Budget Deficit Research Articles

ТҮРКІСТАН ОБЛЫСЫНЫҢ 2020-2023 ЖЫЛДАР КЕЗЕҢІНДЕГІ БЮДЖЕТІН ТАЛДАУ ЖӘНЕ БАҒАЛАУ

The article analyzes the budget of the Turkestan region for the period 2020-2023. The main attention is paid to the dynamics of revenues and expenditures, as well as changes in the budget deficit (surplus) for the specified period. The use of financial resources and loans to finance budget operations is considered. Data analysis allows us to highlight the key problems and tasks facing the budget of the Turkestan region, as well as to identify potential strategies and measures to improve the financial situation and ensure sustainable development of the region. In order to ensure the socio-economic well-being of residents of the Turkestan region, the work shows the need for effective financial management, optimization of expenses and increase in revenues. As a result of the study, through analysis of the use of financial resources and loans, it is shown that the region is actively using internal resources to finance its needs, and it is also determined that it is faced with the need to seek external financing and loans. Therefore, it is proposed to pay more attention to measures to reduce costs, increase revenues and optimize budget management in order to achieve sustainable development and ensure the well-being of the Turkestan region and its residents. It also requires careful analysis and development of strategies to ensure financial stability, efficient use of resources and effective management of long-term financial risks.

Current challenges and threats to the implementation of social policy under the conditions of marital state

The problems of the implementation of social policy are currently determined by the accumulated problem of the unreformed sector of the social sphere and the extremely negative impact of the martial law, which leads to an increase in the critical mass of people who need social assistance and effective solutions that can contribute to the implementation of social policy in accordance with current challenges and threats. This article focuses on identifying and structuring current challenges and threats to the implementation of social policy under martial law. It is established that, given the longterm nature of martial law, social policy is currently under the critical influence of pre2022 problems, which are exacerbated by a large-scale invasion, and the structuring of current challenges and threats that are characteristic of the current state of social policy implementation, given martial law, is an important and relevant topic for research. After all, today the issue of clearly fixing and structuring the current challenges and threats to the implementation of social policy in the conditions of martial law is acute. The purpose of the article is to define and structure the current challenges and threats to the implementation of the social sphere in the conditions of martial law. In the process of research, it was established that in today’s conditions, the implementation of social policy has significant limitations and barriers. Four groups of institutional restrictions are identified, which include the inconsistency of the legal framework; bureaucratic obstacles; insufficient coordination between various state authorities; low level of professional training of social workers. Three groups of obstacles to the effective implementation of social policy are also highlighted, namely: economic, political, and corruption. The main types of threats are identified, including: financial, social, technical and security, each of which creates a whole range of challenges. The following challenges have a high priority to be taken into account in the implementation of social policy: the problem of the state budget deficit, dependence on international donors, the increase in the number of people who need social protection, the decrease in the standard of living and the provision of housing, the further course of military operations and their intensity, internal instability. It was established that further research should be focused on finding effective tools that will allow, taking into account the existing risks and threats, to develop appropriate mechanisms for minimizing the identified threats and challenges for the effective implementation of social policy as quickly as possible.

Analysis of The Influence of State Income and State Expenditure on Tax Revenue in Indonesia 2001-2023 From the Perspective of Islamic Economics

Taxes are one of the sources of state revenue for financing state expenditure. When tax revenue decline, governments often face an urgent need to maintain social and economic stability. In Indonesia in 2020 the ratio of state revenue from taxes fell by 1.5% from the previous year. So if fluctuations in tax revenue and an increase in state spending lead to a high budget deficit, and the government needs to find others sources of financing, such as loans to cover the financing shortfall. The type of research used is quantitative. The method used in this study is the Error Correction Model (ECM). The data used is secondary data published by the Ministry of Finance with the type of time series data in the year of observation, namely 2001-2023 in the State of Indonesia. Testing was carried out with the help of the Eviews 10 software application. The results of this study shows that only the state revenue variable has a significant effect on tax revenue in the long term and short term, while the state expenditure variable does not have a significant effect on tax revenue in the long term and in the short term.

Do budget deficits cause current account deficits? a re-evaluation utilizing military expenditures as an instrumental variable.

The twin deficit hypothesis suggests that budget deficits are crucial factors leading to current account deficits, and substantial empirical evidence documents a significant positive statistical correlation between budget and current account deficits. However, such evidence generally suffers from endogeneity problems due to reverse causality, thereby making it difficult to provide solid evidence to support policy implementation. We use extensive cross-national panel data from developed and developing countries and military expenditure as an instrumental variable to reexamine the impact of budget deficits on the current account and test the validity of the twin deficit hypothesis. Our results demonstrate that budget deficits lead to current account deficits in both developed and developing countries, supporting the twin deficit hypothesis. After considering various factors that may affect the exogeneity of military expenditures, approximating the instrumental variable as exogenous, and performing multiple robustness tests, the hypothesis still holds. This study provides solid evidence supporting the use of fiscal policies to deal with current account imbalances.

The impact of budget deficit on inflation: Insights of Sri Lanka

This research explores the impact of budget deficits on inflation in Sri Lanka from 1990 to 2022, examining both long-term and short-term effects. The study uses statistical methods like unit root tests and econometric models, including the Autoregressive Distributed Lag (ARDL) model and the Error Correction Model (ECM), to assess the reliability and stability of these relationships. Inflation is the dependent variable, with budget deficits as the primary independent variable, and money supply, interest rates, and unemployment rates as secondary variables. Findings indicate an inverse relationship between budget deficits and long-term inflation, while money supply and unemployment rates positively affect inflation. In the short term, previous year’s money supply, budget deficit, and unemployment rates are negatively correlated with inflation. However, the previous year’s budget deficit and the current year’s unemployment rate significantly increase short-run inflation. Interest rates do not significantly impact inflation in either the short or long term. This study, through historical data analysis and econometric techniques, aims to clarify these impacts, enhancing understanding of Sri Lanka’s macroeconomic dynamics and aiding policymakers in sustainable economic management.

Fiscal Sustainability in India: an Assessment in Pre and Aftermath of Covid-19

The purpose of this research paper is to evaluate India's budgetary sustainability both before and after the COVID-19 pandemic. Global economies have been severely affected by the COVID-19 pandemic, and India is no exception. The country is facing significant fiscal issues as a result of rising costs for social security, health care, and economic stimulus plans. This study examines shifts in India's fiscal situation prior to the pandemic and the consequences encountered in its aftermath by examining fiscal variables such as state debt, budget deficits, and revenue trends. Using a mixed-method approach, the study combines qualitative evaluations derived from government reports and economic forecasts with quantitative data analysis. Initial results show that there has been a decline in fiscal indicators since COVID-19, which has been made worse by lower revenue generation and higher demands for expenditure.

Analysis of fiscal sustainability and its impact on enhancing economic growth in Iraq for the period (2004-2021)

The research aims to analyze and measure the reality of the Iraqi economy for the period (2004-2021)by applying the concept of financial sustainability and its indicators on economic growth. The paper's problem lies in the weak implementation of financial sustainability and indicators in most financial decisions in Iraq, negatively impacting economic growth in most economic sectors in Iraq. The paper started from the hypothesis that the weak implementation of financial sustainability in most of Iraq has contributed to the weakness of economic growth. The validity of the hypothesis has been proven using a standard model known as the Multiple Regression Model (ARDL), the study has yielded several results, the most important being the inverse relationship between the budget deficit as an independent variable and economic growth as a dependent variable. The budget deficit reached (59%) of the "gross domestic Product" indicating a deviation from the 3% deficit defined by the Maastricht treaty to ensure deficit coverage. Iraq's deviation from this percentage will lead to a decrease in economic growth. The paper also revealed an inverse relationship between public debt as an independent variable and economic growth as a dependent variable due to Iraq's violation of the golden rule, which dictates allocating debt to the investment side rather than consumptive spending. Paper type: Research paper.

Economic Freedom, Budget Deficits, and Perceived Risk from Larger National Debt-to-GDP Ratios: An Exploratory Analysis of Their Real Interest Rate Effects

Economic Freedom, Budget Deficits, and Perceived Risk from Larger National Debt-to-GDP Ratios: An Exploratory Analysis of Their Real Interest Rate Effects

Formation of the System of Social Services to the Population

The current socio-economic, moral, psychological and spiritual situation in Kyrgyzstan is extremely contradictory and multifaceted. There is instability in the economy, a budget deficit is acutely felt, the number of people with incomes below the subsistence level is practically not decreasing, differentiation of the population by income is increasing, tension in the labor market is increasing, arrears in wages, pensions and social benefits are growing, trends of distress, including social deviations, are acutely evident. The current situation requires the state and non-governmental organizations, and public associations to take adequate measures, primarily in the area of developing the social protection system of the population and ensuring social security.

Forging support: when there is no alternative to ‘there is no alternative’

Abstract Whether fiscal austerity by governments is unpopular or not is much discussed in the literature. One line of research argues that consolidation has negative electoral effects, ranging from declines in politicians’ approval ratings to abstention by voters at elections. Another strand highlights that re-election chances are not harmed by the implementation of austerity and that some voters in fact support consolidation measures. Both sides are limited in at least two regards. First, they do not allow for the possibility that public opinion is shaped by the political discussion about government debts and budget deficits. Second, and relatedly, the literature is limited in its extent to which it considers heterogeneity in preference adaptation across income groups. This article contributes to these debates by bringing to bear insights from the literature on mass preference formation. In particular, I argue that a cross-party consensus on austerity leads voters to align their preferences with the consensus, increasingly demanding cuts to government spending. This adaptation is conditioned by income so that the preferences of those income groups that are the furthest away from the consensus adapt their fiscal preferences most. By including the discursive context of fiscal policy, this article helps explain how austerity can be made popular. Empirically, I test these expectations by matching citizen preferences with party positions on fiscal policy for 60 country years. The empirical results indeed demonstrate that even though low- and middle-income voters are least supportive of austerity, they adapt the most to the party consensus on austerity.

The Current State of the Russian Budget System and the Potential for Financing the Federal Budget Deficit

For the first time, Russia’s budget system is under large-scale stress in all areas: risks of losing the tax base due to international sanctions, a steady increase in unforeseen expenses, inflation risks, and rising debt servicing costs. In this regard, it is necessary to identify and analyze potential sources of financing the federal budget deficit as the main guarantor of budget stability. The article examines the state of the consolidated budget of the Russian Federation and the budgets of state extra-budgetary funds based on the results of the first half of 2024. It is shown that oil and gas revenues remain the main source of revenue growth. Among non-oil and gas revenues, personal income tax and VAT from domestic sales are growing at an accelerated rate. At the same time, the positive dynamics of some sectors of the Russian economy is largely due to budget financing. At the same time, inflation remains above target values, which forces the Central Bank of the Russian Federation to tighten monetary policy. The excess growth of federal budget expenditures and the increase in nominal rates threaten financial stability. In this regard, the article assesses the potential for financing the federal budget deficit in the context of strict borrowing restrictions. Based on the analysis of the state of the domestic federal loan bond market, a conclusion is made about the high risk of a liquidity crisis and the potential for placing domestic debt at the expense of non-bank financial institutions and individuals.

Macroeconomic Drivers of Inflation in Ethiopia: Evidence from ARDL Modelling

Purpose: This study identifies the macroeconomic determinants of inflation in Ethiopia from 2012 to 2023, a period marked by reforms and liberalization efforts. Despite these measures, inflation remains a critical challenge impacting Ethiopia's economic stability.Method: Utilizing the ARDL model, this study examines the relationship between inflation and various macroeconomic indicators. Data are drawn from sources such as the National Bank of Ethiopia (NBE), Ethiopian Economic Association (EEA), International Monetary Fund (IMF), and World Bank (WB). The Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests are employed to assess data stationarity.Findings: Results indicate that money supply growth, import-to-GDP ratio, budget deficit, and public expenditure have a significant positive effect on inflation in both the long and short term. Conversely, lending interest rates exhibit inflationary effects in the short term but are deflationary in the long term. Additionally, external debt-to-GDP ratio, official exchange rate, and real GDP growth rate demonstrate negative long-term impacts on inflation.Novelty: This research uniquely integrates key macroeconomic variables, analyzing their divergent impacts on inflation across short- and long-term frameworks in Ethiopia's context.Implications: The findings underscore the importance of balanced fiscal and monetary policies to curb inflation, offering critical insights for Ethiopian policymakers aiming to foster economic stability.

ANALISIS PENGARUH UTANG DOMESTIK DAN UTANG LUAR NEGERI TERHADAP PERTUMBUHAN EKONOMI DI INDONESIA PADA TAHUN 2014 - 2023

During the period of 2014-2023, Indonesia government set a target for average economic growth of 5.2% for 2014-2020 and 6% for 2020-2025. In order to achieve that, the fiscal policy adopted by the government is by utilizing debt. Based on Keynesian view, the government can incur debt to finance government budget deficits and stimulate economic growth. This research employs the ordinary least squares (OLS) method because it seeks to analyze the relationship between the variables of quarterly increase of GDP, quarterly increase of domestic debt growth, and quarterly foreign debt. Based on the estimation results of the model conducted in the research, the result show that the variables of quarterly domestic debt growth and quarterly foreign debt growth can only explain a 14.49% increase in quarterly GDP value. Simultaneously, domestic debt and foreign debt do not affect economic growth. Partially, an increase per quarter in domestic debt has a significant negative effect on the increase in quarterly GDP value, while an increase per quarter in foreign debt has a positive but not significant effect on the increase of quarterly GDP value.

Education Versus Infrastructure: Is There a Trade-off in an Open Economy with Perfect Capital Mobility?

We present an open economy growth model incorporating various elements of fiscal policy, including government expenditure on education and public capital (infrastructure), budget deficit, internal and external public debt, public consumption, and four tax rates. This detailed description of fiscal policy allows for a systematic study of the relationship between fiscal policy and economic growth. We derive the balanced growth path and analyze its properties, including existence, uniqueness, and stability. The theoretical results are supported by numerical simulations for Poland, with the model calibrated based on data from the years 2010 to 2019. In the baseline scenario, the GDP growth rate converges to 3.98%. However, through appropriate adjustments to fiscal policy, economic growth can be significantly accelerated. Notably, increasing spending on both education and public infrastructure proves to be the most effective way to permanently boost economic growth, even if it requires raising taxes on consumption or increasing public debt.

EFFECTS OF BUDGET IMPLEMENTATION ON GOAL ACHIEVEMENT OF STATE OWNED TERTIARY INSTITUTIONS IN EBONYI STATE, NIGERIA

The evaluation of budget implementation on goal achievement in Ebonyi State of Nigeria prompted the specific objectives of the research work to include: budgetary control mechanism, late approval of budget, budget variance information and late release of approved budgeted funds. Survey research design was adopted and data were collected using close-ended questionnaire. The questionnaire was structured on a 5-point Likert scale statistical rating method. The total population of the study was 259 while the sample size was 157. Collected data were presented on frequency distribution tables, simple percentages and multiple regression analysis. The data were analyzed using Statistical Packages for Social Sciences, version 20, 2023. The study adopted Stakeholders Approach Theory by Edward (1984). The study unveiled that budgetary control mechanism and budget variance information had positive and significant effects while late approval of budget and late release of approved budgeted funds had negative and no significant effects on goal achievement of state owned tertiary institutions in Ebonyi State, Nigeria. The implications of the study were that budgetary control mechanism and budget variance information do not hinder budget implementation on goal achievement. Late approval of budget and late release of approved budgeted funds hinder budget goal achievement, encourage abandonment of projects and non-quality project perfection. Analysis of budget variance aids management of state institutions to adjust budget proposal in respect to deficit budget and, idle resources from surplus budget on any item(s) of budget are reinvested in achieving other goal congruence of the institutions. The study concluded that early approval of budget and timely release of approved budgeted funds facilitate budget implementation and aid in goal achievement of budget proposals of the institutions. The research therefore recommended that the management of the state institutions’ budget committee and other budget stakeholders should be familiar with the processes of budgeting and budget operation to facilitate planning and preparation of financial year budget void of errors and omissions for enablement of early approval of budget and timely release of approved budgeted funds among other measures capable of harnessing budgeting values in the State.

Financing Higher Education in Kenya, 1960-2012

In the last two decades or so Kenya has witnessed increased demand for university education. This has forced education planners to experiment with a number of strategies to admit these increased numbers of qualified students to existing public universities. These strategies have seen remarkable flexibility in public university programs and admission requirements. Some of these strategies include: evening programs, weekend programs, holiday programs, and open and distance learning programs. But one which has raised enough public attention is the variedly labeled parallel, module two or self- sponsored students programs. Although this program has substantially increased access to public university education in Kenya, it has equally been criticized particularly on its ability to deliver quality university education. The argument has been that the programs were primarily tasked with the purpose of raising income and ensuring institutional survival in the prevailing harsh economic conditions. What is however unknown is the extent to which the program has promoted quality training for students and improved skills for public university academic staff. The brief paper seeks to address this gap. The paper is extensive review of secondary data and personal observations. The paper concludes that the introduction of cost sharing and the increasing need for the universities to fundraise to effectively meet the budgetary deficits has negatively affected the quality of public university education in Kenya

Twin Deficit Assumptions: A Case Study of Pakistan (Cab from 2000 to 2023) and (FD from 2008 to 2024)

The aim of this article is to investigate the link between fiscal deficit and current account deficit which is the high rate of fiscal deficit budget and commonly known as twin deficit or deficits assumptions in the Pakistani economy (Khalil Mudassar, Amjad Fakher, Sajid Ali & Fozia Sarwar 2013); present economy below growing stress in the fiscal and foreign fronts as a output of huge fiscal deficit & current account balance deficit. The error rectification specification is used to find evidence of long-running connection from fiscal deficit to current account deficit. The analysis results suggest that the current account balance deficit can be determined but the fiscal deficit budget balance is very challenging and from deficit to growth rate but through strong policies of the government for imposing direct and indirect taxes which will be strong can reduce the fiscal deficit and growing towards the growth rate of the economy.

DEBT POLICY OF UKRAINE IN THE CONDITIONS OF MODERNIZATION OF PUBLIC FINANCES

Since the full-scale invasion of Russian Federation, public finances (PF) have been operating under conditions of uncertainty and unprecedented security challenges, akin to those experienced by the entire economic system. The level of uncertainty is such that it overshadows the current financial crises and parity with the consequences of the Second World War. This became the core objective of the study, which consisted of substantiating conceptual approaches to the formation of debt policy, considering the peculiarities of the projection of martial law on the functioning of PF. The research employs a systematic approach to methodology, integrating methods of factual and situational analysis that are grounded in international standards for public debt assessment and theoretical generalisations. Furthermore, through a comparative analysis, the interrelationships and mutual influences between debt policy and budget strategy are monitored. Furthermore, the study assesses the potential of leveraging the frozen Russian assets to support Ukraine's post-war recovery through the PF system. The study revealed that the debt policy is an integral component of the PF system. Unlike other program documents, it demonstrated resilience to both endogenous and exogenous challenges and the capacity to implement corrective measures during economic crises. This has laid the foundation for a Marshall Plan-like strategy for Ukraine. The PF strategy, which was approved just before the outbreak of the Russian-Ukrainian conflict, prompted discussions on enhancing the predictability of budgetary policy and debt sustainability. This, together with the adoption of a medium-term public debt management strategy, became the basis for the actual establishment of the Debt Agency as a legal entity, which in the future will ensure, on the one hand, the privileging of grants among the financial mechanisms for covering the budget deficit, and, on the other hand, an additional level of budgetary strategy for generating a multiplier effect from the borrowed funds for post-war reconstruction. On the other hand, this approach will create conditions for the transition from external sources of financing the budget deficit to internal ones by expanding and diversifying the range of investors in government securities. It is proved that debt policy in both the short and medium term will serve as the basis for the implementation of the budgetary strategy of post-war reconstruction, and will create conditions for accelerating the process of forced reparations to compensate for the damage caused by the Russian Federation.

Nubian aquifer linkage to the High Aswan Dam Reservoir: Initial assessments of processes and challenges

Egypt, relying heavily on the Nile as its primary water resource, is facing a rising water budget deficit due to increasing consumption, hydroclimatic changes, and upstream river damming. To address the above, innovative management of High Aswan Dam Reservoir (HADR), the third largest artificial reservoir on Earth, and its exchange with the surrounding groundwater system is suggested to develop new agricultural areas. However, the interconnectivity mechanism between the HADR and the fossil Nubian aquifer, the largest transboundary aquifer in Africa, remains speculative due to the lack of in-situ investigations. To address this deficiency, we perform a geophysical survey using aeromagnetic, time-domain electromagnetic, and vertical electrical resistivity sounding in a 330 km2 pilot area to the northwest of the HADR that is hypothesized to have a dense fracture system that could act as a conduit between these two large water bodies. Our survey results show the presence of normal faults cross the reservoir to the tangential basement and the sedimentary cover that are water-saturated and act as recharges to the Nubian fossil aquifer. These in-situ investigations confirm previous orbital gravity observations by GRACE-FO hypothesizing the interconnectivity between the reservoir and the Nubian aquifer, which was subject to debate. We suggest that such connecting areas between these two water bodies can be optimal sites for future agricultural development using improved management of surface water-groundwater exchanges for irrigation. Finally, our findings highlight upcoming challenges for this linkage if the level of HADR reaches below ∼160 m above mean sea level (amsl) due to upstream dam operation during the Nile’s extended drought periods. Under these conditions, the Nubian aquifer could discharge back into the HADR at the investigated site, changing the water budget of the aquifer and compromising the planned agriculture developments in the adjacent areas, which account for ∼ 10 % of the total arable land in Egypt.

Revisiting fiscal deficit sustainability and revenue-expenditure nexus in India

The COVID-19 epidemic has brought to the emergence of fiscal sustainability as an exceptionally challenging issue for both emerging and advanced economies. In this context, it is imperative to assess the sustainability of fiscal deficit in India for the Central and State level for the period 1970–71 to 2021–2022 and 1973–74 to 2021–22, respectively. Furthermore, the study also seeks to establish the cause-and-effect relationship between government expenditure and revenue. The application of Gregory-Hansen cointegration test supports sustainability of fiscal deficits for Central and State governments individually. Additionally, the ARDL model for cointegration indicates that both governments exhibit "weak" sustainability of the fiscal deficit. Finally, the Toda-Yamamoto Granger non-causality test provides evidence in favour of the "spend-tax hypothesis" for both governments. In this backdrop, the present study posits that it is essential for governments to implement fiscal consolidation and prudent fiscal policies in order to reduce the magnitude of the budget deficit, optimise the execution of monetary and exchange rate policies, and foster development driven by the private sector. This approach is crucial to ensure long-term fiscal sustainability and economic stability in India, especially aftermath of the COVID-19 pandemic.