Abstract

Despite successful efforts to balance the budget in 1990 through reductions in spending for health care, education, and enterprise subsidies, the Polish government spent 11% more than it raised in revenues in 1991 and anticipates a budget deficit of more than 65 billion zloty in 1992. The International Monetary Fund (IMF) warned that unless the deficit is limited to 5% of Gross National Product in 1992, credits will be suspended. Other post-communist states have experienced similar budget problems. Although recently several of these states have reduced their deficits, their revenue bases are so unstable that further problems are likely. To the extent that these deficits are a chronic manifestation of the transition from socialism to capitalism and undermine the ability of post-communist states to perform their necessary functions, they constitute a fiscal crisis.