Fiscal rules and regulation of cyclical fluctuations in the EU

Анотація

The analysis of the application of fiscal rules to regulate cyclical fluctuations in the EU was conducted. It was determined that their use directs public administration bodies to support economic activity, counteract negative trends in economic dynamics, implement mechanisms for eliminating crisis situations, and restrain budget expansion during periods of economic growth. Solving such problems involves complicating the mechanisms for implementing and complying with fiscal rules. It is noted that changes have been made to the institutional structure of ensuring fiscal rules, expanding the consideration of market imperatives in their application, introducing restrictions on administrative functions, and allowing a higher level of decentralization in their application. It contains provisions that fiscal rules should take into account changes in exchange rate indicators, inflation rates, interest rates, the quality of public administration, the characteristics of monetary policy, international operations, and the implementation of subnational budgets. It is envisaged to introduce independent institutions in the Member States to increase transparency and accountability in the application of fiscal rules, develop national medium-term fiscal plans and draft budgets, as well as the dynamics of macroeconomic indicators. Issues are raised regarding the adoption of a course for reforming governance in the EU, which involves simplifying fiscal rules and strengthening investment support. Mechanisms for cyclical balance adjustment are being introduced by taking into account cyclical and discretionary changes, observing the rules for balancing the budget in the face of changes in cyclical dynamics, introducing procedures for overcoming excessive budget deficits, applying preventive adjustment measures, allowing fluctuations in public debt indicators in conditions of recession and economic growth, limiting pro-cyclical regulation measures, and strengthening support for automatic stabilization. It is emphasized that, taking into account the Euro-integration course of our country, the issue of updating fiscal rules (in terms of cyclical regulation) is becoming important for Ukraine.

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