№ 7/2020

Fìnansi Ukr. 2020 (7): 47–61https://doi.org/10.33763/finukr2020.07.047

PUBLIC FINANCE MANAGEMENT

IVANYTSKA Olga ¹, KOSHCHUK Tetiana ²

¹National Technical University of Ukraine “Igor Sikorsky Kyiv Polytechnic Institute”
OrcID ID : https://orcid.org/0000-0001-5505-8849
²SESE “The Academy of Financial Management”
OrcID ID : https://orcid.org/0000-0003-1013-4603

Fiscal risk management in conditions of the COVID-19 pandemic

The article is devoted to identifying directions of fiscal risk management caused by the COVID-19 pandemic. The main IMF documents containing recommendations and warnings on public financial management in the conditions of significant shocks are analyzed. It is argued that the COVID-19 pandemic poses large exogenous fiscal risks that have a discrete, unpredictable and nonlinear effect as well as a potentially high threat to fiscal stability. The governments of the countries affected by the pandemic need to find out what consequences these phenomena may have for the budget and for the socio-economic sphere. The wide range of Governments’ measures to address the macroeconomic and social challenges posed by the pandemic is determined. They can be divided into budget measures (budget expenditures and the introduction of changes in taxation); non-budgetary or “extra-budgetary” measures (government expenditures that affect public debt and budget financing); government guarantees and quasi-fiscal transactions. It is mentioned that Governments often allow significant deviations from the basic fiscal rules by implementing “rescue” policies and taking emergency measures to improve the socio-economic situation. Emphasis must be placed on the need to adhere to the following approaches when making government decisions to move away from strict fiscal rules: comparing the effect obtained in the socio-economic sphere, and the possibility of a negative impact of measures on fiscal stability; ensuring transparency and control ; establishing the level of deviation from the legally defined budget indicators; and regulating the processes and procedures for returning to the application of rules; use of fiscally safe instruments. It is underlined the importance of the centralized approach to public finance management, in particular by creating an interagency group of crisis financial management. Some provisions of the Memorandum on Economic and Financial Policy within the framework of Ukraine’s cooperation with the IMF are analyzed.

Keywords:fiscal risks, macroeconomic shocks, consequences of COVID-19, fiscal rules, fiscal stability

JEL: E62, H21, L32

IVANYTSKA O. . Fiscal risk management in conditions of the COVID-19 pandemic / O. . IVANYTSKA, T. . Koshchuk // Фінанси України. - 2020. - № 7. - C. 47-61.

Article original in Ukrainian (pp. 47 - 61)

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