THE NATIONAL GOVERNMENT BUDGET CONSTRAINT AND THE FISCAL EQUALISATION

From a macroeconomic point of view, it is through fiscal policy that the national budget affects the key macroeconomic goals: high employment, high growth, stable prices and satisfactory balance of payments position. For any economic agent expenditure must stay within limits set by the ability to finance it. The finance may come from income, from assets already held, or from borrowing; loans will be obtainable only if lenders believe that they are sufficiently likely to be repaid. Soft budget constraints (Kornai J.) were one of the most important incentive problems of national economies. The necessity of hardening budget constraints of enterprises in economies in transition has clearly been recognized in the literature.