Public finance management system in modern conditions

Liudmyla Prostebi,Alla Chornovol,Julia Tabenska,Tetiana Tomniuk

doi:10.21511/imfi.17(4).2020.34

Abstract

The public finance management system is an important lever for equalizing financial and budgetary disproportions in the context of institutional changes. The paper aims to substantiate the directions of development of the public financial management system. Economic and statistical methods and correlation-regression analysis methods are used to determine the relationship between the GDP deflator and the share of revenues, expenditures, the general government budget deficit, and public debt in GDP, assessing the features of the public financial management system in Ukraine and EU countries. This study reveals that one of the main restraining factors in the public finance system development is a significant level of uncertainty in economic processes, which intensifies macroeconomic fluctuations, significant indicators of the share of public debt and budget deficit of the state administration sector pose risks to financial and economic stability; their potential negative impact on socio-economic processes is much more destructive than the pro-cyclical nature of fiscal policy. From this point of view, the public finance management system should be directed at optimizing financial and budgetary tools to prevent the growth of public debt and budget deficit in gross domestic product, which determines the importance of substantiating further development directions of the public financial management system. It is concluded that the mechanism of public financial management in recent years is quite rigid and restrictive, in the context of institutional change expands the tools of public financial management and increases its impact on socio-economic processes.

Highlights

Reform of the public finance management system is one of the main components of the reform package in both countries with economies in transition and developed economies
The analysis of revenues, expenditures, budget deficits of the state administration sector, and public debt of the EU countries shows that the governance mechanism has been quite stringent and restrictive in recent years
Since public debt and budget deficit share of the state administration sector as a significant indicator poses risks to financial and economic stability, its potential negative impact on socio-economic processes is much more devastating than the pro-cyclical nature of fiscal policy, which affects economic dynamics in the short term. From this point of view, in the context of institutional change, the development of public financial management system should be aimed at optimizing financial and budgetary tools to prevent the growth of public debt and budget deficit in gross domestic product, which determines the importance of justifying further development of public financial management

Summary

INTRODUCTION

Reform of the public finance management system is one of the main components of the reform package in both countries with economies in transition and developed economies. Qualitative public finance management system is an important prerequisite for democratic governance. This highlights concern for finding ways to improve public finance management system as a fundamental basis for public relations development. Economic processes at both the micro and macro levels, which augments the need to ensure the steadiness and stability of the public finance system. This highlights the issue of finding ways to improve public finance management as a fundamental basis for the development of public relations

THEORETICAL BASIS

RESULTS

DISCUSSION

Findings

CONCLUSION