Abstract
The Report addresses four sets of issues: mac roeconomic policy to promote growth, the role of financial liberalization, govemmentinterventionin credit markets, and the design of financial systems. It puts forward the following blueprint for reform: Reform should start by getting the fiscal deficit under control and establishing macroeconomic stability. The government should then scale down its directed credit programs and adjust the level and pattern of interest rates to bring them into line with inflation and other market forces. In the initial stage of reform the govern ment should also try to improve the foundations of finance—that is, the accounting and legal systems, procedures for the enforcement of contracts, disclosure requirements, and the structure of prudential regulation and supervision. It should encourage managerial au tonomy in financial institutions. If institutional insol vency is widespread, the government may need to re structure some financial institutions in the early stages of reform. (World Bank, 1989, p. 127)
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