A new article published by the European Central Bank in July 2010 examines “The impact of the financial crisis on the Central and Eastern European Countries” and  recommends a set of policies they should pursue.

The article says that “[L]ooking ahead, it is crucial for the CEE countries to avoid the re-emergence of macroeconomic imbalances in the future and to ensure a sustainable convergence process. Countries need to commit to lasting policy adjustments and strengthen the necessary counter-cyclical.”

The ECB article recommends, among other things, that:

“With respect to fiscal policy, it is important that the CEE countries achieve and maintain sound and sustainable fiscal positions. For many of the countries concerned, having a fiscal surplus is an appropriate objective to limit the risk of boom-bust cycles in the future. Countries that are subject to an excessive deficit procedure must comply with their commitments in a credible and timely manner. Additional mainly expenditure-based consolidation measures are also required in those countries that have yet to attain their medium-term budgetary objectives. Strong fiscal frameworks should also support fiscal consolidation and limit slippages in public expenditure, while helping to prevent a reemergence of macroeconomic imbalances. With respect to monetary policy, it is crucial for the CEE countries to achieve and maintain price stability on a lasting basis. Once the temporary disinfl ationary factors related to the economic and fi nancial crisis have abated, this will, in particular, require an overall policy stance which will prevent overheating pressures from re-emerging.”

You can read the full article at the ECB web-site here: “The impact of the financial crisis on the Central and Eastern European Countries”