Fiscal rules: lessons for Ukraine
Abstract
The purpose of this article is to assess the systematic implementation of fiscal rules in Ukraine and to provide recommendations for their adjustment. It is proved that the introduction of fiscal rules should be carried out in a comprehensive manner: both quantitative restrictions and security measures of an individual and general nature should be regulated by law. Ukraine has introduced two fiscal rules at the legislative level - debt and budget balancing - and formally prescribed all the security conditions recommended by international experience. The peculiarities of the application of fiscal rules in Ukraine include: vagueness and insufficient detail of the safeguard conditions in the budget legislation; lack of regulation of the activities of an independent body responsible for monitoring compliance with fiscal rules (fiscal council); and insufficient coverage of information related to fiscal rules and lack of systematic publication. Recommendations for improving the fiscal rules in Ukraine include the following: a more detailed description of the mechanism of correction in case of exceeding the budgetary indicators of the established limits; specifying the requirements for activating the procedure for derogation from quantitative restrictions to prevent possible abuse; increasing the level of transparency of information on the application of fiscal rules. Regarding the requirement to establish a fiscal council: there are two possible ways for Ukraine to implement this recommendation: the first is to assign the functions of monitoring the implementation of all fiscal rules to the Accounting Chamber of Ukraine, which has the necessary level of independence and partially performs this function; the second is to take into account the difference in the role of the state auditor and the fiscal council, which should primarily contribute to the formation of fiscal policy, another option is to introduce either a new authority or a separate institution with guarantees of operational independence.
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References
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