Budgetary factors of regional economic growth in the spread of COVID-19 pandemic

Abstract

Domestic regions with different financial and economic development potential and budget revenues face the negative impact of the COVID-19 pandemic in different ways and demonstrate different opportunities for economic growth. The purpose of the study is to examine the impact of budgetary factors on the economic growth of regions in the context of the COVID-19 pandemic. The following methods were used for the study: abstract-logical, comparative analysis, graphical visualization, statistical. The article analyzes the financial stability of local budgets and identifies its dependence on the financial and economic potential of the regions. There is a clear distance between the oblasts of the western regions (Ternopil, Chernivtsi, Rivne, Ivano-Frankivsk) with weak financial and economic potential and high levels of transfer dependence and Kyiv, Poltava, Dnipropetrovsk regions with opposite development characteristics. The article argues that despite the negative impact of the COVID-19 pandemic on the economy of the regions, there was a positive trend in the main indicators of financial stability of local budgets: reducing transfer dependence and coverage of general expenditures with own revenues of local budgets in all regions. The objective reasons for this trend lie not in the rapid growth of local budget revenues but the relatively higher reduction in transfers from the state budget and the reduction of local budget expenditures. The correlation analysis reveals a close link between economic growth in the regions and the main taxes of local budgets and its absence or weak link between their growth rates in the 2020 crisis due to the growth of tax revenues despite the decline in Gross Regional Product. The elasticity of the main taxes of local incomes (personal income tax, single tax, etc.) to the Gross Regional Product is studied. The influence of budgetary factors on the economic growth of regions and interregional disparities in the conditions of instability is investigated and systematization of the influence of budgetary factors on regional development is carried out.