№ 5/2020

Fìnansi Ukr. 2020 (5): 63–83https://doi.org/10.33763/finukr2020.05.063

PUBLIC FINANCE MANAGEMENT

BALAKIN Robert ¹

¹SESE “The Academy of Financial Management”
OrcID ID : https://orcid.org/0000-0001-6431-6635

Institutional provisions for the foundation and implementation of the EU fiscal rules in the process of public finance management

Institutional support for the application of fiscal rules is becoming increasingly important at the supranational and national levels of government in the European Union. The recently enhanced EU fiscal governance framework (through the so-called “six pack” and “two pack” legislative documents on requirements for national budgetary frameworks) broadened the role and formalised the tasks of national fiscal rules in an attempt to foster budgetary discipline and to increase national ownership of EU fiscal rules. This paper examines which economic, institutional and political characteristics of countries affect the likelihood that a numerical fiscal rule will be adopted as part of a current ?scal strategy to limit the level of public deficit and public debt. Countries eager to join the EU showed their commitment to Maastricht targets by incorporating fiscal rules into national laws. The EU member states facing financial difficulties after 2009 sovereign debt crisis were coerced into adopting more stringent fiscal rules to obtain financial support from the EU. Entering into force on January 1, 2013, the “fiscal compact” coerces all 25 ratifying countries to adopt national fiscal rules into national constitution or law within a year. At the fundamental work of IMF experts in 2013, the application of such rules was called one of the important innovations in the field of public financial management. The “new generation” fiscal rules are complicated as they combine the goals of sustainability and flexibility, thus creating new challenges for implementing and monitoring compliance. The number of fiscal rules with political status (coalition agreement, political agreement or political commitment) has decreased, while those with legal status increased. Fiscal rules do matter in government strategy when implementing fiscal reform and that fiscal rules behave similarly to other fiscal reforms. This paper examines which economic, institutional and political characteristics of countries affect the likelihood that a numeral rule will be adopted as part of a ?scal strategy to limit the level of public debt. The article reveals the essential characteristics of inter-institutional cooperation in the process of formation, application and monitoring of the implementation of fiscal rules in the EU. The formation, development and reform of key EU institutions involved in the development and implementation of fiscal rules are analyzed. The principles of medium-term budget planning are studied. The mechanisms of implementation of ways to overcome macroeconomic imbalances are considered. The potential of using the gained experience of the EU member states is determined.

Keywords:public finance, fiscal rules, budget legislation, European semester, EU institutions, medium-term budgetary frameworks

JEL: H61, H87

BALAKIN R. . Institutional provisions for the foundation and implementation of the EU fiscal rules in the process of public finance management / R. . BALAKIN // Фінанси України. - 2020. - № 5. - C. 63-83.

Article original in Ukrainian (pp. 63 - 83)

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