Financial Policy of Ukraine for the Maintenance of Macroeconomic Stability

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Analysis of the expenditures of the state budget of Ukraine
(Kyiv-Mohyla Academy Publishing House, 2023) Lukianenko, Iryna
For many years, the budget system of Ukraine has been characterized by instability and constant reforms, budget deficits, a significant amount of national debt, and imperfections in intergovernmental relations (Figure 5.1). In 2014-2015, after a major budget crisis triggered by military actions in the east, reforms in the budgetary system and relations began.
Assessment of the sources and magnitude of income in Ukraine's state budget
(Kyiv-Mohyla Academy Publishing House, 2023) Lukianenko, Iryna
It is important to pay attention, that in 2022 the income of the state budget amounted to 115,1 % of the approved by the Parliament in the beginning of the year, the excess amounted to 234 billion UAH [12]. In the conditions of war government was searching for new income. At the same time, the amount of the biggest article of income- tax income in comparison to 2021 decreased for 14,21%. If the part of tax income in the general structure of the budget amounted to 85% in 2021, so in 2022 it accounted only 53%.
Budget deficit management and budget-balancing strategies
(Kyiv-Mohyla Academy Publishing House, 2023) Lukianenko, Iryna
An important element of fiscal policy is the timely response to economic cycles, the prevention of economic crises, adherence to maximum limits for the budget deficit and public debt. Issues of medium-term and strategic budget planning hold priority importance. Formulating a long-term strategy and identifying target areas is crucial. However, given the limited budget funds, it is necessary to determine the priority areas of financing to ensure the functions of the state and the socioeconomic development of the country [4]. Managing a budget deficit and developing strategies to balance a budget are crucial aspects of fiscal policy, particularly for governments aiming to maintain financial stability and promote economic growth.
Conclusions
(Kyiv-Mohyla Academy Publishing House, 2023) Lukianenko, Iryna
In light of the profound transformations occurring in the Ukrainian economy, this study of financial policy, the analysis of individual instruments, and the effectiveness of their implementation become particularly relevant. The thorough analysis and systematic use of econometric tools presented in this work define the key aspects and trends of contemporary state regulation of socio-economic processes. Therefore, the main directions and prospects for forming an effective financial policy strategy aimed at achieving macroeconomic stability and sustainable economic growth are outlined. Below are conclusions that distinguish the main vectors of this study and define strategic recommendations for the development of Ukraine's financial policy.
Conclusions to chapter 1
(Kyiv-Mohyla Academy Publishing House, 2023) Lukianenko, Iryna
In the proposed study, the theoretical and methodological foundations of macroeconomic stability and its crucial component - financial stability - are examined. A list of endogenous and exogenous factors influencing financial stability is provided, parameters of macroeconomic and macro-financial stability are determined, and benchmarks for effective management of the national economy are substantiated. The study also explores the activities of the Financial Stability Council of Ukraine, the "Strategy for the Development of the Financial Sector of Ukraine," and the proposed "Post-War Macroeconomic Architecture for Ukraine."
Conclusions to chapter 2
(Kyiv-Mohyla Academy Publishing House, 2023) Lukianenko, Iryna
It has been determined that in case of favorable and stable macroeconomic conditions, a moderate liberalization of financial markets and return to an inflation targeting regime and a floating exchange rate are important. The necessity of continuing technological development of financial services as a prerequisite for further expansion of financial inclusion and ensuring cybersecurity is also substantiated. Important measures also include the restoration of financial infrastructure in de-occupied territories, ensuring accessibility and inclusiveness of the financial sector. Additionally, for Ukraine, the development of financial markets is a crucial task, as they play a significant role in determining the level of interest rates and credit conditions, which affects the size of investments, expenditures of enterprises and citizens, and overall economic development of the country. The development of financial markets entails creating effective financial instruments, such as stocks, bonds, derivatives, and others, allowing for the attraction of more capital and creating favorable conditions for doing business in Ukraine. Furthermore, the creation of financial instruments will help reduce risk for investors and enable the attraction of funds for long-term investments in Ukraine. Directions for the development of financial markets include the advancement of the banking system, securities market, stock market, insurance market, pension market, and derivatives market. Successful development of financial markets in Ukraine can enhance the effectiveness of monetary policy and positively impact the development of the real sector of the economy.
Conclusions to chapter 3
(Kyiv-Mohyla Academy Publishing House, 2023) Lukianenko, Iryna
Any crisis has a negative impact on the strength of the national currency. Therefore, a balanced exchange rate policy ensures the supporting effect of the national currency, and in particular, the position of national producers (export and import facilities). Currency interventions are a crucial means to influence the volatility of the foreign exchange market. There exist different types of currency regulation regimes, each with its own set of pros and cons. Selecting the appropriate currency regime involves considering various factors such as the characteristics of the domestic financial market, the level of economic growth, and the country's overall development. In times of crisis such as during a war, fixing the exchange rate is often the most appropriate solution.
Conclusions to chapter 4
(Kyiv-Mohyla Academy Publishing House, 2023) Lukianenko, Iryna
In this Chapter analysis on financial dollarization in Ukraine was conducted. The overall dollarization of economy is difficult to measure due to limited control over cash transactions, it can be classified also between financial dollarization and real dollarization, which covers the use of foreign currencies by the real sector in forms of wages nominated in foreign currency, rents, and consumption, etc. Deposit and loan dollarization serves as a pretty accurate proxy for analysis of financial dollarization. Conducted analysis of the available literature revealed high emphasis on deposit dollarization, especially in terms of undeveloped financial markets.
Conclusions to chapter 5
(Kyiv-Mohyla Academy Publishing House, 2023) Lukianenko, Iryna
This Chapter analyses the influence of full-scale invasion on the budget system of Ukraine. The state budget is a fundamental tool that enables governments to allocate financial resources strategically across various sectors for social and economic development. Through the state budget, a government can allocate resources to key areas such as healthcare, education, infrastructure, defense, and social welfare. This prioritization reflects the government's policy objectives and socio-economic goals.
Conclusions to chapter 6
(Kyiv-Mohyla Academy Publishing House, 2023) Lukianenko, Iryna
Effective usage of borrowed resources can become a factor in economic growth, while unwarranted increases in debt levels may have a destabilizing effect on the economy and create risks to a country's economic security. In the absence of a comprehensive system for regulating the formation, repayment, and servicing of public debt at the legislative level, and without clearly defined directions of debt policy, recent years in Ukraine have seen a rapid increase in the volumes of gross public debt. Consequently, this situation poses a threat to the economic and financial security of our country. The volumes of public borrowings, their dynamics, and structure directly or indirectly influence all spheres of the state's financial and economic activities, which is why statistical analysis of the structure and volumes of the country's debt burden acquires special importance in the process of managing financial security. One of the main summarizing indicators of the state of indebtedness is the ratio of the total volume of public debt to Gross Domestic Product (GDP). This ratio enables an assessment of the level of debt burden on the state's economy and also reflects its ability to settle with creditors based on its economic potential.
Financial Policy of Ukraine for the Maintenance of Macroeconomic Stability : the collective monograph
(Kyiv-Mohyla Academy Publishing House, 2023) Lukianenko, Iryna; Galytska, Eleonora; Primierova, Olena; Slaviuk, Nataliia; Nasachenko, Mariia; Donkoglova, Nataliia; Lepekha, Kateryna; Mordas, Olena; Orlovska, Oleksandra; Tomilina, Mariia; Nesterenko, Anastasiia; Veremiienko, Vitalii; Lukianenko, Iryna
The development of theoretical and methodological foundations in the field of state financial policy has been the subject of numerous works by both domestic and foreign scholars. Despite this, in contemporary conditions, the issues of state regulation require further resolution. The relevance of this research is strengthened by the complex socio-economic situation arising in Ukraine since the onset of a full-scale invasion, the growth of external and internal risks, social and financial instability, the increasing outflow of skilled labor, and the economic decline, significantly limiting the application of classic macroeconomic regulation tools. The significance and complexity of these problems, both in theoretical and practical aspects, underline the importance and value of research in this direction, which should make a substantial scientific and practical contribution to enhancing the effectiveness of management decisions to ensure the macroeconomic stability of the state. Accordingly, the research aims to develop theoretical and methodological provision and contemporary economic-mathematical tools to form a financial policy strategy, which has the goal to ensure economic stability, to increase the competitiveness of the national economy, and restore economic growth in Ukraine. For students of economic specialties, graduate students, teachers, civil servants, specialists and everyone who seeks to master the theoretical and practical aspects of building dynamic macroeconomic and simulation models for the formation of medium-term and longterm economic policy of the state, aimed at achieving macroeconomic stability even under unpredictable conditions of rapid development of external and internal crisis phenomena.
The implementation of financial policy as an instrument of state regulation
(Kyiv-Mohyla Academy Publishing House, 2023) Galytska, Eleonora; Lukianenko, Iryna
In the current stage, under martial law conditions, achieving sustainable economic development is unfeasible without comprehensive economic regulation and an effective state financial policy. Precisely, effective state regulation of the economy, its targeted impact in the economic management sphere with the objective of directing economic processes in line with the goals, tasks, and interests of the country, is a key factor in macroeconomic shifts needed by the country. The concept of "state economic regulation" should take into account the unstable state of the country's modern economy, its dynamism, instability, and align with the changing directions, aims, and objectives of the state's economic policy. Hence, this mechanism must be unique, adapted to any changes in directions, goals, and objectives of the state's economic policy.
Introduction
(Kyiv-Mohyla Academy Publishing House, 2023) Lukianenko, Iryna
The financial policy of a state is a key tool for economic governance, which has the aim to supervise the economic processes and support of sustainable economic growth. However, macroeconomic instability presents significant obstacles to the effective implementation of financial policy, influencing its development, execution, and results. For instance, high inflation adversely impacts the efficiency of monetary tools, making control over the money supply and interest rates more complicated. Current reductions in state revenue and increase in budget deficits limit the ability to fund economic programs. Moreover, high levels of volatility heighten risks for investors, leading to decreased investments and complicating the execution of longterm financial strategies.
Prioritizing macroeconomic stability within Ukraine's financial policy under contemporary conditions
(Kyiv-Mohyla Academy Publishing House, 2023) Donkohlova, Nataliia; Lukianenko, Iryna
Ensuring financial stability and minimizing vulnerability to external negative influences is a necessary tool for the sustainable development of national economic systems and their sustained growth. Currently, there are significant threats of macroeconomic imbalances due to the presence of convergent and divergent connections in the economic space. Global and internal economic changes, as well as financial market instability, impact aspects such as investment levels, employment, income distribution, and overall economic activity. The study of financial stability becomes increasingly important in the context of the complex socio-economic situation that has arisen in Ukraine since the onset of a full-scale invasion, with the increase of external and internal risks, social and financial instability, the outflow of skilled labor, and the slowing of economic growth, significantly limiting the application of classical tools of macroeconomic regulation. Consequently, the research, development, and implementation of appropriate mechanisms and algorithms to assess the impact of these factors become crucial for timely coordination and synchronization of state policy aimed at achieving macroeconomic stability in the context of intensifying globalization processes. Timely identification of negative trends in the qualitative and quantitative parameters of macroeconomic stability allows a prompt response to internal and external challenges, reducing the high level of uncertainty and negative consequences.
The role of state regulation in fostering sustainable economic growth
(Kyiv-Mohyla Academy Publishing House, 2023) Galytska, Eleonora; Lukianenko, Iryna
The issue of financial support for comprehensive economic, social, and ecological development has been at the forefront of global community attention for at least the last 20 years. Concurrently, the challenges of ensuring sustainable development are compounded by factors such as climate change, deteriorating economic and social dynamics, the repercussions of the COVID-19 pandemic, and Russia's war against Ukraine, which has already inflicted significant environmental damage.
Understanding the essence of the state budget and budget deficit
(Kyiv-Mohyla Academy Publishing House, 2023) Galytska, Eleonora; Nesterenko, Anastasiia; Lukianenko, Iryna
State budget plays an important role in the state finances. It ensures distribution of financial resources inside the country, performs a social function, is the source of financing defense, security of the country, development of important for the society spheres, such as education, medical care, public order, culture, and administrative services.

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