Accessibility links

IMF says transition process working

  • Kevin Foley

Washington, April 18 (RFE/RL) - The International Monetary Fund (IMF) says "the transition process is working" in central and eastern Europe and the former Soviet Union.

The IMF says in the spring edition of its World Economic Report that "many of the transition countries have achieved considerable progress with macroeconomic stabilization and reform, and the fruits of their efforts to transform their economies are clearly visible."

It says: "Poland, the Czech and Slovak Republics and Slovenia have achieved some of the most impressive results."

The economic growth rate for most of the countries should be between four and five percent, the IMF said.

It attributed the success to disciplined financial policies, structural reforms, liberalization of trade policies and rapid growth of trade, especially with western Europe.

The report is published twice a year. It was released Wednesday in advance of the IMF-World Bank meetings that begin Saturday in Washington.

The IMF report provides an overview of progress and prospects for categories of nations, such as industrial, nations in transition, and developing countries. It does not provide detailed reports on individual countries.

Countries in transition is the term IMF economists use to refer to the former centrally planned economies that are now developing free market systems. On the whole, the IMF economists say the nations in transition did well in the past six months. Some did better than others. There were exceptions too. The report says there was not much progress in Belarus, Tajikistan and Turkmenistan.

The report says that while the greatest progress was made in central Europe, nations less advanced in the transition process also made improvements in price liberalization, privatization and tearing down trade barriers.

The economists predict a convincing recovery for economic output in Russia during the rest of this year. Economic prospects have also improved in Kazakhstan, Kyrgyzstan, Moldova, Armenia, Georgia and Uzbekistan, the report says.

Ukraine made considerable progress with stabilization and systemic reform last year, the report says. The economists predicted an end to the decline in economic output if disciplined economic policies continue.

The IMF experts say that reaching and then sustaining economic stability is directly linked to restructuring of the banking and enterpise systems and the reform of social safety nets.

The economists recommend that governments create strong unemployment and health insurance systems to shift the burden of social responsibilities away from enterprises. They also say there is "an urgent need to reform pension systems."

They suggest that because of an aging population, the governments in the region discourage early retirement, increase pension contributions from individuals and raise retirment ages to put the pension systems on a sound footing.

The report says most of the countries in transition made susbtantial further progress toward low inflation, but there were difficult inflationary problems in Ukraine, Turkmenistan and Tajikistan.

It says growth prospects were described as uncertain for Armenia, Bulgaria and Romania because of problems with economic reform policies and, in the case of Armenia, the continuing blockade of trade routes imposed by Azerbaijan.

However, prospects were said to be more favorable for Georgia and Uzbekistan because both made progress with economic stabilization and enforcement of financial discipline.