DOI: https://doi.org/10.18371/fcaptp.v2i25.136346

FISCAL SUSTAINABILITY ANALYSIS WITHIN MEDIUM TERM IN UKRAINE

R. L. Balakin, O. P. Onufriichuk

Abstract


Unbalanced fiscal policy leads to a crisis of sovereign debt, which subsequently has a long pressure on the economy. The paper studied the sustainability of public finances in the medium term Ukraine using S1 fiscal sustainability indicator. Until 2021 the future growth of the ratio of people of retirement age to employable can reach 45%, which will increase social expenditures, and given the high debt burden, create a risk for public finances. Analysis of the dynamics of pension expenditure growth and predicted demographic indicators allows revealing the impact of the age of population on the sustainability dynamics of public finance in Ukraine. As a result of calculations, the S1 indicator on the 2021 will be 7. 8, indicating a high degree of critical public finance risk. The greatest impact has the component A (5. 091% of GDP), reflecting the impact of the public debt level and the primary structural deficit. Component B (1. 252% of GDP) represents the sum of its annual growth. Component C (1,393% of GDP) determines the necessary adjustments to reach the target level of debt and is characterized by the negative effects of tax policy changes on the fiscal gap level. Component D (0,018% of GDP) has no significant impact on the indicator S1. The factor of stabilization of public finances in the medium term is considered of the optimization of pension expenditures. Further research will consider the development of proposals to increase the sustainability of public finances.


Keywords


public finance system of Ukraine; public finances sustainability; an aging population; the S1 indicator.

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References


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ISSN (print) 2306-4994, ISSN (on-line) 2310-8770