Issued since 1995
Welcome to the Finance of Ukraine site (demo).
Login | Register
ACADEMY
OF FINANCIAL
MANAGEMENT
.


№ 12/2020

№ 12/2020

Fìnansi Ukr. 2020 (12): 83–105
https://doi.org/10.33763/finukr2020.12.083

SCIENTIFIC DISCUSSIONS

PETRUKHA Sergii 1, PALIICHUK Tetiana 2, PETRUKHA Nina 3

1Kyiv National University of Construction and Architecture
OrcID ID : https://orcid.org/0000-0002-8859-0724
2Analytical Center of All-Ukrainian Association of Local Governments “Association of Ukrainian Cities”
OrcID ID : https://orcid.org/0000-0002-6951-4371
3Kyiv National University of Construction and Architecture
OrcID ID : https://orcid.org/0000-0002-3805-2215


Local finances in the context of the corona crisis: new budget architecture and financial capacity to regulate sectoral and socio-economic processes


The coronavirus pandemic, which has been the world's biggest test since World War II, has led to the 2020 global economic crisis. In the context of rapid change (increase in the number of diseases and deaths) in Ukraine, a number of internal quarantine measures were introduced to prevent the spread of coronavirus. The implemented measures had a negative impact on the economy of Ukraine and necessitated the implementation of state regulation of economic stimulus to overcome the consequences of COVID-19, revision and change of budget policy priorities. The introduction of quarantine measures by the central government to prevent the emergence and spread of coronavirus, stimulate and support the economy has affected the resources of local government. The article reflects the features of local finances in the context of the corona crisis, updating their budget architecture, the state of financial capacity of local governments to regulate sectoral and socio-economic processes. The budget security of communities in the fight against COVID-19, the impact of changes in budget and tax legislation to support the economy, the impact of quarantine restrictions on revenues to local government budgets are analyzed. The actions of communities to support entrepreneurs in the conditions of additional financial burden on the need to combat COVID-19 are revealed. Recommendations for the implementation of fiscal policy in the area of local finances are proposed, which will help slow down the economic downturn, save enterprises from bankruptcy, save jobs, help fill budgets, and accelerate economic recovery after quarantine.

Keywords:budget policy, local budgets, local finances, local self-government, intergovernmental relations, pandemic, coronavirus, corona crisis, COVID-19

JEL: H72


Petrukha S. . Local finances in the context of the corona crisis: new budget architecture and financial capacity to regulate sectoral and socio-economic processes / S. Petrukha, T. Paliichuk, N. Petrukha // Фінанси України. - 2020. - № 12. - C. 83-105.

Article original in Ukrainian (pp. 83 - 105) DownloadDownloads :173
1. World Health Organization. (2019). Coronavirus disease (COVID-19) pandemic. Retrieved from www.who.int/emergencies/diseases/novel-coronavirus-2019.
2. Ministry of Health of Ukraine. (2020, March 3). A case of COVID-19 has been registered in Ukraine. Retrieved from moz.gov.ua/article/news/v-ukraini-zareestrovanij-
vipadok-zahvorjuvannja-na-covid-19-%e2%80%93-moz [in Ukrainian].
3. Cabinet of Ministers of Ukraine. (2020). On prevention of the spread on the territory of Ukraine of acute respiratory disease COVID-19 caused by coronavirus SARS-CoV-2 (Decree No. 211, March 11). Retrieved from zakon.rada.gov.ua/laws/show/211-2020-%D0%BF [in Ukrainian].
4. Cabinet of Ministers of Ukraine. (2020). On amendments to some acts of the Cabinet of Ministers of Ukraine (Decree No. 291, April 22). Retrieved from zakon.rada.gov.ua/laws/show/291-2020-%D0%BF#n9 [in Ukrainian].
5. Cabinet of Ministers of Ukraine. (2020). About establishment of quarantine for the purpose of prevention of distribution on the territory of Ukraine of an acute respiratory disease COVID-19 caused by a coronavirus of SARS-CoV-2 (Decree No. 392, May 20). Retrieved from zakon.rada.gov.ua/laws/show/392-2020-%D0%BF#n192 [in Ukrainian].
6. Cabinet of Ministers of Ukraine. (2020). On amendments to the resolution of the Cabinet of Ministers of Ukraine of July 22, 2020 No. 641 (Decree No. 956, October 13). Retrieved from zakon.rada.gov.ua/laws/show/956-2020-%D0%BF#n10.
7. Cabinet of Ministers of Ukraine. (2020). On amendments to the resolution of the Cabinet of Ministers of Ukraine of July 22, 2020 No. 641 (Decree No. 1100, November 11). Retrieved from zakon.rada.gov.ua/laws/show/1100-2020-%D0%BF#n11.
8. Andrushchenko, V. (2019). The imperative of fiscal solidarity. Economic Bulletin. Series: Finance, accounting, taxation, 3, 13–19 [in Ukrainian]. doi.org/10.33244/2617-5932.3.2019.13-19
9. Gasanov, S. (2017). Uncertainty in economics and the economy of uncertainty. Finance of Ukraine, 12, 23–34 [in Ukrainian]. doi.org/10.33763/finukr2017.12.023
10. Demydenko, L., & Nakonechna, Ju. (2015). Fiscal decentralization: German experience and Ukrainian realities. Bulletin of Taras Shevchenko National University of Kyiv. Economics, 2 (167), 49–55 [in Ukrainian]. doi.org/10.17721/1728-2667.2015/167-2/8
11. Iefymenko, T. (2017). Fiscal space and stabilization of public finance. Finance of Ukraine, 9, 7–28 [in Ukrainian]. doi.org/10.33763/finukr2017.09.007
12. Zatonatska, T., Kuzkin, Ye., & Stavytskyi, A. (2015). Prospects and preconditions of fiscal decentralization in Ukraine at the present stage. RFI Scientific Papers, 1, 74–86 [in Ukrainian].
13. Kudrjashov, V., & Podderjogin, A. (2019). Experience of application of fiscal rules in Poland. Finance of Ukraine, 6, 55–69 [in Ukrainian]. doi.org/10.33763/finukr2019.06.055
14. Kuzkin, Ye. (2018). The Methodical Aspects of Implementation of the Program-Target Approach in Formation of Local Budgets in Conditions of Decentralization of the State Finances. Business Inform, 6, 290–296. Retrieved from www.business-inform.net/annotated-catalogue/?year=2018&abstract=2018_06_0&stqa=39&lang=ua [in Ukrainian].
15. Lunina, I. (2019). Conceptual basics of public finance sustainability. Finance of Ukraine, 11, 97–109 [in Ukrainian]. doi.org/10.33763/finukr2019.11.097
16. Slobozhan, O. V., & Paliychuk, T. V. (2020). Public finance management and problems of fiscal decentralization. Public finance management and problems of national economic security, 357–360. Irpin: SFS University of Ukraine [in Ukrainian].
17. Blancart, S. (2000). Public finance in a democracy: an introduction to financial science. Kyiv: Lybid [in Ukrainian].
18. Oates, W. E. (1972). Fiscal Federalism. New York: Harcourt, Brace, Jovanovich.
19. Masgrave, R. A. (1959). The Theory of Public Finance. New York: McGraw-Hill Book Company.
20. IMF. (2020, April). The Great Lockdown. World Economic Outlook. Retrieved from www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020.
21. Fitch Ratings. (2020, April 2). Deep Global Recession in 2020 as Coronavirus Crisis Escalates. Retrieved from www.fitchratings.com/research/sovereigns/deep-global-recession-in-2020-as-coronavirus-crisis-escalates-02-04-2020.
22. Government portal. (2020, April 17). The budget process in 2020 will be carried out taking into account the impact of the COVID-19 pandemic. Retrieved from www.kmu.gov.ua/news/minfin-byudzhetnij-proces-u-2020-roci-bude-zdijsnyuvatis-z-urahuvannyam-vplivu-pandemiyi-covid-19 [in Ukrainian].
23. Cabinet of Ministers of Ukraine. (2019). On amendments to the resolution of the Cabinet of Ministers of Ukraine of May 15, 2019 No. 555 (Decree No. 253, March 29). Retrieved from www.kmu.gov.ua/npas/pro-vnesennya-zmin-do-postanovi-kabinm2903020etu-ministriv-ukrayini-vid-15-travnya-2019-r-555 [in Ukrainian].
24. Paliychuk, T. V., Petrukha, S. V., & Alekseienko, N. M. (2020). Financial Equalization in the Conditions of Reform of the Public Finance Management System. Accounting and Finance (A&F), 2, 81–92. doi.org/10.33146/2307-9878-2020-2(88)-81-92
25. Zapatrina, I. V. (2007). Budgetary mechanism of economic growth. Kyiv: Institute of Socio-Economic Strategies [in Ukrainian].
26. Demyanyshyn, V. (2007). Theoretical principles of budget policy. World of Finance, 1 (10), 19–34 [in Ukrainian].
27. Muzyka-Stefanchuk, O. A. (2011). The purpose of budgetary activity in the context of budgetary policy of the state. Law and Society, 3, 141–146 [in Ukrainian].
28. Verkhovna Rada of Ukraine. (2020). On Amendments to Certain Legislative Acts of Ukraine Aimed at Preventing the Occurrence and Spread of Coronavirus Disease (COVID-19) (Act No. 530-IX, March 17). Retrieved from zakon.rada.gov.ua/laws/show/530-IX [in Ukrainian].
29. Verkhovna Rada of Ukraine. (2020). On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine Concerning Support to Taxpayers for the Period of Implementing Measures Aimed at Preventing the Occurrence and Spread of Coronavirus Disease (COVID-19) (Act No. 533-IX, March 17). Retrieved from zakon.rada.gov.ua/laws/show/533-20 [in Ukrainian].
30. Verkhovna Rada of Ukraine. (2020). On Amendments to Certain Legislative Acts of Ukraine Aimed at Providing Additional Social and Economic Guarantees in Connection with the Spread of Coronavirus (COVID-19) (Act No. 540-IX, March 30). Retrieved from zakon.rada.gov.ua/laws/show/540-20#Text [in Ukrainian].
31. Cabinet of Ministers of Ukraine. (2020). On amendments to the Procedure for providing state support to micro and small businesses (Decree No. 283, April 15). Retrieved from zakon.rada.gov.ua/laws/show/283-2020-%D0%BF#Text [in Ukrainian].
32. Government portal. (2020, June 9). Results of the week according to the results of the program “Affordable loans 5-7-9%”: 51 agreements worth UAH 32.6 million. Retrieved from www.kmu.gov.ua/news/pidsumki-tizhnya-za-rezultatami-programi-dostupni-krediti-5-7-9-51-ugoda-na-sumu-v-326-mln-grn [in Ukrainian].
33. Verkhovna Rada of Ukraine. (2020). On Amendments to the Law of Ukraine “On the State Budget of Ukraine for 2020” (Act No. 553-IX, April 13). Retrieved from zakon.rada.gov.ua/laws/show/553-IX [in Ukrainian].
34. Association of Ukrainian Cities. (2020, April 13). Parliament takes into account AUC proposals on changes to the State Budget 2020. Retrieved from www.auc.org.ua/novyna/parlament-vrahuvav-propozyciyi-amu-shchodo-zmin-do-derzhbyudzhetu-2020 [in Ukrainian].
35. Government portal. (2020, June 18). The Ministry of Finance ensures transparency and efficiency in the use of the Fund's resources to combat COVID-19. Retrieved from mof.gov.ua/uk/news/minfin_zabezpechuie_prozorist_ta_efektivnist_vikoristannia_koshtiv_fondu_dlia_borotbi_z_covid-19-2210 [in Ukrainian].
36. Verkhovna Rada of Ukraine. (2020). On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine Concerning Additional Support to Taxpayers for the Period of Implementing Measures Aimed at Preventing the Occurrence and Spread of Coronavirus Disease (COVID-19) (Act No. 591-IX, May 13). Retrieved from zakon.rada.gov.ua/laws/show/591-20#Text [in Ukrainian].
37. Government portal. (2020, May 27). The government has introduced the Economic Incentive Program to overcome the effects of COVID-19. Retrieved from www.kmu.gov.ua/news/uryad-predstaviv-programu-stimulyuvannya-ekonomiki-dlya-podolannya-naslidkiv-covid-19 [in Ukrainian].
38. Association of Ukrainian Cities. (2020, March 24). Communities oppose the COVID-19 pandemic. Retrieved from auc.org.ua/novyna/gromady-protydiyut-pandemiyi-covid-19-dobirka-3 [in Ukrainian].
39. European Business Association. (2020, May 27). One third of small entrepreneurs lost more than 50% of income. Retrieved from eba.com.ua/tretyna-malyh-pidpryyemtsiv-vtratyly-bilshe-50-dohodiv/ [in Ukrainian].