Security of Public Finances under Economic Crisis and Pandemic: Theoretical-Empirical Aspects
Purpose: Determining the interdependence between the economic prosperity and the development of financial balance and debt in the general government sector in the 21st century (in the global, regional (EU) and Poland’s dimensions). Assessment of the impact of the COVID-19 pandemic on public finances. Methodology: Analysis of contemporary concepts and legal system solutions relating to the subjective and objective aspects of public finance and their impact on the economic and financial security of the State. Evaluation of the security of public finance based on the balance and debt formation of the general government institutions, with particular emphasis on periods of economic prosperity downturns and crises. Descriptive correlation of selected indicators of 2000-2001, obtained from the database of the International Monetary Fund, Eurostat, Polish Ministry of Finance, and the Main Statistical Office. Conclusions: In relation to the situation in the 21st century, the fundamental paradigms relating to the interdependence between the cyclical course of the economic prosperity and the situation of public finance have been confirmed. Significant differences were also observed, with respect to individual regions of the world and individual countries. In economic and budgetary policy, too little importance was given to budget balance and public debt in the medium and long term. Practical implications: In the fiscal policy and financial security policy, it is necessary to keep appropriate proportions between the realization of current social needs and shaping the conditions of economic and social development in the medium and long term. The composition of revenue and expenses and public incomes and expenditures should take much more into account the consequences of excessive budget deficits and the burden of public debt, which are intergenerational in nature. The management of the risk of breaching the stability and security of general government finance should become an obligatory subject of current and strategic economic and fiscal policy. Originality/Value: The study is theoretical and empirical. The study clarifies the today’s prevailing legal concepts and interpretations relating to the essence and nature of economic security and the public finance. Descriptive and statistical analyses of macroeconomic determinants of the public finance balance and the public debt in the years 2000-2021 enabled to show the correctness in their formation under conditions of economic collapse and crises, also in relation to the COVID-19 pandemic.