Fiscal consolidation is also necessary in order to prepare the ground for future entry into the European Union (EU), including for being in a position to incur expenditures arising from the obligations of future EU membership. A significant amount of new borrowing for infrastructure investment is being contemplated by these countries, often based on bilateral and multilateral funding. This short approach paper seeks to set out the key issues that will need to be kept in mind when evaluating the proposed borrowing and investments. While the note is indicative, and needs to be supplemented by more detailed analysis by each Government, it suggests that caution needs to be exercised in any new borrowing. To the extent that capital expenditure is financed by loans from international institutions and partners, the same word of caution applies to them in their infrastructure lending to the countries of South Eastern Europe.

Bibliographic Details

Main Author:	World Bank
Language:	English en_US
Published:	Washington, DC 2006-09
Subjects:	AGGREGATE DEMAND, BALANCE OF PAYMENTS, BONDS, BUDGET DEFICIT, BUDGETARY EXPENDITURES, BURDEN OF ADJUSTMENT, CAPITAL EXPENDITURE, CAPITAL EXPENDITURES, CAPITAL FLOWS, CAPITAL INFLOWS, CAPITAL INVESTMENT, CAPITAL SPENDING, CATEGORIES OF EXPENDITURE, CENTRAL GOVERNMENT, CENTRAL GOVERNMENT EXPENDITURE, COMMERCIAL CREDITORS, COMPETITIVENESS, CONTINGENT LIABILITIES, CREDITORS, CURRENT ACCOUNT, CURRENT ACCOUNT BALANCE, CURRENT ACCOUNT DEFICIT, CURRENT ACCOUNT DEFICITS, DEBT, DEBT DATA, DEBT DYNAMICS, DEBT RATIO, DEBT REDUCTION, DEBT RESTRUCTURING, DEBT SERVICE, DEBT SERVICE PROJECTIONS, DEBT SITUATION, DOMESTIC DEBT, DONOR ASSISTANCE, ECONOMIC PROJECTIONS, EFFICIENCY OF GOVERNMENT SPENDING, EXCHANGE RATES, EXPENDITURE MANAGEMENT, EXPENDITURE MANAGEMENT CAPACITY, EXPENDITURES, EXPORTS, EXTERNAL BORROWING, EXTERNAL DEBT, EXTERNAL DEBT SERVICE, EXTERNAL FINANCING, EXTERNAL IMBALANCES, EXTERNAL PAYMENTS, EXTERNAL PUBLIC DEBT, FISCAL ACCOUNTS, FISCAL ADJUSTMENT, FISCAL ADJUSTMENT EFFORTS, FISCAL BALANCE, FISCAL BALANCES, FISCAL CONSOLIDATION, FISCAL CONSOLIDATION EFFORTS, FISCAL DEFICIT, FISCAL DISCIPLINE, FISCAL POLICY, FISCAL RESPONSIBILITY, FISCAL SHOCKS, FISCAL SURPLUS, FISCAL SUSTAINABILITY, FISCAL TARGETS, FISCAL TIGHTENING, FOREIGN DEBT, GDP, GDP PER CAPITA, GOVERNMENT EXPENDITURE, GOVERNMENT EXPENDITURES, GOVERNMENT SPENDING, GROWTH RATE, INCOME LEVELS, INCREASE IN TAX REVENUES, INFLATION, INFORMAL SECTOR, INFRASTRUCTURE EXPENDITURE, INFRASTRUCTURE INVESTMENT, INTEREST COSTS, INTEREST PAYMENTS, INVESTMENT EXPENDITURE, LEVEL OF DEBT, LEVEL OF EXPENDITURES, LOCAL GOVERNMENT, LOW DEBT, MACROECONOMIC PERFORMANCE, MACROECONOMIC SITUATION, NATIONAL ACCOUNTS, NATIONAL ACCOUNTS DATA, NET PRESENT VALUE, POVERTY REDUCTION, PRIMARY SURPLUS, PRIVATE DEBT, PRIVATE SECTOR, PRIVATE SECTOR PARTICIPATION, PROGRAMS, PUBLIC, PUBLIC CAPITAL, PUBLIC DEBT, PUBLIC INFRASTRUCTURE, PUBLIC INVESTMENT, PUBLIC INVESTMENTS, PURCHASING POWER, QUALITY STANDARDS, REAL EXCHANGE RATE, RECURRENT EXPENDITURES, REFORM EFFORTS, REGULATORY FRAMEWORK, REVENUE INCREASES, ROADS, SAVINGS, SECTORAL REFORMS, SHORT-TERM DEBT, SIZE OF GOVERNMENT, SOVEREIGN BONDS, SPENDING LEVELS, STRUCTURAL FUNDS, TAX, TAX REVENUES, TELECOMMUNICATIONS, TOTAL EXPENDITURE, TOTAL EXPENDITURES, TOTAL PUBLIC EXPENDITURE, TOTAL SPENDING, TRANSITION ECONOMIES,
Online Access:	http://documents.worldbank.org/curated/en/2006/09/7259385/fiscal-space-infrastructure-borrowing-south--eastern-europe-suggested-approach https://hdl.handle.net/10986/19252
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