Formation and Use of the System of Financial Incentives for the Development of Partnership between the State and Business

Vasyl Demianyshyn and Bohdana Shuliuk

Economic Studies journal, 2023, issue 3, 88-103

Abstract: The article reveals the domestic and foreign practices of using the main types of financial incentives for public-private partnership: direct financial support, subsidies, guarantees and insurance and government benefits. It was found that concessional lending, provided mainly by international development banks, plays an important role in direct financial support. Such support is especially relevant in the initial stages of project implementation due to the lack of skills and financial resources to achieve effective results. Emphasis is placed on the active participation of public authorities in the lending process, which involves the signing of international agreements and the provision of state or local credit guarantees. Given the low level of development of the financial market in Ukraine, the expediency of using interest rate subsidies is justified, which compensates for the difference between market and preferential rates. It is proved that in the process of state incentives in the form of tax benefits, preferential tariffs for private partners, lease or leasing benefits, public authorities must take into account the annual losses of the state budget from the provision of such benefits. In this regard, to minimize the negative consequences, it is necessary to apply financial incentives, taking into account the impact on the budget and financial and economic activities of economic entities, to introduce an effective system of control over their use. Carrying out a comprehensive analysis of the use of financial incentives in domestic and international practice made it possible to identify problems that hindered their successful implementation in Ukraine.

JEL-codes: G32 G38 H54 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:bas:econst:y:2023:i:3:p:88-103

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