Patterns of crisis responses and implications for governance Regional Policy Roundtable in Eastern Europe and Central Asia on Economic Crisis Responses from a Governance Perspective Sarah N. Repucci UNDP Consultant 7 July 2010

Presentation Outline  Overview of the Governance Reforms in the Aftermath of the Economic Crisis project  Research approach  Preliminary findings

Presentation Outline  Overview of the Governance Reforms in the Aftermath of the Economic Crisis project  Research approach  Preliminary findings

Governance Reforms in the Aftermath of the Economic Crisis  Aim: To develop research on crisis responses from a governance perspective and support policy debates to outline a new governance reform agenda for Eastern Europe and the former Soviet states, during and post- economic crisis.

Governance Reforms in the Aftermath of the Economic Crisis Countries covered

Presentation Outline  Overview of the Governance Reforms in the Aftermath of the Economic Crisis project  Research approach  Preliminary findings

Governance Reforms in the Aftermath of the Economic Crisis  Situation analysis  mapping  country overviews  Case studies  Paper on crisis responses from a governance capacity perspective

Governance Reforms in the Aftermath of the Economic Crisis Country overviews

Presentation Outline  Overview of the Governance Reforms in the Aftermath of the Economic Crisis project  Research approach  Preliminary findings

Stimulus and Austerity  stimulus plan  stability, populism, fiscal cushion  austerity measures  cases of currency peg, aspiration to euro adoption, external demands  combination  in tandem, or in succession

Stimulus and Austerity  spending  cuts  both

Currency Pegs and Devaluation    € €  €  € € €  devaluation € currency peg € uses the euro €    € €   

Stimulus and Austerity  Governance implications:  stimulus more popular among populations  elections often preceded switch to austerity  vulernable groups better protected than in the past

Policy import and home-grown responses  external aid  strings attached  EU accession  form of policy import  some home-grown responses

IMF and other loans $540 million $3.5 billion $1.57 billion $1.2 billion $25 billion €7.5 billion $574 million $21 billion $17.1 billion $3.88 billion $152.6 million $16.4 billion

Policy import and home-grown responses  Governance implications:  many could not meet IMF commitments  some resistance to IFI aid  home-grown more popular, but effective?

Policy consensus and political deadlock  challenging political circumstances  delayed or dampened responses  most turmoil was not directly caused by the economic crisis, but exacerbated by it  consensus  rapid implementation  some anti-crisis measures were struck down in the courts

Established frameworks and ad hoc measures  established frameworks could be enabling or restrictive  ad hoc measures e.g. emergency spending  functional reviews

Sarah Repucci