Budget Deficit Research Articles

MANAGEMENT PUBLIC FINANCE IN THE CONDITIONS OF DYNAMIC DEVELOPMENT OF THE TOKENIZED ECONOMY OF UKRAINE

The article highlights the results of a study of the specifics of public finance management in the context of the dynamic development of Ukraine's tokenized economy. It is substantiated that with the beginning of Russia's full-scale military aggression against Ukraine, budget revenues have significantly decreased and expenditures have begun to grow rapidly, which has led to significant imbalances in public finances and a significant increase in the budget deficit, which today has to be covered mainly from external sources. The author emphasizes that one of the alternative options for filling the budget revenues is taxation of the crypto industry, which has been developing rapidly and has become one of the TOP-5 countries in the world of cryptocurrency introduction in recent years. The author reviews the novelties of domestic legislation in the field of regulation of circulation of virtual assets and emphasis is the presence of contradictions in them with regard to the interpretation of their content and functions. The author identifies specific features of virtual assets and proves that they should be considered as an expression of the value of digital things created using the technology of a distributed ledger or other similar technology that allows their issue, transfer and storage in a decentralized manner, without the need to involve traditional financial intermediaries or centralized administrators. The author studies the global experience of taxation of virtual assets. It is substantiated that Ukraine should choose a policy of moderate regulation of the virtual asset market, capable of ensuring both budget revenues and control over the income from transactions with virtual assets. The author develops proposals for accelerating the introduction of the mechanism of taxation of virtual assets turnover as one of the alternative sources of formation of the state revenues of the country and successful implementation of the policy of moderate regulation of the virtual assets market.

Реформування міжнародних фінансових організацій в контексті впливу на соціально-економічний розвиток України та Казахстану

The article presents the results of a study on current problems of reforming the international financial architecture under the expanding crisis phenomena of a financial nature and the vulnerability of financial markets and public finances to sharp economies political and geopolitical changes. The meta-statistics are aimed at identifying the main institutional fundamentals of the reform of international financial organizations in the context of the transformation of mutual relations with certain neighboring groups of countries and their impact on the socio-economic development in Ukraine and Kazakhstan. Systematized the main guidelines in the transformation of international financial architecture, such as: reform of certain international organizations; changes in the policy of cooperation between individual countries and international financial organizations, transformation of the latter’s influence; creation of a global institution based on international multilateral agreements; strengthening the regulatory mechanisms of international financial law and increasing the responsibilities of national regulators for the functioning of individual segments of financial markets; facilitating reforms of the global financial architecture to achieve the goals of global development and climate change; creation of new international financial institutions etc. The impact of the reforms of international financial organizations on the socio-economic development of Ukraine and Kazakhstan is manifested in the changes in the directions of Kazakhstan’s and Ukraine’s cooperation with modern international institutions, culminating in the updated policy frameworks and special programs for market reform, in ensuring the stability of the national currency, in the solution of socio-economic problems, in financing the deficit of the sovereign budget and in balancing the balance of payments. The allocation of financial resources of a credit and investment nature is accompanied by recommendations on the institutional development of market economy, reforms of the necessary legal framework, development of the private sector and the shaping of a corporate governance system. A comparative analysis of the effectiveness of Kazakhstan’s and Ukraine’s cooperation with international financial organizations allows us to recognize the vulnerability of both countries’ financial systems to crisis phenomena of a global nature, including through the growth of the foreign debt and their weak positions in terms of the EBRD Financial Market Development Index in 2020 compared to the European countries, which became EU members 2004.

Priority National Project – Healthcare: Financing, challenges, trends

Subject. This article discusses the problems of financing Russian healthcare and those related to the achievement of the targets of the specialized National Project Healthcare in 2024. Objectives. Based on the study of the Federal budget structure over time, as well as the results achieved within the framework of the implementation of the National Project Healthcare and the opinions of members of the Government of the Russian Federation, the article aims to find the main trend and the main problems of government financing of the industry. Methods. For the study, we used the historical method, analysis, systematization, and forecasting. Results. The article finds that the reduction in the budgets of national and federal projects related to healthcare in recent years is caused by objective reasons, but the paradigm of access to high-quality medical care for every Russian not only remains unchanged, but also receives proper government funding and high-quality development in accordance with the needs of modern society. Conclusions and Relevance. The problem of the lack of public sources to finance Russian healthcare has existed for a long time and, therefore, is not unexpected. In 2024, a budget sequestration is planned in conditions when at the end of 2023 the actual budget deficit exceeded the planned figure. In the context of the trend towards a decrease in public funding and taking into account the fact that 2024 is the year of the end of the National Project Healthcare, the achievement of the planned social development goals is at risk. The results of the study can be applied in the educational environment of higher education, in the scientific field, as well as for the development of new tools of government social and budgetary policies.

The Nexus Amongst the Interest Rate, Inflation and Economic Growth in Pakistan: Evidence from Simultaneous Equation Modeling

The main objective of this empirical study is to analyze the nexus amongst the interest rate, inflation and economic growth in Pakistan: evidence from simultaneous equation modeling, for the period from 1970- 2019. The estimate of the ADF test shows that all variables are a mixed order of integration, and the Johensan cointegration estimate reveals that there exist long-run relations amongst the variables. The estimate of the robust least square shows that inflation, unemployment, money supply, exchange rate, and budget deficit, have a positive effect on GDP per capita, while interest rate, total investment, and FDI have a negative effect on GDP per capita. Moreover, inflation and exchange rate have a positive effect on interest rate, while money supply, budget deficit, and FDI have a negative effect on interest rate. Furthermore, the interest rate has a positive effect on inflation, while unemployment and money supply have negative effects on inflation. Policymakers should adopt a sound macroeconomic policy to enhance economic growth and control the interest rate and inflation.

Modelling Wealth and Wealth Inequality in Bulgaria

This paper analyses net wealth and net wealth inequality determinants in Bulgaria, for the 2000-2020 period. The econometric results suggest that the introduction of corporate and individual flat tax rates in 2007 and 2008 contribute to households’ net wealth creation but have no significant association with inequality variables. Interest rates on mortgage loans, cost of debt, budget surpluses and inflation have a negative association with wealth, while the value of houses, arable land, equity, interest income, budget deficits contribute to net wealth growth. The top percentile increases its wealth share supported by the value of houses, equity and positive current account to Gross Domestic Product (GDP) values, however the cost of debt and GDP per capita are in a negative association with top percentile inequality. The bottom half of the population increases its wealth share with higher GDP per capita values and higher consumer loans rates, however inflation affects it negatively. Inflation and investment income are in a positive association with the Gini coefficient, while interest rates on consumer loans, cost of debt, GDP per capita, Government revenues, dividend income, equity, and the value of houses reduce inequality.

Analysis of the Impact of Domestic Debt on the Nigerian Economy: 1980-2021

The study investigates the impact of domestic debt on the Nigerian economy from 1980 to 2021 to ascertain, among other things, the relative significance and impact of domestic debt on Nigeria's GDP growth. The study uses quantitative research with a secondary focus on CBN data. The Debt Management Office and Central Bank of Nigeria provided information on the stock of domestic debt, GDP, interest on domestic debt, and capital spending for Nigeria between 1980 and 2020. The gathered data were subjected to a linear regression model, and the model's effectiveness was evaluated using the E-view statistical program. The Unit Root Test and Ordinary Least Square Method were the techniques utilised in this study to assist in explaining the variation and other explanatory variables. The Autoregressive Distributed Lag model (ARDL)-Bound Test is used in the study to investigate and analyse cointegration. According to the findings, Nigeria's economy is negatively impacted by domestic wagers, interest rates on domestic debt and capital expenditures, budget deficits, and private-sector lending. The study suggests good domestic debt management and suitable debt-servicing strategies for the efficient expansion of the economy in light of this finding.

Реалізація положень статті 13 Конституції України

The work analyzes the method of implementing the provisions of Article 13 of the Constitution of Ukraine in accordance with the norms of the Tax Code of Ukraine. It was revealed that the Ukrainian people's ownership of the subsoil is improperly implemented and requires radical changes. This issue is solved in the work by determining the components of the price of raw materials extracted in Ukraine. It is proposed to define the sale price as the sum of two components: the extraction price plus rent. Such a price structure automatically monitors the global market situation for each type of raw material, the mining and geological conditions of its extraction in Ukraine, and is universal for all types of raw materials. The work substantiates the necessity of transition to world prices for raw materials and defines the way to implement this possibility. The transition to world prices for raw materials provides a universal way of determining the rent for all types of raw materials as the difference between the world price for the corresponding raw material and the price of extraction of the corresponding raw material in Ukraine. Due to the policy of low wages in Ukraine, most consumers are unable to pay for natural gas and utilities at such rates. To ensure the possibility of applying world prices for energy resources, it is proposed to introduce a discount, the amount of which is equal to the amount of rent. The discount is calculated for each protected consumer depending on the volume of gas consumed according to the readings of his metering devices. The source of funds for granting the discount is part of the rent paid by mining companies in Ukraine. The rest of the consumers must pay the cost of raw materials at world market prices. It is also proposed to change the directions of the use of annuity. Part of the rent should be used to eliminate the budget deficit of the Pension Fund of Ukraine. Most of the rent should be used to form a sovereign national fund and the rest must be transferred to the State Budget.

External Debts as Panacea to Economic Growth Challenges in Selected Eastern African countries: An Application of the Autoregressive Distributed Lag Model

Foreign aid has significantly influenced medium- and long-term development initiatives in Eastern African countries. Project aid and non-project aid are the two main categories that describe foreign economic assistance (loans, credits, and grants). The primary aim of foreign aid has been to supplement the internal resources needed to quicken the economic development of the nations in Eastern Africa. This study investigated the influence of external debt on the economic growth of Eastern African countries (Kenya, Uganda, Rwanda, Burundi, and Tanzania) using the autoregressive distributive lag mode and panel data (1970–2020). The findings revealed that external debt had a significant adverse effect on economic growth. In Burundi, an increase in external debt reduces GDP by 5% in the short run, while in the long run, it reduces GDP by 19%; in Tanzania, it decreases GDP by 22%; and in Kenya, it reduces the GDP by 13%. Conversely, the findings indicated that the increased level of external debt positively influenced Uganda's GDP (0.03%) but was not statistically significant. Therefore, it is recommended that Eastern African countries source their income, apart from more external concessional debt, through bilateral or multilateral arrangements to plug into their budget deficits. Also, it is recommended that East African governments develop their external debt initiatives that offer further profitable investment opportunities to repay their foreign debt gradually. Moreover, strategies in the East African countries must be geared towards strengthening revenue mobilization to provide avenues to balance their external debts. For instance, improving the informal sector in these countries is a viable base for increasing revenue through taxes.

National system of prevention of legalization (laundering) of property obtained by crime

The socio-economic crisis in Ukraine, the essential features of which are the decline in production, the imbalance of state finances, the budget deficit, inflation, the tense situation on the market of credit resources, etc., has led to a sharp increase in the degree of criminalization of vital spheres of the functioning of the state and, above all, of the economy. The modern criminalization of the economy, the imperfection of the legislation on combating economic crime, the lack of an effective system of state control over the activities of commercial structures, and the insufficient scientific development of the problem of preventing these crimes have turned the credit and financial system of Ukraine into a zone favorable for the legalization (laundering) of proceeds obtained through crime, which , in turn, is one of the most common offenses in the field of economy committed by organized crime.
 The article substantiates the role and significance of the national system of prevention of legalization (laundering) of proceeds obtained through crime in modern conditions of development in Ukraine. The main directions of combating the legalization of criminally obtained income are highlighted, and the relevance of this activity in Ukraine is established. Subjects in the field of financial monitoring, the purpose and tasks of their activities are defined. The legislative framework in the issue of preventing and countering the legalization of illegal income has been studied. The order of the Cabinet of Ministers of Ukraine dated December 27, 2023 No. 1207-r «On approval of the plan of measures aimed at preventing the occurrence and/or reducing the negative consequences of risks identified as a result of the third national risk assessment in the field of prevention and countermeasures against legalization (laundering) of income, proceeds of crime, the financing of terrorism and the financing of the proliferation of weapons of mass destruction, for the period until 2026», the purpose of which is legislative, organizational and institutional improvement and ensuring the stable functioning of the national system for preventing and countering the legalization (laundering) of proceeds obtained through crime.

Varieties of State-Building: Ecology, Clientelism, and Bureaucratic Rule in Chile

Current research suggests that all states share a perpetual appetite for extraction and standardization. However, this research overlooks the fact that subnational regions present different appeals and challenges to ruling coalitions. While states seek to extend bureaucratic rule over peripheries with valuable assets and favorable geography, they might instead seek to preserve local patrimonial bastions when those areas offer substantial electoral support. In turn, these strategies lead to broad subnational heterogeneity in the reach of the state. This paper focuses on regions’ ecological, military, and clientelistic features to explain local trajectories of bureaucratic rule and country-level state capacity. Empirically, I examine Chile, a successful case of capacity-building in Latin America. Prompted by a fiscal crisis in the mid-1850s, Chile’s central government launched state-building projects to offset its budgetary deficit. Using GIS and original data from censuses, budgets, and other primary sources, I show that Chile’s ruling coalition paradoxically modernized the country’s peripheries while deepening its own traditionalism. These results challenge prevailing narratives about the projection of political authority and Chile’s territorial uniformity.

Economic, Political, and Institutional Determinants of Budget Deficit: A Dynamic Panel Data Approach to South Asian Countries

The study conducted on South Asian countries spanning from 1995 to 2023 using the pooled mean group (PMG) and mean group (MG) approaches for the dynamic panel data has yielded insightful findings regarding the long-run relationships between economic, political, and institutional determinants of the budget deficit. Through empirical analysis, the study confirmed the presence of these relationships, highlighting key factors that significantly impact budget deficits. Specifically, inflation, debt servicing, slow economic acceleration, and large government size were identified as major determinants of budget deficits in the region. Interestingly, the study also incorporated a dummy variable for elections, revealing a positive relationship between election years and budget deficits. This suggests that governments may increase spending during election years to gain political support, leading to higher deficits. These findings provide valuable insights for policymakers, emphasizing the importance of addressing these factors to achieve fiscal sustainability and economic stability in South Asian countries.

Public Financing of Professional Sports Facilities and Drug Asset Forfeiture

Local governments provide many crucial services from limited budgets, yet often subsidize the profitable, private businesses in professional sports leagues in the United States. Policing represents one important public service. Policing typically constitutes large portions of government budgets and also generates revenue through fines and forfeitures. Existing evidence suggests that large municipal expenditures in other areas can have an ambiguous effect on policing outcomes. This paper addresses the question of whether large public expenditures on sports facilities affect drug asset forfeiture using two-way fixed effects (TWFE) and generalized dynamic model specifications (GDMS). The results are similar across estimation methods, with static TWFE results suggesting a treatment effect of $1,274–5,589 in additional forfeiture per million in subsidies and results from the newer GDMS estimators suggesting $7,703 per million in subsidies. The results imply that, beyond generating no tangible local economic benefits, public subsidization of sports facilities also leads police to make up budget shortfalls by more aggressive policing, which has important implications for racial equity.

Examining the Impact of Fiscal Rules on Fiscal Stability in EU Member States

Following the rapid escalation of budget deficits and public debt across many EU nations post-2008, fiscal policy has encountered a formidable challenge in devising suitable measures to fortify fiscal discipline and enhance the quality of public finance. Institutional mechanisms, including numerical fiscal rules, play a pivotal role in upholding fiscal discipline and bolstering the fiscal credibility of states. These rules typically entail permanent constraints on fiscal policy, delineated by indicators that set thresholds for specific fiscal aggregates such as budget deficits, public debt, public expenditure, or public revenue. The theoretical aim of this article is to scrutinize the institutional dimensions of numerical fiscal rules, encompassing their type, legal foundation, transparency, complexity, flexibility, adequacy, and coherence. The empirical objective, conversely, is to conduct statistical analysis and investigate the correlation between the fiscal rules index and the levels of budget deficit and public debt across the 28 Member States of the European Union. Evaluating the efficacy of implemented fiscal rules, both at the European and national levels, constitutes a crucial aspect of this analysis.

Evaluating Fiscal Performance: A Fixed-Effect Panel Threshold Approach to National and Supranational Rules *

Fiscal rules are designed to prevent budget deficits arising from frequent and abrupt changes in countries' fiscal policies. These changes can be attributed to shifts in regional and global economic conditions, as well as short-term decisions made by governments. Recently, the COVID-19 pandemic has led to increased government spending and borrowing, rendering governments more vulnerable. In this context, the implementation of fiscal rules has gained renewed attention. However, to construct a more resilient infrastructure against future crises, it is not only the national fiscal rules that are critical, but also the presence of supranational fiscal rules that can ensure coordination and discipline among countries has become increasingly important. This study, therefore, seeks to analyze the impact of national and supranational fiscal rules on fiscal performance in 31 advanced economies over the period 2000-2020, utilizing the fixed-effect panel threshold model approach. The results indicate that national fiscal rule implementations become effective after a certain threshold level, whereas supranational fiscal rules are effective both below and above a specific debt threshold. This implies that while both types of fiscal rules are effective, supranational rules stand out in terms of their magnitude and their effectiveness even at lower levels of debt. These findings are expected to guide policymakers in evaluating fiscal rule policies and balancing local needs with the achievement of regional objectives.

The State as a Financial Market Participant

High levels of public debt and chronic budget deficits force states to be constantly present on the financial market. This leads to the slow transformation from tax states into debt states. The change in the financial operating model generates new risks, the essence of which the literature has yet to fully identify. Increasingly, states are beginning to resemble intergenerational financial institutions, allocating funds from future generations to those currently living. The aim of this article is to identify the risks to socio-economic sustainability posed by the critical dependence of the state on market-based financing of its borrowing needs. This is a first step in the search for a new security architecture that better serves the idea of sustainable finance.

Fine particle contents in sediment drive silica transport and deposition to the estuary in the turbid river basin

Changes in riverine sediment transport are an important part of land-sea geochemical cycling and further impact geochemical element fluxes in turbid rivers. However, as a vital nutrient element supporting primary productivity, silica mobilization from drainage in turbid rivers is overlooked. The turbid Yellow River has a strong ability to adsorb reactive silica, thereby exerting a substantial impact on the estuarine deposition of silica. Through an integration of monitoring databases, field sampling and historical hydrological data, we concluded that riverine fine particles control the exchangeable silica in the river and its estuary under soil erosion. Indoor simulation further revealed that the adsorbed content of exchangeable silica (ex-Si) in fine sediment constituted 35 % of total sediment matter. In addition, the transport of phosphorus and ex-Si was jointly regulated by fine sediment in global fluvial sediment transport, thereby exerting additional influence on the trophic structure of estuarine ecosystems. Against the backdrop of sediment budget deficit in the estuary, the heightened content of fine particles is depleting the silica storage from estuarine sediments.

Analysis of the relationship between the general budget deficit and the trade balance deficit in Sudan for the period2000-2022 (Testing the Keynesian disability hypothesis and ricardian equivalence)

The study aimed to know the internal deficit (the general budget) and its relationship to the external deficit (the trade balance) statistically significant between the general budget deficit and the trade balance deficit in Sudan during the period 2000-2022. There is also a one –way causal relationship that goes from the general budget deficit to the trade balance in Sudan during the study period . the study used the descriptive approach to deficit concepts related to the general budget deficit ,the trade balance and theories .explaining the deficit and the quantitative approach was used to build a standard model the measure and analyze the relationship between the general budget deficit ,and the results of the study showed matching the Keynesian point of view with the existence of a causal relationship in two directions that goes from the budget deficit to the trade balance deficit and vice versa , and the rejection of the Ricardian equivalence hypothesis that says there is no relationship between the two deficits.

An Examination of the Relationship between Budget Deficit and Economic Growth in Malawi

An Examination of the Relationship between Budget Deficit and Economic Growth in Malawi

FISCAL POLICY CHANGES: OPPORTUNITIES AND RISKS FOR REGIONAL DEVELOPMENT

Purpose. Evaluation of recent fiscal initiatives in the context of ensuring a reasonable balance between the volume and sources of tax revenues, the distribution of such resources, and the maintenance of a necessary level of business activity in times of war or post-war recovery. The study also involves an analysis of the state and availability of alternative funding instruments for budgetary expenditures and an assessment of the impact of fiscal initiatives on taxpayers. Methodology of research. The setting goal was achieved through the use of such methods analysis of scientific literature, normative documents to study the situation with the payment and administration of taxes; comparison of revenues to the budgets by components and dynamics, sources of financing budget deficits; systematization and generalization of the literature on the possibility and risks of using certain proposed fiscal instruments. The study is based on the analysis of data from various sources, including budget indicators (income and expenditures by components, sources of financing the budget deficit), fiscal statistics (tax rates, number of taxpayers by types of taxes, tax debt), socio-economic indicators (demography, level destruction caused by military actions) and the legal framework. Findings. The article assesses the vulnerability of local budgets in the context of their own revenue sources during wartime conditions and the expected changes in fiscal policy have done. Key fiscal initiatives since the onset of the widespread Russian invasion are analysed, identifying limitations with the greatest impact on the formation of the resource base of local budgets. The study also explores opportunities for financing regional development projects through budgetary funds and analyses the existing fiscal model. Originality. The article introduces a new approach to examining the relationship between fiscal policy and regional development, taking into account contemporary trends and economic conditions. It elucidates the connection between fiscal initiatives and factors influencing economic development during conflict or recovery. Practical value. The proposed research results enable the evaluation of key risks and the adaptation of interaction models between fiscal entities to the challenges of the present and future. Also, and the relationship between fiscal initiatives and factors that determine economic development in conflict or recovery conditions is also explained. The research can be used by scientists to build models of minimizing losses for budgets and preventing losses of the local economy when forming fiscal policy in terms of the tax base, tax rates and powers. Key words: fiscal policy, taxes, government budget, local budgets, regional development, tax revenues, taxpayers.

TRANSFORMATION OF THE BUDGET SYSTEM OF UKRAINE IN THE FACE OF EXTRAORDINARY CHALLENGES AND THREATS

Full-scale hostilities have had a significant impact on the budget system due to increased spending on defense, reconstruction, and humanitarian assistance to vulnerable groups, which has affected the accumulation of budgetary resources. The article examines the impact of extraordinary challenges and threats on the national budget system, in particular, on the structure and volume of budget revenues and expenditures, the growth of the budget deficit and public debt, changes in regulation in the field of public finance, and the potential of financial capabilities of the regions. The purpose of the article is to make a scientific and practical assessment of the problematic aspects related to the transformation of the budget system, to outline the ways of attracting financial resources that can be used for the purpose of distribution and redistribution to perform the functions of the State, to identify the main areas of influence of emergency challenges and threats on the budget system of Ukraine and the priority areas and measures of budget policy in wartime.The authors conclude that the strategic and main directions of Ukraine's development need to be improved in the strategy of public finance management and financial and economic security as part of the implementation of the Memorandum of Economic and Financial Policies by the IMF. At the same time, the relevant legislative changes to the state budget for 2023 that meet the needs of Ukraine are studied, and the implementation of the first preparatory stage for the development of the National Revenue Strategy is analyzed. The authors emphasize the positive impact of decentralization on local self-government and the financial sustainability of local budgets. It is proposed to empower communities through monitoring the implementation of local budgets. In the context of defense needs, the possibility of including defense expenditures during martial law in local budgets is considered.