Budget Transfers Research Articles

РЕГИОНАЛЬНАЯ ПОЛИТИКА В КОНТЕКСТЕ СНИЖЕНИЯ СОЦИАЛЬНО-ЭКОНОМИЧЕСКОГО НЕРАВЕНСТВА СУБЪЕКТОВ РОССИЙСКОЙ ФЕДЕРАЦИИ

The article studies the foundations of state management of regional development in the Russian Federation at the present stage in the context of persisting socio-economic differentiation of territorial entities. It is noted that the corresponding normative-legal base of realization of the state regional policy has been formed, various mechanisms and instruments aimed at activation of economic activity of Russian regions are involved, but the adherence to traditional forms of financial support by means of redistribution of resources is still preserved because of the regional differentiation remaining at a high level. Budget transfers, so actively used to equalize regional inequality, primarily perform the task of fiscal security, but cannot (due to resource constraints) affect the strengthening of economic growth rates of recipient regions. In this regard, the authors present possible ways to reduce territorial differences in the level of socio-economic development on the basis of the introduction of modern technologies of public administration. They include not only different ways of interaction between the state and regions on the issues of balanced economic development, but also a new model of this interaction based on a unified strategy of regional development with an appropriate fund of financial support.

Thorns in the side: Strategies of populist parties against local public administrations

AbstractThe success of populist parties in national elections puts pressure on political leaders and their administrations, both at the central and sub‐national levels. This paper explores the political tensions between two administrative levels—a central level governed by a populist party, and the city level headed by a liberal party—and the strategies populists use to challenge local political leaders and their city administrations. This paper analyzes three case studies: Prague, Warsaw, and Budapest. In all three cities, opposition candidates are visible challengers to the populist parties in government. The results show that city administrations face increasing tasks, cuts in budget transfers, higher scrutiny from central government, and administrative bottlenecks.

Effects of financial transfers on redistribution and risk sharing within the EU and the Euro Area

The effectiveness of European fiscal policies is of particular importance for the future economic performance of the community especially during times of crisis due to polarized public opinion and expert criticism. This study attempts to identify the redistributive and risk-sharing effects resulting from centralized financial transfers within the EU. We investigate a broader sample of EU (28) countries during 2000-2021 in addition to the Euro area countries used in most studies on the issue. Traditional regression methods and the Pooled Mean Group (PMG) model were used in order to maximize the objectivity of the analysis. The study’s results show that long-term redistribution is virtually absent with levels below 1%. In some cases, the values are even negative which is an interesting (but not unattested) finding in the context of such a sensitive issue as the permanent shift of wealth within the EA and EU. Budget transfers achieved a risk-sharing effect of 11% for the EU and 29% for the EA. Risk sharing levels are comparable and even better than those of some fully-fledged fiscal federations. This is an attestation to the capacity of the EU to successfully implement its intended policies despite some criticism.

Implementing a Managed Entry Agreement Framework in Cyprus

ABSTRACT Introduction The aim of this study is to explore the current practice in Cyprus regarding the introduction and reimbursement of innovative pharmaceuticals through Managed Entry Agreements (MEA), assess its operational context, and suggest approaches toward spanning the knowledge gap consequential to these efforts, especially the barriers of a small country context. Areas covered The recent introduction of a National Health System (NHS), brought about fundamental reforms in Cyprus’ Healthcare sector. Among such reforms, of particular interest, has been the introduction of a Managed Entry Agreements (MEA) mechanism. The first preliminary results indicate that despite being a small and unattractive market, Cyprus can apply a substantial MEA program. Concomitantly, it annotates the need to design an operational framework which should include, the definition of important technical parameters, clear demarcation of the scope, cooperation principles ensuring the effective operation of scientific committees, and clear delineation of what ‘value’ is. Moreover, in the context of the unified healthcare market, budget transfers should be considered, which could alleviate the inordinate budget impact of new products, which nevertheless will cut down on hospital expenditures. Narrative synthesis and health policy analysis-related resources were used. Expert opinion The implementation of MEA in Cyprus provides an ideal testing ground for innovative reimbursement approaches. This will streamline the country’s efforts toward reimbursement of innovation, while concomitantly add to the collective MEA experience.

The impacts of reforming agricultural policy support on cereal prices: a CGE modeling approach

PurposeThis paper investigates the effects of the total abolition of all forms of agricultural subsidies to producers and border tariffs on the prices of staple cereals.Design/methodology/approachThe authors use the GTAP global economy-wide model and focus on 27 countries and 8 regions. The GTAP database that is used contains information on budgetary transfers to producers and market price support such as domestic price support, tariffs, export subsidies, quotas on exports or imports and other border measures.FindingsThe removal of subsidies is estimated to significantly increase the prices of wheat and other cereal grains in Japan, paddy rice in Malaysia and Indonesia, processed rice in Malaysia and Indonesia and wheat in Brazil and India. When border tariffs are removed, cereal prices are projected to fall in several countries, but the decline is more pronounced for wheat in Kenya and Japan, other cereal grains in South Korea and all staples in Nepal.Research limitations/implicationsThe alternative scenarios on the removal of agricultural subsidies in all agricultural sectors and the elimination of border tariffs are purely speculative as the analysis ignores important political economy considerations of agricultural and food policy reforms.Practical implicationsThe findings from this study point to the importance of implementing additional policy measures to mitigate the possible negative effect of repurposing the support to agriculture and ensure the food security and welfare of those categories of buyers who heavily depend on the price of staple food for their livelihoods.Social implicationsThis study’s findings confirm that the elimination of agricultural subsidies would impact global food security directly by making staple food less affordable to the poorest and indirectly by decreasing the available household budget for other presumably more nutritious food groups. Consequently, it is expected that these price increases could make segments of the world population poorer, particularly the net-food buyers due to a decline in their real income.Originality/valueThe authors assess the impact of removing the subsidies on the economy in a comprehensive way, particularly given the recent policy focus on net zero emissions and Sustainable Development Goals that include healthy foods. The authors also consider the counter effects of tariff reduction on this, which is price-reducing.

The ability of financial support of the educational sphere in the process of financial decentralization of the region: economic and legal aspect

The article considers the possibility of optional implementation of financial and educational decentralization approaches in Ukraine. The strategic role of CMU Order No. 333-r dated April 1, 2014 on the approval of the Concept of Reforming Local Self-Government and Territorial Organization of Power in Ukraine as a conceptual measure of financial and educational transformations is outlined. The legal status and legal options of educational self-government at the level of OTG are defined in accordance with the national "normative basis of decentralization": the Law of Ukraine "On the Voluntary Association of Territorial Communities" No. 157-VIII, the Law of Ukraine "On the Principles of State Regional Policy" No. 156-VIII, etc., as well as relevant legislation (the Law of Ukraine "On Education" No. 2145- VIII of the Law of Ukraine "On Higher Education" No. 1556-VII, etc.).
 A terminological distinction between the concepts of "power decentralization" and "financial decentralization of the region" is proposed. The problem of budgetary and educational provision of scientific and educational facilities is conceptualized spheres in Ukraine through the prism of the Budget Code of Ukraine No. 2456-VI.
 Examples of foreign decentralization-educational (management and financial) support are presented and implementation methods of its application in Ukraine are proposed.
 The ideological problem is that the decentralization of power presupposes, among other things, the financial independence of the region (one of the principles of decentralization is the transfer of resources from the ODF to the OMS), and the issue of its provision is problematic for a country that is used to building financial and economic relations by the "vertical" principle, i.e. "from top to bottom".
 Taking into account the dependent connection of the educational sphere in Ukraine on the accompanying and sectoral legislation, such trends, without having a direct impact on the volume and expenditure mechanisms of scientific and educational support from the State Budget of Ukraine, create a precedent of institutional and jurisdictional inconsistency.
 The issue of financial support for higher education and directly – institutions of higher education (HEIs) has several problems, among which “financing of expenses for the maintenance of HEIs, not the actual cost of the educational process” stands out; calculation of budget transfers only in the amount of "educational needs" (without cultural and sports and social assistance initiatives of the development and education self-government); inadequate financial and logistical support of vocational education as a subcomponent and pregenerator of higher education in Ukraine.

The First- and Second-Nature Geographic Correlates of Federal Budget Transfers and Fiscal Dependence—Evidence from Russia and the United States

Abstract This study examines fiscal federalism by interrogating the relationship between first- and second-nature geographic features—most notably distance as well as various economic/infrastructural indicators—and intergovernmental transfers and subnational fiscal dependence in Russia and the United States from 2003 to 2015. Our findings reveal stark differences in the role that geographic factors play in these two federations. While first- and second-nature factors influenced both transfers and reliance in Russia, only second-nature indicators had an effect in the U.S. case. Economic development and infrastructural improvements do not cause the influence of first-nature indicators to evaporate altogether, but they do attenuate the effects of those considerations.

Impact of state support on Russian agricultural producers and consumers

State support plays an important role in the development of the agricultural sector, ensuring food security and sustainability. In this article the PSE/ CSE methodology, developed by OECD, is applied to analyzing the impact of support to Russian agriculture in 2021 on the welfare of all market participants: agricultural producers, consumers and the agricultural sector as a whole. We present the results of the estimation of the total level of support to agriculture and, in particular, to agricultural producers, provided at the expense of consumers and financed from budget transfers as well as the impact of agricultural policy on consumers. The level of state support to general services for the sector and to small-scale agricultural producers is also investigated. The interpretation of the PSE/CSE indicators in the situation of underdeveloped market infrastructure and regionalization of budget transfers is discussed. Policies aimed at moderating the price hikes for grains resulted in positive transfers to consumers of those commodities, while consumers of the majority of livestock commodities paid more than in the case of absence of support to agricultural producers. Based on this analysis recommendations are suggested for increasing efficiency of the agricultural policy transfers.

Addiction to a bad idea, especially in low- and middle-income countries: Contributory health insurance

Despite limited evidence of successful development and implementation of contributory health insurance and low and middle income countries, many countries are in the process implementing such schemes. This commentary summarizes all available evidence on the limitations of contributory health insurance including the lack of good theoretical underpinning and the considerable evidence of inequity and fragmentation created by such schemes. Moreover, the initiation of a contributory health insurance scheme has not been found to increase revenues to the health sector or help health countries achieve universal health coverage. Low and middle income countries can improve equity and efficiency of the health sector by replacing out-of-pocket spending with pre-paid pooling mechanisms, but that is best done through budget transfers and not by contributory insurance that links payment to sub-population entitlements.

Repasses financeiros para o enfrentamento da COVID-19 na perspectiva de gestores municipais do estado de São Paulo, Brasil

Abstract The study examined municipal managers’ perceptions of extraordinary funding and its use to address COVID-19. In this multiple-case, quantitative and qualitative study, using embedded mixed methods, semi-structured interviews were conducted in six case-municipalities in São Paulo state. Secondary data for 2020 to 2022, drawn from information systems, were analysed. The municipalities differed by population, health expenditures and access to federal funding, making it possible to observe different financial management strategies and resource allocation. In addition to the extraordinary funding, considerable budget transfers were found to have been made by Parliamentary Amendments during the study period. In a context where the national Unified Health System is underfunded, extraordinary funding and budget transfers by Parliamentary Amendments often enabled managers to organise municipal health systems to meet their understanding of health needs and possible responses to those needs. Funding to address COVID-19 was allocated mainly to medium- and high-complexity services and to engaging private companies.

Ko šalje novac kući - fiskalne posledice teritorijalne reprezentativnosti narodne skupštine

The practice of political representatives trying to provide benefits to voters in their local communities is not new. The phenomenon is most often operationalized through financing of public works, projects, subsidies, direct transfers or social benefits, provided in order to increase the political ratings and ultimately ensure reelection. Although the practice is more pronounced in candidate-oriented electoral systems consisting of single-member districts, it can also be identified within the countries employing the proportional list system. The authors' intention is to examine a correlation between the local representation in the Serbian parliament and budgetary transfers and moreover a general level of local financing. For this purpose, data on the residence of MPs was compared with the levels of transfers, subsidies and amount of local expenditures, while the models are additionally controlled with various variables including size of municipality, development level, unemployment rate, share of elderly population, as well as other developmental and societal factors. The sample covered 145 cities and municipalities in Serbia, for a period from 2013 to 2021. The empirical results indicate that pork barrel practices are indeed present even in the environment of closed electoral lists with at-large single district, which does not create institutional incentives for the cultivation of personal vote. But even in Serbia, it seems that local politicians favor their places of residence by increasing the level of public investments. Consequently, municipalities without deputies will remain without financial benefits that parliamentary representation provides. We found that these practices are primarily accomplished through central level subsidies, but can also be identified in the amounts of local budgets and local expenditures. On the other hand, direct annual transfers from the higher levels of government are mostly fixed due to the exact legal criteria, exempting the interference of elected deputies on this particular financing mechanism.

Оценка государственной поддержки сельскохозяйственных производителей в Дальневосточном федеральном округе

What is the current level of support for agricultural producers in the Far Eastern Federal District? How did it change in 2014–2020, quantitatively and qualitatively? To answer these questions, the paper attempts to adapt to the subnational level the methodology for estimating agricultural support developed by the Organization for Economic Cooperation and Development, which made it possible to obtain estimates of indicators of support for agricultural producers in the macroregion. The results obtained allow us to conclude that during the period under study, the main changes were associated not with the dynamics of support volumes, but with the dynamics of its structure. Fluctuations in indicators were insignificant, and by 2020 their values had almost returned to the level of 2014. At the same time, budget transfers have become the dominant tool for supporting agricultural producers, although previously this place was occupied by support for market prices. The benefits from the implementation of the state agricultural policy were disproportionately distributed between animal husbandry and crop production in the Far Eastern Federal District. The values of absolute indicators of support for market prices for crop products were small, and for soybeans and cereals they were even negative. Unlike crop production, producers of all livestock products in the macroregion were protected by foreign trade policy measures and received significant support through the market price support mechanism. In turn, the difference in the level of support for producers in animal husbandry and crop production largely led to the differentiation of the level of support for agricultural producers in the Far Eastern regions

Оценка факторов, влияющих на экспорт продовольствия российских регионов

The development of food export and transformation of its structure with a predominance of deep processed products is a priority goal of the Russian agri-food sector. In this regard, it is necessary to find ways to restructure food production for ensuring the country’s food security and increasing its export potential. The study aims to identify key factors affecting agricultural exports, as well as to substantiate the role of state support in creating a regional strategy for the development of industries processing agricultural raw materials. To this end, statistical research methods were applied, in particular, a multiple regression model was constructed to assess the influence of the selected factors on Russian food export considering its regional diversity. The factors affecting exports can be divided into market (food industry output, population income, agricultural output, food imports, budget expenditures) and state ones (direct budgetary transfers to agricultural producers and subsidies to regions). The research concluded that direct state support to agricultural producers has the biggest impact on food exports. The study justified the need to restructure the system of state support to improve production efficiency and competitiveness of products and proposed a set of potentially effective tools for achieving this goal. The methodological approach and research findings can be used to establish a strategy for the development of the food and processing industry of the domestic agri-food sector at the federal and regional levels. At the same time, it is required to further study methodological aspects of the distribution of state support to the food industry across Russian regions, as well as to define criteria and principles of its intersectoral and interregional division.

COVID-related incentive payments to healthcare workers

Introduction/Objective. The study estimates the associations between the key pandemic indicators and the allocation of COVID-19-related bonus and welfare payments to Russian healthcare workers. Methods. The study uses regression analysis. Results. The study examines two consecutive types of COVID-19-related bonus payments: (1) incentive payments (in 2020) and (2) welfare payments (in 2020?2022). Concerning incentive payments (type 1), the study supports hypotheses regarding the association between the number of persons infected with COVID-19 in a relevant region and the actual/estimated amount of budget transfers to a relevant region for bonus payments to medical workers (a) for special working conditions and additional workload and (b) for performing particularly important work. As for welfare payments (type 2), the study supports hypotheses regarding the association between (1) COVID-19 cases, (2) COVID-19 recoveries, and (3) the fiscal year-end closeout and the amount of welfare payments. Conclusion. The main channel for financing payments to medical workers is a special welfare payment through the system of the Social Insurance Fund of the Russian Federation. This source exceeds the estimated total transfers and subsidies for similar purposes in 2020. The study tests hypotheses regarding the association between the key pandemic indicators and the size of various types of budget transfers for bonus and welfare payments to medical workers.

Local Tax Strategy and Its Components and the Formation of Investment Competitiveness of the Municipality

It can be assumed that the main objective of the tax policy – both from the macro- and microeconomic perspective – is the implementation of the fiscal function of taxes, consisting in the accumulation of tax revenues to fulfil the tasks and functions of public finance sector entities. Tax revenues are used to finance budget transfers, e.g. to the public sector, while affecting the allocation processes between taxpayers and the public finance sector. Taxes and the tax system also perform non-fiscal functions of taxation, influencing – inter alia, through tax allowances and tax exemptions – the implementation of various stimulus, economic and social objectives (often overextended and mutually contradictory). An example of non-fiscal goals of taxation is the use of tax instruments to influence changes in the economic or social structure at the municipality level. The amount of revenue obtained by municipalities from local government taxes and fees in Poland was influenced by the tax policy pursued by municipalities and the resulting reduction of the maximum tax and fee rates, which are tools for supporting local systemic development.

Menakar Konstitusionalitas Penundaan dan/atau Pemotongan Anggaran Transfer ke Daerah dalam UU APBN

Provisions regarding delays and/or withholding of transfers to regions by the Government in the APBN Law create problems when they are considered to create legal uncertainty regarding finances, which should be the domain of regional governments. This study aims to analyze: the constitutional urgency of the existence of a transfer budget to the regions from the center and the suitability of the sanctions for delaying and/or cutting budget transfers to the areas in the APBN Law. The study results show that transfers to the regions are a form of constitutional embodiment in the form of handing over financial resources to the areas as an actualization of effective fiscal decentralization. However, in practice, some regions do not comply with budget allocations, so the implications for regional financial management are not on target. On the other hand, the provision of sanctions for delaying and/or withholding funds transfers to the regions is in line with the financial construction of the unitary state with a decentralized system. This has also been strengthened through Constitutional Court Decision No. 5/PUU-XVI/2018.

Theoretical foundations of rendering state support to аgroindustrial complex organizations

The article presents the results of studies of the mechanism for providing state support to agroindustrial complex organizations, including the directions of financing investment projects. Definitions of the terms “subsidies for the payment of interest (part of interest) for the use of loans”, “budget transfers to reimburse part of the capital costs of investment projects”, and a flowchart for improving the mechanisms of state support for the agroindustrial complex of the Republic of Belarus (classification of state support measures) are given.

Assessment of the level of state support for the agrarian sector in Russia and the European Union

The article provides the research of the state support for agriculture in Russia using the methodology of the Organization for Economic Cooperation and Development (OECD). The overall estimation of support for agricultural producers in Russia, considering not only budget transfers but also price support in 2020 amounted to 749 billion rubles or 12 % of gross revenue. At the same time, budgetary transfers account for 31.9 %. A significant amount is accounted for by the support of the market price, which is estimated through the difference between domestic and reference prices (prices "at the border") by the types of agricultural products. In the case of Russia, pork, poultry and beef producers received more than 655 billion rubles in 2020 as a result of price support. On the contrary, hidden taxation is typical for crop producers; about 308 billion rubles were withdrawn from them because of the pricing policy. However, the high overall market price support for agricultural producers in Russia in 2020 suggests that transfers from consumers exceed transfers in the form of subsidies. For comparison, price support in Russia and the EU on average for 2013-2020 was 44 % and 17 %, respectively. It is shown that in the EU 75% of the total support for agriculture is provided through the least market-distorting forms (support for general services, creation of state reserves to ensure food security), in Russia – 27 %. From the point of view of the sustainability of agriculture, the measures to support general services (infrastructure, science and education, innovation support) have the greatest impact on the volume of gross value added of the industry in Russia. The correlation coefficient for this type of support is the highest - 0.93, while the coefficient of determination is high – 86 %. This leads to the main recommendation on the adjustment of the agrarian budget in favor of supporting general services, which, in addition to the high positive effect on agricultural production, refers to least market-distorting measures and does not have the disadvantage of unequal access to agricultural producers, in contrast to, for example, direct subsidies and concessional loans.

Enhancing provincial government’s revenue generation for effective service delivery

Background: The Constitution of South Africa assigns the duty of providing basic social services and administering social security grants and welfare schemes to the various provinces that fund their expenditure from the allocation received from the national government and provincially raised revenue. The provincial equitable share (PES) formula is employed to allocate revenue to provinces based on the size of the province’s population. Provincial governments rely heavily on the budget transfers from the national treasury, as the revenue that is raised at the provincial level is inadequate to fund expenditure but the revenue received through the PES has been declining and exerting additional strain on service delivery in the Eastern Cape Province.Aim: This article aimed to analyse provincial own receipts (revenue) and the factors that affect revenue generation in the Eastern Cape province of South Africa. The article further aimed to utilise the results to generate recommendations as to how the province can enhance provincial government revenue.Setting: Eastern Cape province, South Africa.Methods: This research utilised quantitative, descriptive statistics.Results: The observations indicated that improved economic growth, household incomes and employment opportunities will not necessarily lead to improved revenue generation in the province. Authorities cannot rely on improving economic variables alone to increase such revenue and sound administration is required to enhance revenue generation in the Eastern Cape Province.Conclusion: The Eastern Cape Province needs to enhance the efficiency of the revenue collection strategies whilst simultaneously broadening the revenue base.

‘Congruent We Govern’: Cost of Governance in Multiparty Presidentialism

AbstractThe received wisdom on executive–legislative relations in multiparty presidential systems is that the size of the president's majority in Congress is the key factor explaining governance patterns, particularly the president's legislative success. However, in many cases presidents enjoying a nominal majority have been unable to pass legislation and have faced institutional instability. The article departs from a conventional definition of divided government and focuses on the preference incongruence between the governing coalition and the floor of Congress. It argues that the ideological distance between the floor and the coalition is a key factor explaining the president's cost of governing (which includes factors such as the distribution of cabinet portfolios and budgetary transfers to coalition partners). The article provides an empirical test with data from Brazil that find that the greater the ideological incongruence, the higher the cost of governing for the president.