Direction Of Fiscal Policy Research Articles

Institutional support for the sustainability of the public finance system

Relevance of the research topic. In modern conditions, the system of public finance is an important tool for regulating socio-economic processes, intensification of the economy. Important factors that affect the quality of the public finance system are financial and economic risks due to the trend of economic development. Accordingly, the assessment of financial and economic risks is an important condition for the development of sound financial and budgetary policy, the development of institutional support for the stability of public finances and economic security of the country as a whole. Formulation of the problem. Based on the trends of economic development of both countries with transformational and developed economies, in modern conditions, important tasks are: substantiation of strategic objectives of fiscal policy to increase the level of stability of public finance and its components; mutual coordination of decisions of public administration bodies. At the same time, the development of institutional support for the sustainability of the public finance system should be carried out taking into account globalization processes. Analysis of recent research and publications. The issue of developing institutional support for the sustainability of the public finance system is quite common in research. These are the works of famous domestic and foreign scientists: J. Keynes, P. Samuelson, J. Stiglitz, V. Tanzi, O. Vasylyk, I. Zapatrina, S. Kucherenko, L. Lysyak, L. Levaeva, I. Lukyanenko, M. Pasichny, A. Sokolovska, I. Chugunov and others. Highlighting unexplored parts of a common problem. Selection of unexplored parts of the general problem. The above issues are relevant in connection with the spread of acute respiratory disease COVID-19, which affected the trend of economic development, led to a violation of the budget balance, which requires a number of specific tasks related to the development of institutional sustainability of public finances and its components. Goal setting, research goals. The objectives of the study are: to reveal the role of public finance in the regulation of socio-economic processes; substantiate the features of economic security and its components; to analyze and evaluate the indicators of financial security of Ukraine. The purpose of the study is to reveal the directions of fiscal policy to ensure the sustainability of public finance. Research method or methodology. The article uses a set of research methods: a systematic approach, statistical analysis, structuring, synthesis, etc. Basic material presentation. The role of the public finance system in the regulation of socio-economic processes is revealed. The peculiarities of economic security and its components are substantiated. The analysis and assessment of financial security indicators of Ukraine is carried out. The directions of financial and budgetary policy on ensuring the stability of the public finance system are revealed. Area of application of results. The results of the study can be used in the process of reforming the public finance system. Conclusions according to article. In order to increase the stability of the public finance system, at this stage of socio-economic development of the country, it is advisable to: substantiate sustainability indicators – the basis of a transparent system of continuous monitoring of public finance system development and its components; introduction of effective management financial and budgetary tools – systematic assessment of the state of financial and budgetary security; improving the efficiency of financial and budgetary policy in the field of ensuring the stability of the public finance system and political responsibility for its results.

РАСХОДНАЯ ПОЛИТИКА ОБЩИННЫХ БЮДЖЕТОВ В РА

The issues for ensuring the financial policy of the RA communities are discussed. The directions of fiscal policy and the implementation of community budget expenditures are analyzed. Opportunities for improving expenditure policies and financial decentralization in the Republic of Armenia are assessed.

МЕЖБЮДЖЕТНЫЕ ТРАНСФЕРТЫ И НАЛОГОВЫЕ ЛЬГОТЫ КАК ИНСТРУМЕНТЫ ОБЕСПЕЧЕНИЯ СОЦИАЛЬНО-ЭКОНОМИЧЕСКОГО РАЗВИТИЯ РЕГИОНОВ

The subject of this study is to analyze the impact of interbudgetary transfers and tax incentives on strengthening the financial stability of regions, as well as on the formation of the dependent sentiments of regional authorities as a barrier to the socio-economic development of regions. The aim of the study is to substantiate the possibilities for regions with high and low budgetary stability of combining interbudgetary transfers as a way to cover current expenditures of regional budgets and to provide tax benefits as a tool to expand the tax base of regions. In the course of the study, general methods of cognition (deduction and induction, analysis and synthesis, description and generalization) and private scientific methods of cognition (comparison method, tabular and graphical methods of data presentation) were used. Improving the system of indicators for assessing the effectiveness of regional tax incentives will allow monitoring the activities of regions to increase the financial stability of requests for transfers from the higher budget. Currently, in the Russian Federation, interbudgetary transfers have become an integral part of budgetary relationships. The analysis of the financial stability of all 85 subjects showed that the regions cannot fulfill their current expenditure obligations only at the expense of their own revenues. The overwhelming majority of the subjects of the Federation need to increase their financial independence. Subsidies as a type of interbudgetary transfers can lead to dependent sentiments of regional authorities. Regional tax policy based on the use of regional tax incentives helps to strengthen the tax base in the region and increase financial stability. Subsidies as a type of interbudgetary transfers carry a latent threat to the formation of the dependent sentiments of regional authorities. The way to reduce this threat is to develop a system of effective tax incentives to stimulate the socio-economic growth of the regions. The results obtained can be taken into account in the activities of the Ministry of Finance of Russia when developing the main directions of fiscal policy.

Gulf Cooperation Council

Global economic activity is gaining momentum. Global growth is forecast at 3.6 percent this year, and 3.7 percent in 2018, compared to 3.2 percent in 2016. Risks around this forecast are broadly balanced in the near term, but are skewed to the downside over the medium term. The more positive global growth environment should support somewhat stronger oil demand. With inflation in advanced countries remaining subdued, monetary policy is expected to remain accommodative. GCC countries are continuing to adjust to lower oil prices. Substantial fiscal consolidation has taken place in most countries, mainly focused on expenditure reduction. This is necessary, but it has weakened non-oil growth. With the pace of fiscal consolidation set to slow, non-oil growth is expected to increase to 2.6 percent this year, from 1.8 percent last year. However, because of lower oil output, overall real GDP growth is projected to slow to 0.5 percent in 2017 from 2.2 percent in 2016. Growth prospects in the medium-term remain subdued amid relatively low oil prices and geopolitical risks. Policymakers have made a strong start in adjusting fiscal policy. While the needed pace of fiscal adjustment varies across countries depending on the fiscal space available, in general countries should continue to focus on recurrent expenditure rationalization, further energy price reforms, increased non-oil revenues, and improved efficiency of capital spending. Fiscal consolidation should be accompanied by a further improvement in fiscal frameworks and institutions. The direction of fiscal policy in the GCC is broadly consistent with these recommendations. Policies should continue to be geared toward managing evolving liquidity situations in the banking system and supporting the private sector’s access to funding. While countries have made progress in enhancing their financial policy frameworks, strengthening liquidity forecasting and developing liquidity management instruments will help banks adjust to a tighter liquidity environment. Banks generally remain profitable, well capitalized, and liquid, but with growth expected to remain relatively weak, the monitoring of financial sector vulnerabilities should continue to be enhanced. Diversification and private sector development will be needed to offset lower government spending and ensure stronger, sustainable, and inclusive growth. This will require stepped-up reforms to improve the business climate and reduce the role of the public sector in the economy through privatization and PPPs. Reforms are needed to increase the incentives for nationals to work in the private sector and for private sector firms to hire them. Increasing female participation in the labor market and employment would benefit productivity and growth across the region. Where fiscal space is available, fiscal policy can be used to support the structural reforms needed to boost private sector growth and employment.

Future Directions of Fiscal Policy and Institutions for Fiscal Consolidation in the Low Growth and Fast Ageing Era

Future Directions of Fiscal Policy and Institutions for Fiscal Consolidation in the Low Growth and Fast Ageing Era

Filling the Gap – An International Comparison of the Cyclical Adjustment of Budget Balances

The assessment of the direction of fiscal policy is both important and controversial. Because budgets are influenced by business cycles, disentangling the underlying fiscal position from the effect of the business cycle is difficult. The two main methods used by international institutions to determine this cyclical factor arguably do not fulfill the necessary requirements for obtaining correct results. This paper introduces an alternative disaggregated methodology which is not only able to incorporate theoretical considerations, but is also easily computable. To provide an empirical underpinning, we apply these methodologies to several countries.

Capital Flows in a Transitional Economy and the Sterilization Dilemma: The Hungarian Case

This paper compares Hungary’s experience with sterilization with that of other capital inflow episodes. The study focuses on the short-run impact of sterilization on monetary policy. The empirical data indicate that sterilized interventions by the National Bank of Hungary (NBH) were not significant until mid-1994, sometime after the return to power of the former Communist leaders. Thus, in the second half of 1994, the NBH began to demonstrate more firmly its independence by tightening monetary policy. By the beginning of 1995, the direction of fiscal policy had begun to show consonance with the overall aims of monetary policy.

Capital Flows in a Transitional Economy and the Sterilization Dilemma: The Hungarian Case

This paper compares Hungary’s experience with sterilization with that of other capital inflow episodes. The study focuses on the short-run impact of sterilization on monetary policy. The empirical data indicate that sterilized interventions by the National Bank of Hungary (NBH) were not significant until mid-1994, sometime after the return to power of the former Communist leaders. Thus, in the second half of 1994, the NBH began to demonstrate more firmly its independence by tightening monetary policy. By the beginning of 1995, the direction of fiscal policy had begun to show consonance with the overall aims of monetary policy.

Budgetary Measures of Fiscal Performance

It is now well established that the actual or realized budgetary surplus (deficit) is poorly suited as an index of the strength and direction of fiscal policy. To a considerable extent, its inadequacy stems from the fact that the budget surplus reflects as well as affects the level of aggregate income. In technical jargon, the realized surplus is endogenous to the economic system; as such, it cannot exert an independent impact upon economic activity. To serve as a useful tool of macro-economic planning and as a basis for appraising past policy decisions, the budget surplus must be purged of its endogenous components. It was to this end that the concept of the full-employment budget surplus was developed. In what follows, the usefulness of the fullemployment surplus as a policy tool and as a measure of fiscal performance will be analyzed. It will be demonstrated that for certain mixes of fiscal action, the F. E. S. will fail to reflect the direction of impact upon economic activity. At this point, an alternative measure, based not upon fullemployment levels of income but existing levels of income, shall be proposed and analyzed. It will be demonstrated that this alternative indicator, while subject to some of the same limitations of the F. E. S., is superior to it in all relevant respects.