№ 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)

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