№ 6/2017

Fìnansi Ukr. 2017 (6): 26–37

BUDGET POLICY

BASHKO Vasyl ¹

¹State Educational and Research Organization “Academy of Financial Management”

Fiscal sustainability and budget rules in Ukraine

Over the past few years, Ukraine has experienced a high rate of increase in the debt burden, which has led to a significant increase in debt risks. In order to analyze the compliance of current fiscal policy with the state of the national economy and the level of debt burden, the article examines the factors of strengthening the latter in Ukraine and the measures necessary to reduce it in the future. With the help of the Hodrick-Prescott filter, the potential volume of gross domestic product is determined, and on its basis – the GDP-gap and the cyclical component of the budget balance. There are arguments in favor of the assertion that the traditional indicator of the budget deficit is not an adequate indicator of the direction of fiscal policy. An assessment of the current fiscal policy by such a criterion as the primary structural balance of the general government sector is given. Using the methodology of the European Commission, S1 fiscal sustainability indicator, characterizing the adequacy of fiscal consolidation measures taken to reduce the debt burden to a safe level, is defined. The calculation of this indicator takes into account the structural impact of population aging on the budget balance. The main obstacles to reducing the debt burden are clarified. It is proposed to amend the Budget Code of Ukraine to tighten fiscal discipline by introducing budget rules that would facilitate the implementation of a balanced fiscal policy and minimize the influence of political factors on fiscal policy, namely: to limit the level of debt financing of the state budget, the amount of state guarantees, state loans in foreign currency; to increase transparency and predictability of fiscal policy.

Keywords:budget rules, fiscal sustainability, debt burden, the primary structural and cyclical balance, population aging.

JEL: Н61, Н62, Н63.

BASHKO V. . Fiscal sustainability and budget rules in Ukraine / V. BASHKO // Фінанси України. - 2017. - № 6. - C. 26-37.

Article original in Ukrainian (pp. 26 - 37)

Download

Downloads :624

1. Yefy`menko, T. І. (2012). Fiscal space for anti-crisis regulation. Ky`yiv: DNNU “Akademіya fіnansovoho upravlіnnya” [in Ukrainian].
2. Yefy`menko, T. І., Gasanov, S. S., Kudryashov, V. P. (2013). Fiscal consolidation in the context of anti-crisis management. Finance of Ukraine, 2, 7–20. Retrieved from nbuv.gov.ua/UJRN/Fu_2013_2_3 [in Ukrainian].
3. Bohdan, І. V. (2015). Fiscal sustainability in Ukraine and assessment of the fiscal gaps up to 2020. Finance of Ukraine, 9, 61–77. Retrieved from nbuv.gov.ua/UJRN/Fu_2015_9_6 [in Ukrainian].
4. Bohdan, T. P., Bohdan, І. V. (2012). Stabilization of fiscal policy and salient features of its application in Ukraine. Finance of Ukraine, 7, 3–16. Retrieved from nbuv.gov.ua/UJRN/Fu_2012_7_2 [in Ukrainian].
5. Bohdan, T. P., Bohdan, І. V. (2014). Fiscal consolidation: lessons from international experience for Ukraine. Finance of Ukraine, 10, 55–72. Retrieved from nbuv.gov.ua/UJRN/Fu_2014_10_7 [in Ukrainian].
6. Gasanov, S. S., Kudryashov, V. P., Balakіn, R. L. (2015). Reforming the Ukrainian fiscal system in the context of European integration processes. Finance of Ukraine, 5, 16–38. Retrieved from finukr.org.ua/docs/FU_15_05_016_uk.pdf [in Ukrainian].
7. Gasanov, S. S., Kudryashov, V. P. (2015). The budget deficit restrictions in conditions of fiscal risks. RFI scientific papers, 3, 5–14. Retrieved from nbuv.gov.ua/UJRN/Npndfi_2015_3_2 [in Ukrainian].
8. Gasanov, S. S., Kudryashov, V. P., Balakіn, R. L. (2012). Formation of the system of fiscal sustainability indicators of the general government. Finance of Ukraine, 9, 18–36. Retrieved from nbuv.gov.ua/UJRN/Fu_2012_9_3 [in Ukrainian].
9. Hladchenko, L. P. (2012). Critical view on the fiscal rules of the Ukrainian government activity. Finance, accounting and audit, 19, 39–46 [in Ukrainian].
10. Dluhopol`s`ky`j, O. V. (2013). Fiscal consolidation as a reaction to the global financial and economic crisis: the specifics of the application of rules and regulations in the EU and Latin American countries. Scientific Proceedings of Ostroh Academy National University, series “Economics”, 23, 26–38 [in Ukrainain].
11. Petrakov, Ya. V. (2016). Assessment of fiscal pulses of tax tools. Finance of Ukraine, 1, 57–79. Retrieved from nbuv.gov.ua/UJRN/Fu_2016_1_6 [in Ukrainian].
12. Radіonova, І. F. (2013). Rules of fiscal policy and government budget constraints. Finance of Ukraine, 4, 58–69. Retrieved from nbuv.gov.ua/UJRN/Fu_2013_4_6 [in Ukrainian].
13. Umans`ky`j, І. І. (2015). Public finance sustainability in the context of European integration processes. Finance of Ukraine, 1, 9–
28. Retrieved from nbuv.gov.ua/UJRN/Fu_2015_1_3 [in Ukraininan].
14. Ministry of Finance of Ukraine. (2017). Memorandum of the Government of Ukraine with the IMF. Retrieved from www.minfin.gov.ua/ uploads/redactor/files/Меморандум%20МВФ_Київ,%202%20березня%202017.pdf [in Ukrainian].
15. European Commission. (2014, November). Adjusting the budget balance for the business cycle: the EU methodology. Retrieved from ec.europa.eu/economy_finance/publications/economic_paper/2014/pdf/ecp536_en.pdf.
16. European Commission. (2012, October 26). Consolidated version of the Treaty on the Functioning of the European Union. Retrieved from eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A12012E%2FTXT.
17. European Commission. (2016, January 25). Fiscal Sustainability Report 2015. Retrieved from ec.europa.eu/economy_finance/publications/eeip/pdf/ip018_en.pdf.