World Bank2014-08-012014-08-012006-09https://hdl.handle.net/10986/19252The 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.en-USCC BY 3.0 IGOAGGREGATE DEMANDBALANCE OF PAYMENTSBONDSBUDGET DEFICITBUDGETARY EXPENDITURESBURDEN OF ADJUSTMENTCAPITAL EXPENDITURECAPITAL EXPENDITURESCAPITAL FLOWSCAPITAL INFLOWSCAPITAL INVESTMENTCAPITAL SPENDINGCATEGORIES OF EXPENDITURECENTRAL GOVERNMENTCENTRAL GOVERNMENT EXPENDITURECOMMERCIAL CREDITORSCOMPETITIVENESSCONTINGENT LIABILITIESCREDITORSCURRENT ACCOUNTCURRENT ACCOUNT BALANCECURRENT ACCOUNT DEFICITCURRENT ACCOUNT DEFICITSDEBTDEBT DATADEBT DYNAMICSDEBT RATIODEBT REDUCTIONDEBT RESTRUCTURINGDEBT SERVICEDEBT SERVICE PROJECTIONSDEBT SITUATIONDOMESTIC DEBTDONOR ASSISTANCEECONOMIC PROJECTIONSEFFICIENCY OF GOVERNMENT SPENDINGEXCHANGE RATESEXPENDITURE MANAGEMENTEXPENDITURE MANAGEMENT CAPACITYEXPENDITURESEXPORTSEXTERNAL BORROWINGEXTERNAL DEBTEXTERNAL DEBT SERVICEEXTERNAL FINANCINGEXTERNAL IMBALANCESEXTERNAL PAYMENTSEXTERNAL PUBLIC DEBTFISCAL ACCOUNTSFISCAL ADJUSTMENTFISCAL ADJUSTMENT EFFORTSFISCAL BALANCEFISCAL BALANCESFISCAL CONSOLIDATIONFISCAL CONSOLIDATION EFFORTSFISCAL DEFICITFISCAL DISCIPLINEFISCAL POLICYFISCAL RESPONSIBILITYFISCAL SHOCKSFISCAL SURPLUSFISCAL SUSTAINABILITYFISCAL TARGETSFISCAL TIGHTENINGFOREIGN DEBTGDPGDP PER CAPITAGOVERNMENT EXPENDITUREGOVERNMENT EXPENDITURESGOVERNMENT SPENDINGGROWTH RATEINCOME LEVELSINCREASE IN TAX REVENUESINFLATIONINFORMAL SECTORINFRASTRUCTURE EXPENDITUREINFRASTRUCTURE INVESTMENTINTEREST COSTSINTEREST PAYMENTSINVESTMENT EXPENDITURELEVEL OF DEBTLEVEL OF EXPENDITURESLOCAL GOVERNMENTLOW DEBTMACROECONOMIC PERFORMANCEMACROECONOMIC SITUATIONNATIONAL ACCOUNTSNATIONAL ACCOUNTS DATANET PRESENT VALUEPOVERTY REDUCTIONPRIMARY SURPLUSPRIVATE DEBTPRIVATE SECTORPRIVATE SECTOR PARTICIPATIONPROGRAMSPUBLICPUBLIC CAPITALPUBLIC DEBTPUBLIC INFRASTRUCTUREPUBLIC INVESTMENTPUBLIC INVESTMENTSPURCHASING POWERQUALITY STANDARDSREAL EXCHANGE RATERECURRENT EXPENDITURESREFORM EFFORTSREGULATORY FRAMEWORKREVENUE INCREASESROADSSAVINGSSECTORAL REFORMSSHORT-TERM DEBTSIZE OF GOVERNMENTSOVEREIGN BONDSSPENDING LEVELSSTRUCTURAL FUNDSTAXTAX REVENUESTELECOMMUNICATIONSTOTAL EXPENDITURETOTAL EXPENDITURESTOTAL PUBLIC EXPENDITURETOTAL SPENDINGTRANSITION ECONOMIES10.1596/19252