REFORM IN HUNGARY SEQUENCING AND PRIVATISATION

The paper examines reform issues facing Hungary, concentrating on sequencing the liberalisation of domestic markets, international trade and demonopolisation. Creating competitive conditions in product and factor markets is a precondition for the success of other reforms. Trade liberalisation could play a key role, but is constrained by the large debt, so demonopolisation is a critical first step. If privatisation is to be undertaken quickly, there is an argument for making transfers proportional to the implied asset value of state pensions, and reducing subsequent pension payments. © 1991.