Transformation cushions should not last forever. Because of the rapid growth of nominal wages and of faster inflation than in OECD countries, they are getting thinner and thinner and slowly disappear. It should not be, however, either before or after the end of transformation. It must be temporarily financed. Using a portion of the capital account surplus is quite appropriate.
Privatization is of crucial importance.
Transformation privatization in my country is over, but we are under political as well as academic criticism that by privatizing we have not succeeded in forming an optimum property rights structure. The ambition for transformation privatization was not to be the end of property rights restructuring but, on the contrary, to be its beginning. The task of government at that moment was to find the first private owners, not the final ones. This fundamental difference tends to be misunderstood. Radical political, social and economic restructuring gives us a unique opportunity not only to dismantle the old communist institutions, but not to establish new barriers to economic freedom.