PUBLIC SPENDING IN THE ERA OF DIGITAL TECHNOLOGY

The aim of the article is to study transformation of public expenditures in the context of a
global trend of the digital economy development and the information society formation.
Based on the analysis of scientific publications, the fundamental approaches to
understanding public consumption and the system of state purchases have been determined. Public
expenditures are related to the provision of public goods and services to citizens to promote
economic, social and environmental sustainability: electricity and water supply, education,
emergency services, environmental protection, financial services, health care, postal services, public
safety, transport and infrastructure, social security. These services should be accessible to all
members of the community regardless of their income level.
The quantity, quality, level of protection and depth of geographic penetration of public
services varies greatly in different countries due to information asymmetries, high transaction costs
and weak governmental institutions.
Obviously, global automation and digitalization of financial processes require significant
changes in the public spending policy. The main effects of innovative digital paradigm on
transparency and efficiency of state expenditures are determined: reduction of corruption risks,
transaction costs due to scale of operations, promotion of fair competition by increasing the quantity
and quality of participants on both sides, etc.
Considerable attention is paid to the introduction of electronic public procurement system
ProZorro. The expediency of its implementation in national practice of budget expenditures is
substantiated; the principles and procedures of implementation are analyzed. The dynamics of
public procurement in Ukraine is summarized. The statistical indicators confirm the reduction of
price of purchase of goods, works or services by 10-15% of the expected value of a contract. The
volume of savings is proportional to the increase in purchasing volumes due to the scale effect. At the
same time, volumes of sub-procurement continue to dominate over-thresholds: 78% vs. 22% in 2019.
There are cases of intentional understatement by the bidding organizers of the volume of
procurement, divided into several lots within the amount of 200 thousand UAH.
The conclusions on the advantages of electronic system are made, including transparency
and impartiality, stimulation of competition and non-discrimination of bidding participants,
reduction of corruption, the effect of reducing the savings of budget funds for the growth of public
welfare.
The potential risks, threats and shortcomings of the ProZorro system are highlighted,
including a high proportion of non-competitive procedures, a possible hidden conflict of interests of
participants, unreasonable stretching in time of individual procedures, justification of the
procurement procedure for one participant in a dubious "urgent need", unjustified application of a
procurement procedure to one participant due to the falsification of conditions or division of the
procurement subject, discriminatory requirements in documentation of competitive bidding, lack of
skills and experience in implementing the tender procedure in the Prozorro system by local
authorities: rural councils and united territorial communities (OTGs), ineffectiveness of complaints
handling mechanism, etc.