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Archive 2001

  • 24.07.2001

    Are the budget plans compatible with an acceleration of structural reforms? Proposals for strategic budget reforms

    (Code:Q8)

    The many achievements since 2000 include a dramatic improvement of the solvency of the government, which resulted in a much lower interest burden than anticipated. The regained freedom of action on the part of the government could be used to accelerate structural reforms including, for instance, the elimination of any remaining payment arrears so as to contribute to break the cycle of non-payments and inter-enterprise arrears.

    An acceleration of structural reforms should be visible on both the revenue and expenditure side of the budget and in changes of the underlying administrative rules. When examining budget developments and budget plans this expectation is indeed to some extent met. There are many changes that may be expected to have substantial beneficial effects, perhaps most importantly the introduction of a so-called “program-targeted approach to government expenditures”. But there are also many areas where stronger signs of structural change and structural reforms initiated by the government could be visible in the budget. To show this is one goal of this paper. Another goal is to provide proposals for government decisions in areas where reform progress was very difficult to achieve, not considering here tax reform1, and whose adoption would make structural reforms more visible in the budget. These strategic decisions concern particularly the coordination of budget planning with lower levels of government and budget control, a new organization of the relationship between the government and energy enterprises, especially Naftogas Ukraine, and development of the social support system so that, among others, the income criteria of eligibility would be substituted for the many other criteria of eligibility currently employed.

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    Research spheres:  Real sector
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