№ 2/2016

Fìnansi Ukr. 2016 (2): 49–63

FINANCIAL AND ECONOMIC INTEGRATION OF UKRAINE INTO THE EU

BULANA Oleksandra

The reform of state aid to businesses in the context of European Union — Ukraine Association Agreement

EU-Ukraine Association Agreement contains a number of commitments for Ukraine to reform the state aid to businesses. The article aims to assess the impact of implementation of the relevant provisions of the Agreement on the economy of Ukraine. It is estimated the volumes of the state aid in Ukraine (% to GDP), based on the EU approach to the definition of state aid. It is considered the list of measures that create preferences for a limited number of enterprises or industries and have a distortion effect on competition. Completed calculations indicate that the Ukrainian volumes of state aid (% to GDP) significantly exceed those in the EU. Excessive amounts of state expenditures for aid to businesses is not the only problem of Ukraine’s state aid policy. There are also a number of issues concerning the decision-making processes and control over the use of public funds. Extensive aid to loss-making state companies is especially burdensome for public finance. Despite the significant amounts of financial support from the state provided for a number of years, these companies still have not become competitive. It is concluded that implementation of the EU rules on state aid in Ukraine implies reduction of volumes of aid, increased transparency of public finance, restructuring of loss-making state companies and equal competitive environment for business.

Keywords:state aid, EU-Ukraine Association Agreement, horizontal state aid, selective state aid.

JEL: E60, E61, F21

BULANA O. . The reform of state aid to businesses in the context of European Union — Ukraine Association Agreement / O. . BULANA // Фінанси України. - 2016. - № 2. - C. 49-63.

Article original in Ukrainian (pp. 49 - 63)

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