Read the text. Single out the main facts.

 

FINANCIAL POLICY. FISCAL SPHERE

Financial policy is a very complex notion covering measures aimed at working out basic concepts, major guidelines, goals and objectives, as well as at creating an adequate financial mechanism and at directing financial activities of a country. Financial policy is based on strategic guidelines which set long-term and medium-term prospects for using financial resources and ensure attainment of major economic targets and solution of goals in the social sphere. At the same time a country pursuing its financial policy sets current goals and objectives connected with mobilization and effective utilization of resources and development of productive forces.

Over the past two decades financial problems have exacerbated the world over. Public debts have reached unsustainable levels in a growing number of industrial countries. This development and its results - higher interest rates, lower investment, and slower growth in living standards - have stimulated efforts by policymakers to find solutions to swollen¹ budget deficits.

Central to these solutions is fiscal policy. Fiscal policy is the policy adopted by a government for raising revenue to meet expenditure.

For countries that now face unsustainable fiscal deficits, financial stabilization represents a top priority.

The answer to financial stabilization lies in the effectiveness of fiscal management - the principles, institutional arrangements, information flows, and techniques that govern the budget process and define fiscal relations between levels of government.

Most western nations operate some degree of fiscal federalism, which is the system of taxation and public expenditure in which revenue-raising powers and control over expenditure are vested in various levels of government² within a nation, ranging from the national government to the smallest unit of local government.

A system of multilevel finance may be justified in terms of allocative efficiency on the grounds that while some public goods, such as national defence, confer benefits on the nation as a whole, the benefits of other goods, such as refuse collection³, are more limited in geographical incidence. It is argued that⁴ by making decisions concerning the provision and financing of the latter type of goods at the level of local rather than national governments, the best or optimal level of provision is more likely to be achieved.⁵

Since the onset of the reforms Ukraine has been in the process of creating a new system of taxation and rules to administer taxes and to distribute those taxes and expenditure responsibilities among levels of government.

Words you need:

swollen¹ роздутий

are vested in various levels of government² які передані різним рівням влади

refuse collection³ збирання сміття

It is argued that⁴ Стверджують, що

is more likely to be achieved⁵ який ймовірно буде досягнутий

 

Exercises

1. Answer these questions:

1. What does the notion "financial policy" mean?

2. Do many countries face financial problems these days? What are they?

3. What is fiscal policy?

4. What fiscal trends have been registered in the industrial countries since the early 1970s?

5. What does the effectiveness of fiscal management imply?

6. What is fiscal federalism?

7. What has been done in Ukraine so far in the field of fiscal relations?

8. What expenditure responsibilities are practiced in Ukraine?

9. What measures should countries facing unsustainable fiscal deficits take?

 

2. Find in the text English equivalents for the following Ukrainian phrases:

Заходи,які направлені на…; створити відповідний механізм; направляти діяльність; забезпечити досягнення основних економічних показників; ефективне використання ресурсів; проблеми загострилися; рівень, який держава не може більше підтримувати; роздутий бюджетний дефіцит; прийняти політику; фінансова стабілізація; керування державним бюджетом; інформаційні потоки; повноваження з збирання прибутків; контроль за витратами.