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The Peculiarities of Local Budgets Balance Management in the Context of Financial Instability

Authors: Vera V. LEVINA Cand. Sc. (Econ.), Associate Prof. of Finance and Management Dept.

Abstract: The article discusses the problems that arise when managing the balance of local budgets due to the instability of the financial system. The directions for improving intergovernmental regulation at regional level which take into account topicality of the problem of soft budget constraints are established. It is stated that the main instruments for regulating municipal budgets’ balance include budget loans and grants to support measures of balancing local budgets. Based on the analysis of legislation and practical experience the peculiarities of granting budget loans at regional level are determined. The paper provides the author’s methodology for managing local budgets’ balance that allows using a differentiated approach to municipalities depending on their initial fiscal capacity and responsiveness to crisis changes in the state financial system in order to ensure the stability of the municipal budget policy.

Keywords: MUNICIPAL BUDGET, INTERGOVERNMENTAL REGULATION, TRANSFERS, GRANTS, SOFT BUDGET CONSTRAINTS