Cultural and institutional constraints on Fiscal Space

The study’s relevance lies in its effort to outline fiscal space limits. This is crucial given the concurrent rise in budget duties, sanctions’ limitations, the replacement of foreign by domestic funding, and heightened expectations for trust in fiscal policy mechanisms from citizens and businesses. Institutional barriers and fairness expectations influence the actual ability to raise and reallocate funds, meaning that the theoretical fiscal space isn’t always realistic. This research holds scientific weight by going beyond the standard economic understanding of fiscal space. It introduces a cultural- institutional layer, clarifying variations in how territories and economic agents respond to identical fiscal policies. This study examines the subject of fiscal space as an economic concept, encompassing both the quantitative boundaries of budgetary actions and the cultural underpinnings of sustainable budget choices. The paper aims to substantiate the need for a cultural lens on fiscal space and to demonstrate that, between its estimated capacity and the volumes of financial resources actually available, there are institutional constraints and cultural expectations that determine the admissibility of fiscal measures without undermining trust and financial discipline. To achieve this aim, the following objectives were addressed: the evolution of the concept of fiscal space was traced, and the divergence of its contemporary interpretations was showed —  interpretations that often reduce the concept to a set of isolated indicators, such as the debt-to- GDP ratio and the scale of budget expenditures; it was shown that such an understanding of fiscal space cannot explain the observed behavioral responses to fiscal decisions, which leads to errors in the management of public finances; and it was demonstrated that comparable budgetary parameters of the Khanty- Mansi Autonomous Okrug and the Republic of Sakha (Yakutia) may give rise to different regimes of the reproducibility of fiscal space. By integrating diverse fields, the research uses a methodology on the cultural dichotomy of I-Russia and K-Russia to illuminate the extent of fiscal space. The opposing expectations stemming from this dualism concern the fair allocation of resources, the acceptability of their centralization, and the priorities of fiscal policy. The author suggested a multiple-map to illustrate the complex nature of fiscal space. This map integrates territorial, functional, and institutional aspects, enabling an assessment of fiscal flexibility and the factors ensuring its sustainability. The research’s scientific innovation lies in its approach to fiscal space, viewing it as a dynamic, complex system shaped by culture and institutions. The author concludes that fiscal expansion hinges on aligning financial factors with governance structures, trust levels, and fair resource distribution ideas.

1. Lorenzo P., Lacey E. A. A Primer on restoring fiscal space and sustainability. Washington (DS): World Bank; 2025. URL: https://documents1.worldbank.org/curated/en/099062724151525291/pdf/P1778861af1af8068191-6110829a341e1c1.pdf (accessed on 26.02.2026).

2. Heller P. S. Understanding fiscal space. IMF Policy Discussion Paper. Washington, DC: International Monetary Fund; 2005.

3. Ostry J. D., Ghosh A. R., Kim J. I., Qureshi M. S. Fiscal Space. IMF Staff Position Note. Washington, DC: International Monetary Fund; 2010. DOI: 10.5089/9781455228010.004.

4. Tandon А., Cashin С. Aassesing public expenditure on health from a fiscal space perspective. Washington (DS): World Bank; 2010. URL: https://openknowledge.worldbank.org/server/api/core/bitstreams/daaca2b2-a6d1-5ab9-82e0-e5be7c5ebbb7/content (accessed on 20.02.2026).

5. Abu- Ismai K., Roy R. and Almeida R. R. Is there fiscal space for financing an arab development transformation? Working Paper number 88. Brasilia (DF): International Policy Centre for Inclusive Growth, UNDP. URL: https://repositorio.ipea.gov.br/server/api/core/bitstreams/4f287282-dd82-4115-a021-ba61164f85ad/content (accessed on 20.02.2026).

6. Oppel A., Mcnabb K., Gupta S., Brown H., Plant M., Camps Adrogue B. Global financial architecture reform and the fiscal space of developing countries. Brussels: European Parliament, Directorate- General for External Policies, Policy Department for External Relations; 2024. URL: https://www.europarl.europa.eu/cmsdata/287253/Fiscal%20space%20developing%20countries.pdf (accessed on 25.02.2026).

7. Kakaulina M. O., Demidova S. E. (2025) Comparison of fiscal policy cyclicity models in foreign countries. Finance: Theory and Practice. 2025;(2):228-238. (In Russ.).

8. Dorofeev M. L. (2024) Fiscal multipliers and the level of income inequality (based on the OECD Countries, Russia, and China). Voprosy Ekonomiki = Questions of economics. 2024;(4):111-126. (In Russ.). DOI: 10.32609/0042-8736-2024-4-111-126

9. Magnitsky N. D., Tyurina Yu. G. Conceptual issues of managing non-tax revenues of budgets of public-law entities. Finance: Theory and Practice. 2025;29(3):35-44. (In Russ.). DOI: 10.26794/2587-5671-2025-29-3-35-44

10. Kireeva E. F., Karaev A. K. Estimating fiscal convergence of the Eurasian Economic Union countries using the multivariate ellipsoid method. Journal of Applied Economic Research. 2025;24(1):34-58. (In Russ.). DOI: 10.15826/vestnik.2025.24.1.002

11. Karaev A. K., Pinskaya M. R., Melnichuk M. V. Short-term forecasting of budget tax revenues: Applied methods and their relevance for Russia. Vestnik Moskovskogo universiteta. Seriya 6: Ekonomika = Bulletin of Moscow University. Series 6: Economics.2025;60(2):3-19. (In Russ.). DOI: 10.55959/MSU0130-0105-6-60-2-1

12. Auzan A. A. Individualism and collectivism: two cultural cores of Russia. Filosofskie nauki = Philosophical sciences. 2024;67(4):11-27. (In Russ.). DOI: 10.30727/0235-1188-2024-67-4-11-26

13. Timofeeva O. I. On the concept of budget openness (Transparency). Vestnik instituta ekonomiki Rossijskoj akademii nauk = Bulletin of the Institute of Economics of the Russian Academy of Sciences. 2025;(2):71-92. (In Russ.). DOI: 10.52180/2073-6487_2025_2_71_92

14. Khrapov S. A., Kryuchkova S. E. National identity of modern Russia: Search for a model and risks of constructive formation. Voprosy filosofii = Questions of Philosophy. 2025;(2):5-15. (In Russ.). DOI: 10.21146/0042-8744-2025-2-5-15

15. Kireeva E. F. Institutional character of fiscal space. Bankovskie uslugi = Banking Services. 2025;(1):12-21. (In Russ.). DOI: 10.36992/2075-1915_2025_1_12

16. Kamyshova A. B., Mierin’ L.A., Myshkina N. V. Approaches to state regulation of the structure of the regional sector of the Russian economy in the new geopolitical conditions. Finansy, den’gi, investicii = Finance, Money, Investments. 2024;(2):3-9. (In Russ.).

17. Matveychev O. A. Kant and Akim Volynsky’s “New Brain Line”. Vestnik Sankt- Peterburgskogo universiteta. Filosofiya i konfliktologiya=Bulletin of St. Petersburg University. Philosophy and Conflictology. 2024;40(2):201-210. (In Russ.). DOI:10.21638/spbu17.2024.202