Balance of Payments Issues in Central and Eastern European Countries’ Run-Up to Euro Area Accession

In 2004, eight countries from central and eastern Europe entered the EU; all eight countries intend to access the euro area within three to six years after entering the EU. This book presents three analytical studies that focus on selected aspects related to the countries’ balance of payments and other issues that are of interest in the countries’ run-up to full European Monetary Union membership. The first study assesses the countries’ current account balance and the sustainability of external debt. The second study addresses the question of how to attract foreign direct investment inflows by analyzing the factors that determine these flows from industrialized countries. Since most central and eastern European countries face high public deficits and European institutions recommend expenditure-based consolidation strategies, the third study analyzes the impact of such strategies on the external balance.