Key medium– and longer–term fiscal issues faced by transition economies are reviewed, including government solvency and the sustainability of the fiscal–financial–monetary program. The paper aims to assist the design and implementation of future Fund programs and to contribute to the debate about fiscal policy in transition economies. After presenting a framework for evaluating the sustainability of the fiscal–financial–monetary program of the state, some numerical material is presented on public debt, (quasi–) fiscal deficits and monetary financing. Eight budgetary issues of special relevance to transition economies are considered next. The lessons from this study are summarized in a number of propositions.