Issue #4 (Volume 14 2025)

Type of the article: Research Article

Abstract
This study analyzes the financial conditions pertaining to South African municipalities that have given rise to disclosures of irregular, unauthorized, fruitless, and wasteful expenditures for the financial periods from 2011/2012 to 2020/2021. The study employed the Poisson regression model to compare annual government expenditure on irregular, unauthorized, fruitless, and wasteful expenditures, based on a content analysis of the National Treasury’s expenditure reports for metropolitan municipalities over a ten–year period. The results highlight a p–value < 0.05 for government expenditure in all eight metropolitan municipalities. The financial year 2013/14 (R3.4 billion) had the highest fruitless and wasteful expenditure total, followed by the financial year 2014/15 (R1.9 billion). Irregular expenditures for the financial years 2016/17 and 2018/19 recorded R12.46 billion and R12.54 billion, respectively. The financial year 2019/20 had the highest unauthorized expenditure (R5.3 billion), as compared to other financial years. The municipalities in South Africa continue to pursue irregular, unauthorized, fruitless, and wasteful expenditures each year, without any apparent indications of valid efforts to end or prevent ongoing occurrences. The seriousness of fruitless and wasteful expenditure totals indicates the magnitude of financial benefits foregone by municipalities, and that can be avoided with proper oversight.

Type of the article: Research Article

Abstract
The paper examines the effects of fiscal decentralization reforms on regional development and governance quality in Kazakhstan. The significance of the study lies in the growing role of fiscal autonomy and local accountability in improving public sector efficiency across emerging economies. The analysis focuses on two major reforms: the introduction of fourth-level local budgets in 2019, which transferred limited financial authority to rural administrations, and the direct election of rural akims (local mayors) between 2021 and 2023, replacing centrally appointed officials. The objective is to assess whether these institutional changes produced measurable macroeconomic effects. Using panel data from 14 regions covering the period 2018–2023, the study applies a difference-in-differences model with regional and temporal fixed effects. The findings indicate that gross regional product (p ≈ 0.09) in reform-affected areas increased by about 12%, while the effects on per capita income (0.8%) and investment (–15%) were statistically insignificant. Subsample analysis shows that the benefits were concentrated in wealthier and administratively stronger regions, suggesting that institutional and fiscal capacity determine how effectively local governments can utilize new powers. The results imply that decentralization can enhance efficiency, transparency, and accountability – but only under “fair game” conditions where regions possess comparable institutional readiness, resources, and access to intergovernmental support. Otherwise, reforms risk widening the gap between advanced and lagging regions. The study thus offers practical insights for policymakers designing fiscal decentralization strategies in transitional economies.

Type of the article: Research Article

Abstract
The effectiveness of public tax reform in improving tax compliance is shaped not only by institutional and administrative factors, but also by social and humanitarian conditions. This study analyzes how morality and patriotism influence tax compliance within the context of public tax reform in Indonesia, and investigates whether political connections moderate these relationships. The sample consists of 401 MSME taxpayers in Java; convenience random sampling techniques were used from July to August 2025. MSMEs are an intriguing subject in tax compliance because they make a large contribution to national GDP, but their level of tax compliance is relatively low. Using a hierarchical linear regression for data analysis, the findings show that morality has a significantly positive effect on tax compliance with a positive beta (0.0471 for non-CTAS and 0.540 for CTAS group), a p-value of 0.000, and an increase in the R2 value (ΔR²: 0.222 for non-CTAS and 0.219 for CTAS group). Patriotism significantly affects tax compliance with a beta of 0.453, a p-value of 0.000, and an increase in the R2 value of 0.105 only in the non-CTAS group. Political connections act more as the main determinant rather than as a moderating variable. The results suggest that public tax reform should not rely solely on technological upgrades; it must also reinforce the moral and civic foundations of taxation. Sustainable compliance can be achieved only when system improvements are accompanied by greater public trust and taxpayer morality.

Acknowledgment
This paper was funded by the Directorate General of Research and Development, Ministry of Higher Education, Science and Technology of the Republic of Indonesia in 2025 with the National Competitive Fundamental Research Grant scheme.

Type of the article: Research Article

Abstract
The relevance of this study derives from the strategic role of international public procurement in Ukraine’s public finance system and its critical importance for post-war reconstruction. The purpose is to assess how the transformation of Ukraine’s procurement through institutional convergence with the EU acquis, a shift toward public-value creation, and readiness for value-oriented recovery affects its effectiveness under wartime conditions. The methodology combines a systemic and comparative approach with historical-institutional analysis and regulatory examination, drawing on more than forty Ukrainian legal acts, EU directives, OECD and Transparency International reports, and procurement data from ProZorro and TED for 2019–2025. Quantitative evidence indicates a marked increase in international donor financing, rising from €1.1 million in 2019 to €20.2 million in 2025, signaling intensified support for reconstruction and institutional alignment. The results indicate that institutional convergence, public value creation, and recovery readiness operate as mutually reinforcing processes. The findings partially confirm all three hypotheses: convergence enhances transparency, competition, and public trust; value transformation is reflected in procurement’s evolution from a procedural function to a mechanism integrating economic, social, and innovation objectives; and readiness for value-driven reconstruction depends on combining accelerated procedures with legality, integrity, and digital oversight. The study concludes that further advancement requires sustained digitalization, professionalization, and continued adherence to EU standards.

Type of the article: Research Article

Abstract
As emphasized by the FATF, IMF, and World Bank, technological readiness and institutional quality are increasingly decisive in shaping AML effectiveness. By mitigating money-laundering vulnerabilities, strengthening AI readiness, and enhancing institutional quality, tax collection efficiency can be improved and fiscal leakages reduced. These improvements expand the fiscal space available for national budgets, strengthening the financial foundations of public administration. The study aims to examine the impact of Government AI Readiness on AML risk, measured by the Basel AML Index, and the moderating role of institutional quality as captured by the Rule of Law Index. An unbalanced panel dataset that covers up to 168 countries for 2020–2024 was analyzed using fixed effects and random effects models, with variable transformations applied where necessary. All estimations were performed in R Studio. The results indicate that a one-point increase in the Government AI Readiness Index is associated with a 0.048–0.040 point reduction in the Basel AML Index, while a one-unit increase in log GDP per capita decreases the Basel AML Index by 0.54–0.34 points, holding other factors constant. The interaction term between AI readiness and the Rule of Law Index is positive (0.067–0.072), confirming that the risk-reducing effect of AI readiness diminishes as institutional quality strengthens. These findings support the hypotheses and confirm the complementary roles of technological preparedness and institutional integrity in shaping AML outcomes. Fixed effects analysis reveals structural vulnerabilities in AML in Gabon and China, while Sweden exhibits the lowest residual risk after accounting for AI readiness and institutional strength.

Acknowledgment
This article was supported by the Ministry of Education and Science of Ukraine (project No. 0123U101945 – National security of Ukraine through prevention of financial fraud and money laundering: war and post-war challenges).

Type of the article: Research Article

Abstract
The Russian invasion of Ukraine has reshaped the functioning of local budgets, creating fiscal challenges for municipalities while simultaneously testing the resilience of the decentralization reform launched in the pre-war period. This study examines the dynamics of local public finance in Ukraine during wartime (2022–2024), focusing on revenue fluctuations, expenditure restructuring, and the emerging role of participatory budgeting as an adaptive tool for community engagement. Using official data from the Ministry of Finance, the State Statistics Service, and the Open Budget Portal, the analysis compares fiscal indicators before and during the full-scale war. Case studies of selected municipalities highlight divergent strategies between frontline and rear communities in balancing defense-related needs, social support for internally displaced persons, and development priorities. Despite reduced revenues and rising security expenditures, local budgets remained stable, largely due to the decentralization framework. In addition to domestic revenues, local budgets increasingly relied on external inflows: international grants, loans, and non-repayable donor assistance. These instruments served as a critical buffer that compensated for the wartime decline in municipal revenues and stabilized key public services. We further examined how these external resources shaped the fiscal resilience of Ukrainian municipalities under wartime conditions. Moreover, participatory budgeting, though often suspended, proved to be a potential mechanism for maintaining public trust and civic involvement under crisis conditions. The study argues that “wartime participatory budgeting” represents a novel phenomenon with implications for both crisis governance and post-war reconstruction.