№ 4/2016

Fìnansi Ukr. 2016 (4): 7–26

PUBLIC FINANCE MANAGEMENT

BOHDAN Tetiana ¹

¹NGO “Growford Institute”
OrcID ID : https://orcid.org/0000-0002-6133-5336

FISCAL RULES АS AN ESSENTIAL COMPONENT OF ADVANCED FISCAL INSTITUTIONS

The article demonstrates the advisability of applying fiscal rules as an important component of sound fiscal institutions, classifies types of such rules, and summarizes practices of their application across the globe. The author investigates distinctive features of fiscal institution development in the EU that are driven by excessive debt burden and the need for coordination of fiscal policies of sovereign governments in pursuing common monetary policies. Organizational and legal mechanisms of fiscal enforcement are revealed; emphasis is placed on the importance of the inclusion of automatic adjustment actions into the budgetary legislation if limits are about to be reached, as well as the inclusion of institutional restrictions and personal sanctions for civil servants. Proposals for expanding a list of fiscal rules and designing a mechanism for their implementation in Ukraine are substantiated in view of the need to restore debt sustainability and adopt EU standards. The author argues convincingly that it is advisable to introduce the lower limit on the cyclically adjusted balance of the general government and extend the scope of limit to cover debt of this government. The article contains specific proposals for introducing the automatic fiscal policies adjustment mechanism (so-called debt brake) if debt limits are about to be reached.

Keywords:fiscal rules, fiscal institutions, European Union, structural balance, debt sustainability.

JEL: H61, H87.

BOHDAN T. . FISCAL RULES АS AN ESSENTIAL COMPONENT OF ADVANCED FISCAL INSTITUTIONS / T. . BOHDAN // Фінанси України. - 2016. - № 4. - C. 7-26.

Article original in Ukrainian (pp. 7 - 26)

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