№ 4/2017

Fìnansi Ukr. 2017 (4): 7–21https://doi.org/10.33763/finukr2017.04.007

PUBLIC FINANCE MANAGEMENT

LUNINA Inna ¹

¹Institute for Economics and Forecasting of NAS of Ukraine
OrcID ID : https://orcid.org/0000-0003-3812-4802

Risks of the long-term solvency of the state

Predictability of the consolidation and evolution of public finances is an important precondition for economic growth and social development of the country. This article investigates the problematic aspects of the definition of “public finance risks” and considers approaches to determining their constituents, particularly budgetary risks. The causes and macroeconomic factors for deviations of actual budgetary figures against planned ones are revealed. The shortcomings of the established approaches to risk identification based on traditional current budget indicators are noted. The author substantiates the expediency of applying a new integrated approach to fiscal risk management, which is to determine the consequences of decisions and measures of the state socio-economic policy, causing an increase in its potential financial liabilities and possible expenditure in the current and future periods. The international experience of assessing fiscal shocks and their adverse impact on public finances is under consideration in the article. A matrix of risks for public finances of Ukraine, covering explicit and implicit sources for the establishment of direct and contingent liabilities of the government, is developed. A quantitative assessment of the current budgetary risks of 2008-2015 and certain long-term public finance risks is done. It is established that a broad view of socio-economic policy and its budgetary implications is a prerequisite for preventing unexpected changes in public expenditure and reducing the state’s solvency. It is proved that to ensure the long-term solvency of the state, it is necessary to supplement a traditional budget analysis with the comprehensive consideration of public finance risks, to develop plans for their consolidation and regulate indicators of the process and criteria for its success in the Budget Code of Ukraine.

Keywords:risks of public finances, risk matrix, financial liability of the state, solvency of the state.

JEL: G18, H50, H60, H63

Lunina I. . Risks of the long-term solvency of the state / I. . Lunina // Фінанси України. - 2017. - № 4. - C. 7-21.

Article original in Ukrainian (pp. 7 - 21)

Download

Downloads :835

1.Polackova, H. (1998). Contingent Liabilities - a threat to fiscal stability. World Bank, Premnotes, 9.

2. Zahorodnij, A. H., Voznyuk, H. L. (2007). Financial and economic dictionary. Ky'yiv: Znannya [in Ukrainian].

3. Mocherny'j, S. V. (Ed.). (2002). Economic encyclopedia (Vol. 3). Ky'yiv: VC "Akademiya" [in Ukrainian].

4. Fedorov, E. (2007). Practical application of the Value-at-Risk method for estimating and predicting market risk. Financial risks, 4 (49), 67-73 [in Russian].

5. Fedosov, V. M., Yurij, S. I. (Eds.). (2012). Budgetary system. Ky'yiv: CUL; Ternopil': Ekonomichna dumka [in Ukrainian].

6.Hranaturov, V. M., Yasenova, I. B. (2007). Tax risk of the state: definition and classification. Finance of Ukraine, 10, 86-95 [in Ukrainian].

7. Ony'shko, S. V., Shvabij, K. I., & Novy'c'ka, N. V. (2007). Quantification of tax and fiscal risks. Economy and forecasting, 3, 32.-42 [in Ukrainian].

8. Vitlins'ky'j, V. V., Ty'mchenko, O. M. (2007). Sources and types of tax risks: their interconnection. Finance of Ukraine, 3, 132-139 [in Ukrainian].

9. Vovchak, O. D., Kemenyash, I. H. (2008). Tax risks in the system of managing the economic safety of Ukraine's entrepreneurial structures. Finance of Ukraine, 11, 41-46 [in Ukrainian].

10. Nekhaj, V. A., Hnedina, K. V. (2015). Tax risks: content and methods of reduction. Scientific bulletin of Polissia, 2 (2), 134-140 [in Ukrainian].

11. Lebedzevy'ch, Ya. V., Kuz'mins'ka, T. S. (2013). Basic methods of analysis of tax risks in decision-making. Bulletin of Zhytomyr State Technological University, 2, 252-260 [in Ukrainian].

12. Ivanov, Yu. B., Ty'shhenko, O. M., & Davy'skiba, K. V. (2006). The problems of fiscal management and planning of tax payments. Kharkiv: KhNEU [in Ukrainian].

13. Ivany'c'ka, O. M., Koshhuk, T. V. (2017). Fiscal risks management related to activities of state enterprises in Ukraine. Finance of Ukraine, 2, 64-80 [in Ukrainain].
doi.org/10.33763/finukr2017.02.064

14. Cabinet of Ministers of Ukraine. (2012). About approval of the control procedure of risks associated with public (local) debt management (Decree No. 815, August 8). Retrieved from zakon0.rada.gov.ua/laws/show/815-2012-%D0% BF [in Ukrainian].

15. Skry'pny'chenko, M. I. (Ed.). (2012). Macroeconomic instability factors in the system of economic development models. Ky'yiv: Insty'tut ekonomiky' ta prohnozuvannya [in Ukrainian].

16. Bager, G., Pulay, G. (2008). Analysis of the macroeconomic risks of budgeting. Public Finances, 3, 391-408.

17. Schick, A. (2002). Budgeting for Fiscal Risk. In Polackova, H., Schick, A., van Wijnbergen, S. Government at Risk. Contingent liabilities and fiscal risk. Washington, D. C.: The World Bank.

18. International Monetary Fund. (2001). Manual on government finance statistics. Retrieved from www.imf.org/external/pubs/ft/gfs/manual/rus/pdf/allr.pdf [in Russian].

19. INTOSAI. (2003, February). Haushaltsrisiken: Auswirkungen auf die Schuldenverwaltung und die Rolle der ORKB [in German].

20. Cebotari, A. (Ed.). (2008). Fiscal risks: sources, disclosure, and management. Washington, D. C.: IMF.

21. Honohan, P., Klingebiel, D. (2000). Controlling the Fiscal Costs of Banking Crises. The World Bank Development Research Group Policy Research Working Paper, 2441.
doi.org/10.1596/1813-9450-2441

22. Polackova, H., Shatalov, S., & Zlaoui, L. (2000). Managing Fiscal Risk in Bulgaria. Working Paper. World Bank Europe and Central Asia Region Poverty Reduction and Economic Management Sector Unit, 2282, 6-14.

23. Analyzing and Managing Fiscal Risks - Best Practices. (2016, June). IMF Policy Paper.

24. Polackova, H. (1998, October). Government contingent liabilities: A hidden risk to fiscal stability. Working Paper. The World Bank Europe and Central Asia Poverty Reduction and Economic Management Sector Unit.
doi.org/10.1596/1813-9450-1989

25. The World Bank. (2015). Public-private partnership in the context of the management of public investments in Ukraine: assessment. Washington. Retrieved from documents.worldbank.org/curated/en/495131467995051959/pdf/106249-UKRANIAN-WP-P153935-PUBLIC-Public-Investment-UKR-Web-cover.pdf [in Ukrainian].

26. Boll, L., Li, D., & Lungani, P. (2011). Painful remedy. Finance and Development, 48, 3, 20-23 [in Russian].

27. OECD. (1999). The OECD Survey of Budgeting Developments - Country Responses, 20th Annual Meeting of Senior Budget Officials. Paris.

28. OECD. (2013). Strengthening Budget Institutions in OECD Countries. Results of the 2012 OECD Budget Practices and Procedures Survey, 34th Annual Meeting of OECD Senior Budget Officials. Paris.