RULES AND ADJUSTMENT OF FISCAL POLICY

Abstract

The issue of using fiscal rules in budget policy implementation is covered (namely, one of the innovative mechanisms aimed at limiting fiscal imbalances and enhancing positive impacts on economic and social development). An analysis of approaches to determining the content of fiscal rules is carried out. The content’s interpretation is proposed, which reflects not only restrictive, but also corrective functions. The IMF recommendations on application of fiscal rules and supranational regulation of budget policy in the framework of integration associations, as well as their positive and negative impact on the development of Member States, were considered. It is noted that fiscal rules should be sufficiently balanced and flexible for their use in public administration. In order to increase the effectiveness of fiscal rules, significant changes have been made in the EU regarding their composition over the past years. The authors reveal the main objectives of application of fiscal rules, as well as their importance in increasing the budgetary responsibility of the government, particularly, to ensure budgetary discipline, as well as the effectiveness of spending funds. Mechanisms for adjusting the fiscal policies that are introduced in framework of fiscal rules are outlined. Particular attention is paid to measures to continue fiscal consolidation, as well as to support economic growth and financial stability. It is concluded that strengthening rigidity of fiscal rules at the supranational level in the EU hampered flexibility in managing budget resources, hence they require reform. With the use of fiscal rules, the issues of amending the institutional structure of public finance management and deepening the transparency of budget operations have been actualized. It is noted that changes to application of fiscal rules are important enough for Ukraine. The rules used in our state are insufficient and do not fully solve the tasks assigned to them. They require expansion and improvement, as well as introduction of effective implementation mechanisms. To improve the effectiveness of fiscal policy in Ukraine, one should take into account the experience of foreign countries, as well as develop and implement more detailed and flexible fiscal rules.