Serbia and Montenegro : Public Expenditure and Institutional Review, Volume 1. Executive Summary

Abstract

This Public Expenditure and
 Institutional Review (PEIR) aims to help the government of
 the Federal Republic of Yugoslavia (FRY) in taking their
 public expenditure reforms further. It analyzes public
 expenditure practices, and institutions of the two Republics
 - Serbia and Montenegro - and of the Federal Government,
 and, evaluates their decision-making, and implementation
 processes. The cross-cutting topics of the PEIR are:
 sustainability of public expenditures; strategic allocation
 of public spending, to maximize growth and welfare within
 fiscally sustainable limits; and, accountability of the
 public expenditure system, needed to maintain domestic, and
 international support for the reconstruction programs of the
 two Republics. The success of reforms depends on difficult
 strategic choices: 1) the inherited, distorted fiscal
 systems, and inefficient budget management practices, call
 for a realistic focus in selecting the goals of reform; 2)
 the best solution choice must be derived from the existing
 structures, and practices; and, 3) the Governments of Serbia
 and Montenegro should focus on deepening the reforms already
 initiated, rather than launching a number of new ones. The
 first volume provides an overview of the public expenditure
 reform agenda; volume two focuses on the Republic of Serbia
 and the Federal Government, while volume three discusses
 public expenditure management issues in Montenegro. The
 public expenditure problems of the Federal level receive a
 somewhat limited treatment, as the contours of the future
 union government takes shape. Similarly, challenges of
 fiscal decentralization below the Republic level, receive
 only a brief treatment, actually only in the Serbia volume.