Contents -- I. INTRODUCTION -- II. MEASURING THE QUASI-FISCAL DEFICIT -- III. MACROECONOMIC RELEVANCE OF QUASI-FISCAL DEFICITS -- IV. ENERGY SECTOR CONDITIONALITY -- V. OUTCOMES AND LESSONS LEARNED -- VI. POLICY OPTIONS -- VII. EPILOGUE -- References
Summary
Quasi-fiscal deficits of public utility companies are common in all member countries of the Commonwealth of Independent States (CIS). They constitute a significant impediment to efficient resource allocation and endanger macroeconomic stability. This paper presents a simple framework for measuring and monitoring such deficits and highlights their macroeconomic relevance. It reviews the progress under IMF conditionality aimed at correcting these imbalances during 1993-2003. The paper suggests that the extensive conditionality under the IMF-supported programs has yielded only limited progress in reducing the energy sector's financial imbalances. In conclusion, different policy options are discussed in light of the lessons learned