Public Finance in the Era of COVID-19

The spread of coronavirus infection throughout the world has led to unprecedented effects on the global economy, including on the state of public finances. The need to allocate significant amounts of unplanned budget funds to support the economy in the face of coronavirus restrictions has called for an increase in public debt and the state budget deficit. Nevertheless, this support was unavoidable and had a positive effect on mitigating the economic impact of the pandemic. Despite the fact that the factor and cluster analysis carried out in this paper gave contradictory results, only partially confirming the hypothesis of a positive impact of fiscal stimulus, the calculation of the contributions of public spending to GDP growth in 2019-2020 and their comparison with the volume of fiscal measures showed that with a higher level of fiscal support, the increase in those contributions between two years were higher. In the future, to reduce the likelihood of risks associated with the deterioration of public finances, countries should increase the targeting, flexibility and speed of support measures, as well as follow the structural changes caused by the pandemic.