Transforming public finance under the impact of COVID-19

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Devastating effects of the COVID-19 pandemic throughout the world enhance the societal requests for effective healthcare and social protection systems, modern education, and high-quality infrastructure. In Ukraine, education, healthcare, and social services have been chronically deteriorating, and the corona-crisis has further exacerbated their state and increased poverty in the country. The aim of this study is to reveal the main weaknesses of fiscal policy in Ukraine and to outline the prospects of public finance transformations under the impact of the COVID-19. To achieve this aim, the indicators of fiscal policy response to the pandemic in Ukraine are calculated and a comparative analysis of Ukraine’s public finance structure with the international patterns is undertaken. A moderate fiscal impulse and insufficient fiscal rescue package in Ukraine are shown. Moreover, the inconsistencies of anti-crisis fiscal policy instruments with the international best practice are revealed. Summarizing the available theoretical sources and recent applied research allows identifying the prospects of public finances transformations under the impact of the COVID-19 in a global context. Along with the obtained results of Ukraine’s fiscal sector analysis, these form the basis for shaping the fiscal policy response in Ukraine over the medium term. Proposals for public financing of Ukraine’s health care and educational sectors, of the social safety nets and infrastructures under the impact of the pandemic are developed. Offsetting measures from the expenditure and revenue sides of the budget are drawn up for closing the arising fiscal gaps.

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    • Figure 1. Fiscal rescue packages in Ukraine and country groups by main components as of March 2021
    • Figure 2. Cyclically-adjusted primary balances (CAPBs) and fiscal impulses in Ukraine and country groups as a % of the GDP
    • Figure 3. Public expenditure on health care in emerging market and post-socialist economies as a % of the GDP, 2017–2019 average
    • Figure 4. Public expenditure on health care in advanced economies and Ukraine as a % of the GDP, 2017–2019 average
    • Figure 5. Public investments in Ukraine versus emerging market countries and countries average as a % of the GDP in 2019.
    • Table 1. Fiscal policy response to the COVID-19 in the country groups and specific countries as a % of the GDP
    • Conceptualization
      Tetiana Bogdan
    • Formal Analysis
      Tetiana Bogdan
    • Project administration
      Tetiana Bogdan
    • Investigation
      Tetiana Bogdan
    • Validation
      Tetiana Bogdan
    • Writing – original draft
      Tetiana Bogdan
    • Writing – review & editing
      Tetiana Bogdan, Vitalii Lomakovych
    • Data curation
      Vitalii Lomakovych
    • Supervision
      Vitalii Lomakovych
    • Visualization
      Vitalii Lomakovych