Financial Policy of Ukraine for the Maintenance of Macroeconomic Stability

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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.
Defining financial dollarization: approaches to assessment and categorization
(Kyiv-Mohyla Academy Publishing House, 2023) Slaviuk, Nataliia
Financial dollarization is a phenomenon in which a foreign currency, most often the US dollar, is used for financial transactions and is held as a store of value in place of the national currency. It can be present in various forms, including deposit dollarization (DD), loan dollarization (LD), and portfolio dollarization. The measurement and classification of financial dollarization have been an ongoing topic of interest for economists and policymakers, as high levels of dollarization can negatively affect the financial system's stability and the monetary policy's effectiveness. Various methods of assessing the degree of financial dollarization include ratio analysis, regression analysis, and portfolio optimization models. Additionally, financial dollarization can be classified based on its source, such as natural or induced dollarization, as well as its duration, whether it is short-term or long-term.
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.
Investigating the dynamics and structural characteristics of financial dollarization in Ukraine
(Kyiv-Mohyla Academy Publishing House, 2023) Orlovska, Oleksandra; Slaviuk, Nataliia
The financial sector is a critical component of the economy, and its stability plays a crucial role in the economic development of a country. One of the significant concerns for policymakers is the degree of financial dollarization, particularly in emerging economies. Ukraine is such an economy where the level of dollarization in the banking system has been a persistent issue, impacting its economic stability and growth prospects.
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.
An examination of government debt and analysis of debt sustainability indicators in Ukraine
(Kyiv-Mohyla Academy Publishing House, 2023) Lepekha, Kateryna; Slaviuk, Nataliia
Since the moment of proclaiming the independence of Ukraine in 1991, the management of government debt was made by different methods. The government debt of Ukraine during the period of 1991-2000 was characterized by the higher amount of external borrowings and the increasing of government indebtedness. After the 10 years of independence it was accumulated 14,1 billion USD (10,3 billion USD of external debt and 3,8 billion USD of internal debt). The main goal of usage the government borrowings was the coverage of budget deficit.
Modeling and analysis of financial dollarization phenomena
(Kyiv-Mohyla Academy Publishing House, 2023) Orlovska, Oleksandra; Slaviuk, Nataliia
Financial dollarization, or the use of foreign currency for deposits and loans, is a significant issue for many economies, as it can lead to increased volatility and risks to financial stability. To better understand and analyze the drivers and consequences of dollarization, econometric models are often used. These models offer a systematic approach to understanding the drivers and consequences of dollarization by quantifying the relationships between various economic variables. Econometric models can simulate different scenarios to evaluate the effectiveness of potential policy interventions aimed at reducing dollarization levels, such as changes in monetary policy or regulatory adjustments. So, by leveraging such econometric models, policymakers, researchers, and financial analysts can gain deeper insights into the phenomenon of dollarization, devise strategies to manage its effects, and make informed decisions to enhance economic stability and performance.
The essence of government debt and its management instruments
(Kyiv-Mohyla Academy Publishing House, 2023) Donkohlova, Nataliia; Slaviuk, Nataliia
Government debt is the normal phenomenon of the economic system. All countries of the world use the government borrowings. Though, during the centuries many questions arise regarding the influence of the government debt on the economies of countries. The opinions of scholars have varied significantly, and every economic school has its opinion about the government indebtedness.
Strategies for enhancing the management of Ukraine's public debt
(Kyiv-Mohyla Academy Publishing House, 2023) Nesterenko, Anastasiia; Nataliia, Slaviuk
In the first year of the war, a significant number of measures was already taken in the direction of fundraising, including external grant-based and concessional funding, expanding cooperation with the IMF, and with the governments of various countries. It should be noted, that during the war, debt management had a different character. The emphasis shifted to the volume of financing rather than its terms because the country's survival depended on the amount of funding available. However we should remember, that the government debts should be repaid, and it is important the conditions of borrowings.
De-dollarization policies and prospects for the de-dollarization of the Ukrainian economy
(Kyiv-Mohyla Academy Publishing House, 2023) Slaviuk, Nataliia
De-dollarization policies are becoming increasingly important for many countries as they seek to reduce their dependence on foreign currencies and promote economic stability. While the specific strategies for de-dollarization may vary, it is generally recognized that reducing dollarization can help countries avoid financial crises and currency shocks. However, the success of de-dollarization policies can depend on a range of factors, such as the strength of a country's financial institutions, the degree of public trust in the national currency, and the effectiveness of government policies in promoting alternative investment options. Therefore, it is important for policymakers to carefully consider the various approaches to dedollarization and choose those that are most likely to be successful in their specific economic and political context.
Modeling the cost of government debt
(Kyiv-Mohyla Academy Publishing House, 2023) Lepekha, Kateryna; Slaviuk, Nataliia
To build the model, monthly data from January 2016 to March 2023 were used, including the central bank rate, weighted average yield on government bonds, average rates on loans and deposits, as well as the spread between interest rates on hryvnia and foreign currency deposits. As far as the inflation targeting regime was implemented in 2015, the effect of changes in the base rate started influencing other financial market rates through the transmission mechanism from 2016. Before, the rates were relatively weakly correlated. The first step in determining the model's specification involves checking the time series for stationarity. All-time series, except for the new deposit rate, are stationary in the first differences, while the deposit rate is stationary in the second differences.
Influence of the exchange rate policy on trade competitiveness of the country
(Kyiv-Mohyla Academy Publishing House, 2023) Mordas, Olena; Slaviuk, Nataliia
It is worth starting with the fact that, according to the authors, in the post-war period, the optimal exchange rate policy is to return to a floating currency regime in future. At the beginning of the full-scale invasion in February 2022, the National Bank was forced to fix the course in order to avoid panic and support the economy and financial activity of the country. Such actions had a positive result in the first months of the war. However, in the long term, fixing the exchange rate will lead to deepening of the country's economic problems. Thus, the exchange rate of the dollar is an indicator of the purchasing power of the population, the level of competitiveness of goods of national producers, inflationary expectations, etc. In the conditions of a fixed foreign currency regime, there is an accumulation of economic imbalances that are not reflected in the dynamics of the exchange rate.
The essence and classification of the exchange rate regimes
(Kyiv-Mohyla Academy Publishing House, 2023) Slaviuk, Nataliia
The exchange rate plays a crucial role in the system of national settlements. In Ukraine, the exchange rate is formed on the interbank market. The Central bank can influence the demand and supply of foreign currency through interventions. According to the definition from the Corporate Finance Institute, an exchange rate is a amount at which one currency can be exchanged for another between countries or economic zones. This rate is important to define trade and capital dynamics of the flow and the values of currencies to each other. This rate influences trade conditions and movement of the capital between the countries-trading partners.
Exchange rate of Ukraine: tendencies and problems
(Kyiv-Mohyla Academy Publishing House, 2023) Slaviuk, Nataliia
In this section, the main dynamics of the exchange rate of the Ukrainian national currency, the hryvnia, will be considered. From 1996 to 2014 the exchange rate regime in Ukraine was fixed, from 2014 to March 2022 - floating, and after the start of a full-scale war (24.02.2022) since March 2022 to October 2023 - fixed. In October 2023 National Bank of Ukraine announced change of the exchange rate to the managed floating.
Exploring the relationship between exchange rate dynamics and trade competitiveness of Ukraine
(Kyiv-Mohyla Academy Publishing House, 2023) Mordas, Olena; Slaviuk, Nataliia
The main relationship between exchange rate dynamics and trade competitiveness of Ukraine is represented by Vector Autoregressive model (VAR). This model is based on the reproduction of the dynamics of the time series based on its historical values, and long-term memory of series. Thus, a feature of these models is a high empirical level. Since it was important to investigate the short-term forecast and analyze the relationships between the variables, therefore, the VAR model was chosen. Let's move on to the first stage of building the model - data selection and preparation.
Recommendations for enhancing monetary policy interventions to achieve macroeconomic stability in Ukraine over the medium term
(Kyiv-Mohyla Academy Publishing House, 2023) Nasachenko, Mariia; Primierova, Olena
Monetary policy constitutes a pivotal instrument of economic governance, enabling the regulation of inflation levels, ensuring the stability of the financial system, and supporting sustainable economic growth. However, the implementation of monetary policy amidst macroeconomic instability presents unique characteristics and poses a complex task for central banks and other state authorities. A notable challenge is that macroeconomic instability diminishes the effectiveness of monetary policy. For instance, in a recessionary context, increasing the discount rate does not yield the anticipated effect of reducing inflation and diminishing investment activity. Furthermore, a higher policy key rate can augment the risk of insolvency for households and businesses.
Evaluation of the effectiveness of monetary policy in Ukraine
(Kyiv-Mohyla Academy Publishing House, 2023) Veremiienko, Vitalii; Primierova, Olena
Throughout the war period, the NBU's monetary policy was adaptive, focusing on crisis management and the stabilization of the financial system while laying the groundwork for post-conflict economic recovery. The unique challenges posed by the war necessitated a departure from conventional monetary policy practices, emphasizing the need for flexibility and responsiveness in central banking during times of crisis. Based on the information provided above, Ukraine followed a similar path to other countries when the NBU chose to peg the exchange rate of hryvnia to USD during the onset of the invasion. This move was made by the regulator to maintain stability in economic agents' expectations and thereby ensure macro-financial stability during the war. In addition, the fixed exchange rate played a vital role in controlling inflation.
The monetary policy experience during the war and post-war periods
(Kyiv-Mohyla Academy Publishing House, 2023) Tomilina, Mariia; Primierova, Olena
During a crisis, the objectives of a monetary policy shift to address the unique challenges presented by a military economy. In such an economy, government expenditure rises, and the state's role in the economy becomes more prominent. Furthermore, economic decisions are dominated by security concerns, and the economic multiplier effect is limited due to the destruction caused by war. If we look at the Federal Reserve System of the U.S. when World War II outbroke, the challenges for dealing with a considerable surge in the federal deficit due to increased war expenditures occurred even though the Treasury was depended more on taxes than it was during World War I and even with the rise in tax revenue due to the significant growth in industrial production.
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.

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