Instituto de Estudios Políticos y Derecho Público "Dr. Humberto J. La Roche"
de la Facultad de Ciencias Jurídicas y Políticas de la Universidad del Zulia
Maracaibo, Venezuela
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Vol. 41, Nº 77 (2023), 437-454
IEPDP-Facultad de Ciencias Jurídicas y Políticas - LUZ
Measures to prevent state default
under martial law
DOI: https://doi.org/10.46398/cuestpol.4177.29
Inga Perestyuk *
Olena Berezovska-Chmil **
Yevhen Bilousov ***
Ivan Yakoviyk ****
Ihor Zhukov *****
Abstract
Debt security is especially relevant for developing countries,
because they recover from economic shocks longer than developed
countries, and the consequences of such shocks are catastrophic
for them. Default is one of the most undesirable consequences
of defaulting on a debt security, which determines the relevance
of the topic under investigation. The aim of the study was to
assess the current condition and state policy on the provision of
debt security in Ukraine under martial law and to generalize measures to
increase debt security and minimize the risk of default. The article used
the following methods: economic statistical analysis, structural system
approach and abstract logical method. The study found that, with the onset
of a large-scale invasion, the share of public debt in Ukraine exceeded
the recommended value by about 47 % and increased by more than 58 %
compared to 2021. The conclusions of the research propose measures to
increase debt security, divided into domestic and international measures.
Keywords: public debt; debt security; debt policy; debt strategy; public
administration.
* PhD., of Sciences in Public Administration, Associate professor, Department of Public Administration
and Administration, Institute for Continuing Education, National Aviation University, 03058, Kyiv,
Ukraine. ORCID ID: https://orcid.org/0000-0003-1692-9247
** PhD., of Political Science, Associate Professor, Department of Political Institutions and Processes,
Faculty of History, Political Science and International Relations, Vasyl Stefanyk Precarpathian National
University, 76018, Ivano-Frankivsk, Ukraine. ORCID ID: https://orcid.org/0000-0002-3395-9141
*** Doctor of Law, Professor, Department of European Union Law, Yaroslav Mudryi National Law
University, 61024, Kharkiv, Ukraine. ORCID ID: https://orcid.org/0000-0003-3998-9947
**** Doctor of Law, Professor, Department of European Union Law, Yaroslav Mudryi National Law
University, 61024, Kharkiv, Ukraine. ORCID ID: https://orcid.org/0000-0002-8070-1645
***** PhD., of Legal Sciences, Associate professor, Department of European Union Law, Yaroslav Mudryi
National Law University, 61024, Kharkiv, Ukraine. ORCID ID: https://orcid.org/0000-0003-1374-
196X
438
Inga Perestyuk, Olena Berezovska-Chmil, Yevhen Bilousov, Ivan Yakoviyk y Ihor Zhukov
Measures to prevent state default under martial law
Medidas para prevenir el incumplimiento del Estado
bajo la ley marcial
Resumen
La seguridad de la deuda es especialmente relevante para los países en
desarrollo, porque se recuperan después de shocks económicos por más
tiempo que los países desarrollados, y las consecuencias de tales shocks son
catastrócas para ellos. La mora es una de las consecuencias más indeseables
del incumplimiento de un título de deuda, lo que determina la relevancia del
tema investigado. El objetivo del estudio fue evaluar la condición actual y la
política estatal sobre la provisión de seguridad de la deuda en Ucrania, bajo
la ley marcial, y generalizar las medidas para aumentar la seguridad de la
deuda y minimizar el riesgo de incumplimiento. En el artículo se utilizaron
los siguientes métodos: análisis estadístico económico, enfoque estructural
del sistema y método lógico abstracto. El estudio encontró que, con el
comienzo de una invasión a gran escala, la proporción de la deuda pública
en Ucrania superó el valor recomendado en aproximadamente un 47 % y
aumentó en más del 58 % en comparación con 2021. En las conclusiones
de la investigación se proponen medidas para aumentar la seguridad de la
deuda, divididas en medidas nacionales e internacionales.
Palabras clave: deuda pública; garantía de deuda; política de deuda;
estrategia de deuda; administración pública.
Introduction
A large-scale military invasion of the sovereign territory of Ukraine had
a disastrous eect for the population, infrastructure and economy of the
country. The national security becomes especially important during this
period, in particular, nancial and debt security require increased attention.
Breach of debt security is accompanied by a debt crisis, which is associated
with exceeding the permissible amount of public debt and the inability to
service and repay it (Fominykh and Parfenyuk, 2021).
The concept of public debt is closely related to the concept of budget
decit. The Budget Code of Ukraine denes that the budget decit is an
excess of the budget expenditures over the budget revenues for a certain
year. The public debt is the total amount of the country’s debt obligations
for the repayment of received and outstanding loans (Verkhovna Rada of
Ukraine, 2023).
Excessive growth of the budget decit and the amount of public debt
negatively aects economic growth (Law et al., 2021; Semenyshyn et al.,
2020) and can lead to default in the country, which in the most general
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CUESTIONES POLÍTICAS
Vol. 41 Nº 77 (2023): 437-454
sense means the inability to fully or partially meet obligations. According
to the IMF and the World Bank criteria, the fact that a country has declared
default is the main sign of a debt crisis along with negotiations on debt
restructuring (Bogdan, 2021).
A possible declaration of default in Ukraine was repeatedly discussed
in the scientic and political sphere even before the war. The underlying
reason is the growth of threats to debt security because of the increased
budget decit, excessive borrowing and irrational use of funds, an unstable
political situation, the nancial and economic consequences caused by the
COVID-19 pandemic, etc. (Sytnyk and Shutko, 2022).
However, the military invasion and its devastating eects on the
economy brought default preventing to the fore. At the same time, public
debt has a number of advantages (Hilton, 2021; Rahman et al., 2019). It is
an important source of nancing, in particular during martial law, because
it provides support for the economy and fullment of specic tasks that
appear in this time before the government (Prokopenko et al., 2023).
Therefore, the issue of balanced borrowings and their rational use for the
needs of the state during the war with the simultaneous minimization of the
risk of default is a relevant objective.
So, the aim of the study is to assess the current condition and state
policy on debt security in Ukraine under martial law, as well as generalize
measures to increase debt security and minimize the risk of default. The
aim involved the following research objectives:
• assess the current state of debt security in Ukraine;
• study the legal support of the budget process under martial law;
• analyse the eectiveness of the main areas of public debt security
and default prevention policy.
1. Literature review
Most Ukrainian researchers focus on the current state of debt security
in the country and developing relevant recommendations. Fominykh and
Parfenyuk (2021) assess the main indicators of debt security and identify
the main problems of debt management and the use of borrowings. Sytnyk
and Shutko (2022) assess the debt security of Ukraine under martial law
and determine the positive and negative aspects of debt in the country.
As a result of the conducted research, the researchers develop measures
to increase the level of debt security. In their articles, Rudyk et al., (2022),
Liamzina and Harbinska-Rudenko (2022) also study debt security in
wartime and outline the reasons for the rapid increase in the amount of
debt.
440
Inga Perestyuk, Olena Berezovska-Chmil, Yevhen Bilousov, Ivan Yakoviyk y Ihor Zhukov
Measures to prevent state default under martial law
Researchers found a number of positive aspects of public debt: it is
a source of investment, reduces the negative eects of a budget decit,
and accelerates economic growth. Hobela et al., (2022) conduct an
assessment of debt and budget security, identify the main threats and
provide recommendations for improving these types of security. Kubakh
and Riabushka (2022) identied the factors inuencing the state of debt
and nancial security of countries, and also noted the lack of a unied
approach to the denition of debt security and the absence of the denition
in legislation.
Foreign researchers also actively study debt security aspects and the
probability of default in countries with dierent levels of development.
Aguiar and Amador (2021) note in their work that debt crises and defaults
are mostly characteristic of low-income countries and developing countries.
However, as the authors note, negative trends are increasingly spreading to
developed countries.
Eichengreen et al., (2021) substantiate the need for public borrowing, as
well as the main advantages and disadvantages of using borrowed funds. It
is noted that public debt opens up additional opportunities, in particular,
during a crisis, such as a pandemic or the need to defend the state.
Abbas et al., (2019) covers a number of theoretical aspects related to
public debt, in particular: historical facts of the development of debt relations,
basic denitions and concepts, motives for borrowing, debt sustainability,
public debt management, sovereign default, debt restructuring, etc.
Meier et al., (2021) assess the eectiveness of policy measures and
reforms in ensuring the safety and soundness of the global nancial
system, in particular debt security. The study summarizes the causes of the
crisis, the reactions to the adopted reforms, as well as whether the reforms
correspond to the set goals.
Stiglitz and Rashid (2020) study the risks to the debt security of
developing countries. Researchers note that the developing countries can
suer a disastrous eect from the realization of threats generated by the
simultaneous eect of the pandemic and the deepening of the economic
crisis. At the same time, developed countries will suer losses, but will be
much more capable of recovery.
So, it can be noted based on the results of the literature analysis
that a large number of studies are focused on determining debt security
indicators. However, the data for 2022 are missing in the works of
Ukrainian researchers, the year that causes the most concern in the context
of the breach of debt security and the probability of default. Therefore,
it is appropriate, rst, to update statistical debt security indicators, and,
second, structure recommendations and measures to improve the state of
debt security with their distribution according to the directions of future
debt strategy.
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2. Methods
2.1. Research design
The study was conducted in three stages, the rst of which was an
assessment of the public debt of Ukraine. An economic statistical analysis
of the structure and dynamics of public debt indicators was carried out.
The following indicators were analysed: the dynamics of the national
debt of Ukraine for 2017-2022, the dynamics of internal and external debt
as part of the public debt for 2017-2022, the dynamics of internal and
external debt as part of the state-guaranteed debt for 2017-2022, the ratio
of the total volume of state and state-guaranteed debt to GDP for 2017-
2022.
The second stage involved the study of the legal regulation of the
budget process under martial law. For this purpose, the most important
changes implemented in the budget legislation by the government after the
beginning of the military invasion were identied, in particular, changes
directly related to the repayment and servicing of the national debt of
Ukraine.
The third stage provided for summarizing measures to improve debt
security and prevent default. It is proposed to generalize, arrange and
divide the specied measures, or directions of their implementation, into
two levels — national and international.
2.2. The research methods used
The following scientic methods were used during the research:
economic statistical analysis to assess the dynamics and structure of the
public debt of Ukraine and determine debt security indicators; system
structural method and abstract logical method in the course of arrangement
and generalization of measures to increase debt security.
2.3. Research limitations
The research limitations are related to the lack of accurate ocial data
on the GDP of Ukraine for 2022. This is why an approximate value of GDP
was determined during the study, calculated based on preliminary data
provided by the Ministry of Economy of Ukraine (Slovo i Dilo, 2023).
2.4. Information background
The information background of the study is academic periodicals of
Ukraine and foreign countries, as well as data that are publicly available
on the resources of the Ministry of Finance of Ukraine, the State Statistics
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Inga Perestyuk, Olena Berezovska-Chmil, Yevhen Bilousov, Ivan Yakoviyk y Ihor Zhukov
Measures to prevent state default under martial law
Service of Ukraine, and the Decentralization Portal. Besides, the study
considered a number of legislative acts: the Budget Code of Ukraine, Law
No. 2120-IX of 15 March 2022, Law No. 2134-IX of 15 March 2022, Law
No. 2134-IX of 15 March 2022, Law No. 2135-ХХ of 15 March 2022, Law
No. 2142-ХХ of 24 March 2022, Resolution No. 252 of 11 March 2022,
Resolution No. 590 of 9 June 2022, Resolution No. 165 of 28 February
2022, Resolution No. 267 of 13 March 2022.
3. Results
3.1. Evaluation of the public debt of Ukraine
The national debt of Ukraine consists of public debt and state-
guaranteed debt, each being, in turn, divided into internal and external.
Figure 1 shows the trend of changes in the volume of the national debt of
Ukraine for 2017-2022, with its distribution by the amount of public debt
and state-guaranteed debt.
Figure 1. Dynamics of the public debt of Ukraine for 2017-2022 (billion UAH)
(Ministry of Finance of Ukraine, 2023).
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CUESTIONES POLÍTICAS
Vol. 41 Nº 77 (2023): 437-454
The trend shown in Figure 1 indicates a relatively moderate increase
in the volume of public debt from 2017 to 2021. In 2019, there was some
reduction in the amount of debt, but according to the results of 2020, when
the world was shaken by the COVID-19 pandemic, the public debt increased
by more than UAH 500 billion. However, according to the results of 2022 —
the year when the war in Ukraine began — the highest jump in the amount
of the state debt was recorded during the period — it increased by about
UAH 1,400 billion.
For the most part, the increase was due to a signicant increase in the
amount of public debt – it increased by more than UAH 1,350 billion, while
the state-guaranteed debt increased by UAH 50 billion. Figure 2 shows the
dynamics of internal and external debt as part of the public debt for 2017-
2022.
Figure 2. Dynamics of internal and external debt as part of the public debt for
2017-2022 (billion UAH) (Ministry of Finance of Ukraine, 2023)
Figure 2 gives grounds to conclude that the growth of the public debt
was mostly determined by an increased external debt — by more than
UAH 1,000 billion. The highest increase is characteristic of debt for loans
received from international nancial organizations (the increase of this
element is more than UAH 637 billion compared to 2021) in the structure
of the external debt (Ministry of Finance of Ukraine, 2023).
Figure 3 shows the dynamics of internal and external debt as part of
state-guaranteed debt for 2017-2022.
444
Inga Perestyuk, Olena Berezovska-Chmil, Yevhen Bilousov, Ivan Yakoviyk y Ihor Zhukov
Measures to prevent state default under martial law
Figure 3. Dynamics of internal and external debt as part of state-guaranteed
debt for 2017-2022 (billion UAH) (Ministry of Finance of Ukraine, 2023)
Sharp leaps are not characteristic of the growth of internal and external
debt as part of the state-guaranteed debt for 2017-2022. The volume of
internal debt as part of state-guaranteed debt in 2022 is even lower than at
the beginning of the period under study.
Therefore, the analysis of the trend of the volume of public debt as a
whole indicates its signicant growth in 2022, however, more information
can be obtained by studying the dynamics of the share of public debt in the
GDP of Ukraine and comparing it with the recommended value. The ratio
of the total volume of public and state-guaranteed debt to GDP is one of
the main and most important indicators for assessing the country’s debt
security. The optimal value of this indicator is 20%, and the critical value
is 60% (Fominykh and Parfenyuk, 2021). Table 1 contains the calculated
values.
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CUESTIONES POLÍTICAS
Vol. 41 Nº 77 (2023): 437-454
Table 1. Ratio of the total volume of public and state-guaranteed debt to GDP.
GDP (Million
UAH)
The total
amount
of public
and state-
guaranteed
debt (Million
UAH)
The ratio of the
total volume of
public and state-
guaranteed debt to
GDP (Million UAH)
Debt
growth rate
(Million
UAH)
31.12.2017 2,983,882 2,141,690.59 71.78 -
31.12.2018 3,560,596 2,168,421.57 60.90 1.25
31.12.2019 3,978,400 1,998,295.90 50.23 -7.85
31.12.2020 4,222,026 2,551,881.73 60.44 27.70
31.12.2021 5,459,574 2,672,060.21 48.94 4.71
31.12.2022 3,799,863.504 4,072,846.62 107.18 52.42
Source: calculated by the author based on the data from (Ministry of Finance of Ukraine,
2023; State Statistics Service of Ukraine, 2023; Slovo i Dilo, 2023).
Analysing the information in Table 1 based on the available data, it can
be noted that the GDP of Ukraine had a characteristic upward trend until
2021 inclusive, while it experienced a catastrophic decrease of 30.4% (+/-
2% according to preliminary data) according to the results of 2022. At the
same time, the amount of public debt has increased signicantly, as already
noted. So, the ratio of the total volume of public and state-guaranteed debt
to GDP in 2022 is 107.4%, and is signicantly higher than the recommended
critical value of 60% – not to mention the optimal 20%.
It should be noted that even before the war, the ratio of the total amount
of public and state-guaranteed debt to GDP approached, and sometimes
exceeded (71.78% in 2017), the critical value. However, in 2021, this value
began to decline because of a signicant GDP increase. Therefore, the debt
growth rate in 2022 is more than 50% (before that, the maximum growth
rate for the period under study was characteristic of 2020 — the period of
introduction of quarantine restrictions — and was almost 28%).
It can be concluded based on the results of the analysis that debt security
in Ukraine was broken before the war, but the large-scale invasion caused
the most signicant threat to debt security. To date, the threat of default has
increased signicantly, further increasing because of the high uncertainty
regarding the further development of the conict, however, international
support and a balanced policy of the Ukrainian authorities can contribute
to reducing this threat. In this context, it is advisable to reveal the aspects of
legal support of the budget process in Ukraine under martial law.
446
Inga Perestyuk, Olena Berezovska-Chmil, Yevhen Bilousov, Ivan Yakoviyk y Ihor Zhukov
Measures to prevent state default under martial law
3.2. Legal regulation of the budget process under martial law
The budget policy should be aimed, among other things, at regulating
the state debt. In turn, the imprudent management of the public debt can
lead to its unjustied growth beyond the recommended norms. The growth
of debt increases debt risks if the government is unable to service and repay
it, which can cause a debt crisis and default. So, increasing or decreasing
possibility of default in the country directly depends on the eectiveness of
the budget process.
The budget process has its peculiarities during the war. In Ukraine, this
process underwent a number of signicant changes after the beginning
of the military invasion, which is connected with the need to restructure
revenues and expenditures for national security and defence.
In view of the signicant decrease in budget revenues because of war, the
government was forced to oblige state-owned enterprises and the National
Bank to transfer prots ahead of time, which helped to full the plan for
the budget revenues for the rst month of the war by 93%. Besides, most of
the budget revenues during the war are formed by borrowing in the form
of military bonds, borrowing from international nancial organizations,
the European Union, grants and free aid from other countries (Korobtsova,
2022).
In view of the foregoing, it is appropriate to outline the main changes
made by the government to the budget legislation after the full-scale
invasion began (Figure 4).
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CUESTIONES POLÍTICAS
Vol. 41 Nº 77 (2023): 437-454
Figure 4. Changes in budget legislation introduced in connection with martial
law (Decentralization, 2022).
Figure 4 does not provide a complete list of the implemented changes,
because there were 248 individual changes to the budget process on the
ocial resource (Decentralization, 2022) as of August 2022. Summarizing,
we can say that the changes implemented in the budget process contribute,
rst of all, to the simplication of the fullment of budget obligations,
transfer of funds between budgets, and also expand the powers of local
authorities.
448
Inga Perestyuk, Olena Berezovska-Chmil, Yevhen Bilousov, Ivan Yakoviyk y Ihor Zhukov
Measures to prevent state default under martial law
Besides, among the outlined changes are those related to the repayment
and servicing of the state debt. In particular, expenditures on the repayment
and servicing of the national debt are the second priority after the
expenditures on national security and defence, and the funds of the state
road fund should primarily be directed to the repayment and servicing of
the public debts, as well as the development and maintenance of the road
network. Other expenditures from this fund should be allocated only after
fullling all obligations specied in Article 24 (III)(3) of the Budget Code.
3.3. Generalization of measures to increase debt security and
prevent default
The assessment of the actual state of the state debt and changes in the
legal regulation of the budget process in Ukraine enable us to proceed
to making a number of recommendations regarding further courses of
action. They should be aimed at increasing the country’s debt security
and preventing default and, in view of the results obtained in the previous
sections, are divided into two levels — national and international (Figure 5).
Figure 5. The main directions of increasing debt security and countering default
(created by the author).
Therefore, the results of the analysis of the legislative framework carried
out in the study indicate the need to strengthen work on improving the
legal provision of servicing and repayment of the national debt (both
external and internal). The assessment of the national debt carried out in
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Vol. 41 Nº 77 (2023): 437-454
the article necessitates the need for constant monitoring of debt security
indicators, which will allow making more balanced decisions for further
debt management. The determined structure of the national debt indicates
the need to stimulate the development of the domestic borrowing market,
in particular, military bonds.
Besides, measures to stimulate the development of the nancial market
are appropriate in order to reduce the cost of borrowing for the state. It
is also advisable to consider the possibility of restructuring the public
administration sector, the activities of which are related to the redistribution
and use of budget funds, which will increase the transparency of this process.
These and other measures should form directions for building the strategy
of the state debt policy, therefore the development of strategic planning and
management are important.
In addition to measures at the domestic level, the strategy of state debt
security should also be shaped by directions for increasing debt security at
the international level. As it was established during the analysis, since the
beginning of the war, the situation regarding the national debt in Ukraine
has signicantly worsened, reaching the limit of default. However, Ukraine
has every right to count on international support in the ght against the
aggressor, because it defends not only its interests, but also the interests of
the entire democratic society.
Therefore, the country can expect a positive result, at least partial, when
implementing such measures as: debt restructuring negotiations with the
aim of changing payment terms, the total amount of debt or the interest
rate; writing o part of the debt by submitting a special application to the
IMF and the World Bank; appeals for non-refundable nancial assistance
from international partners, etc. Besides, Ukraine has the indisputable right
to demand compensation for damages from the aggressor by appealing to
the countries of Europe and the United States of America regarding the
conscation of the assets of the Russian Federation to repay part of the
foreign debt.
4. Discussion
The article determined that the volume of Ukraine’s public debt as
a percentage of GDP in 2022 signicantly exceeds the recommended
value — by about 47%. Although the country’s debt security was at risk
in certain periods even before the war, it was within the norm by the end
of 2021 according to the indicator of the share of public debt in GDP. So,
a signicant growth of the national debt is determined by the full-scale
military invasion of the Russian Federation on the sovereign territory of
Ukraine, and occurred mostly at the expense of foreign borrowing.
450
Inga Perestyuk, Olena Berezovska-Chmil, Yevhen Bilousov, Ivan Yakoviyk y Ihor Zhukov
Measures to prevent state default under martial law
The article examines the changes in budget legislation after the start
of the war, and notes which of them relate to the national debt. It can be
argued that the issues of improving the debt policy were not paid enough
attention. Based on the results of the research, recommendations for
increasing debt security are proposed and reasonably divided at the national
and international levels.
Fominykh and Parfenyuk (2021) study the debt security of Ukraine in
the period before a full-scale military invasion, therefore the measures to
increase it suggested by the researchers are more general. The researchers
recommend introducing restrictions on borrowing in foreign currency on
the domestic market and regarding the total amount of public debt at the
level of 50%, optimizing the ratio of short-term and long-term borrowing,
measures to strengthen control, improve debt management, etc. Sytnyk
and Shutko (2022) provide a number of recommendations for increasing
debt security, which correspond to the directions proposed in this article:
improving legal security, monitoring, building a debt security strategy, etc.
Liamzina and Harbinska-Rudenko (2022) mostly focus on the
international direction, in particular, achieving nancial support from other
countries and organizations, restructuring or writing o part of liabilities,
etc. Hobela et al., (2022), in addition to the directions specied in the article,
propose the reduction of debt service costs, as well as the de-oshorization
of the economy as eective measures. Kubakh and Riabushka (2022)
emphasize the need to increase the eciency of the use of borrowed funds,
take measures to prevent corruption, and optimize public administration.
Foreign scholars study the problems of growing public debt in both
developed and developing countries, mostly in the context of aggravating
conicts, increasing crisis phenomena, and the COVID-19 pandemic. Aguiar
and Amador (2021) found that debt markets are prone to frequent and
repeated defaults, leading to a prolonged and costly restructuring period,
with debt re-accumulating during “quiet” periods, which can lead to a new
default. Stiglitz and Rashid (2020) emphasize that the consequences of a
debt crisis, which is the main feature of default, are always devastating, and
such consequences harm not only the country where the default occurred,
but also aect the entire world society.
The researchers note unrest in the country, which is especially
characteristic of countries with ethnic or other divisions or social conicts,
among the main and most frequent consequences of the debt crisis. Such
disturbances often spread beyond the borders of the country, which also
aects developed economies. These ndings correspond to the opinion
expressed in this article: Ukraine has the right to count on international
support, because the ght against the aggressor, as well as ensuring the
country’s debt security, is a global issue.
451
CUESTIONES POLÍTICAS
Vol. 41 Nº 77 (2023): 437-454
Eichengreen et al., (2021) identify the advantages of public debt: it allows
the state to continue to provide the population with basic social services
during periods when state revenues decrease; make eective investments;
improve the country’s defence in the event of a military threat; stabilize
the banking system in the conditions of the nancial crisis; help victims
of pandemics or emergencies, etc. At the same time, public debt can cause
harm if it is used irrationally.
Abbas et al., (2019) summarize that, regardless of the reasons for
borrowing, high levels of public debt can have a negative impact on the
economy by limiting the government’s ability to conduct countercyclical
scal policies, displacing private sector investment, increasing credit
constraints, and creating conditions for scal imbalances. Meier et al.,
(2021) oer a number of general recommendations for increasing nancial
stability and debt security, including the introduction of appropriate
scal stimulus packages, strengthening the consolidation of international
cooperation and harmonization of the legal framework in the banking and
insurance sectors, etc.
The combination of recommendations provided in this article and
measures proposed by other researchers can become an eective basis for
the further development of the strategy of public debt policy. The further
research should focus on the development of an adaptation mechanism
of the state debt policy to the conditions of military operations in 2023,
which should contain alternative scenarios in accordance with a high level
of uncertainty.
Conclusions
The article outlined the structure and dynamics of the national debt of
Ukraine, as well as debt security indicators. The conducted analysis found
that even before the beginning of the full-scale invasion, the share of public
debt in the GDP of Ukraine, as one of the main indicators of debt security,
exceeded the recommended value for certain periods. However, this
indicator signicantly decreased in 2021, and was within the normal range.
But martial law caused the rate to increase by more than 58% compared
to 2021, or 47% above the maximum allowable value. This increases the
risks for the country’s debt security and necessitates the development of
measures to combat default in the country. A study of the legal framework
for changes in budget legislation after the start of the full-scale invasion
made it possible to determine that the issue of debt security was not paid
enough attention.
452
Inga Perestyuk, Olena Berezovska-Chmil, Yevhen Bilousov, Ivan Yakoviyk y Ihor Zhukov
Measures to prevent state default under martial law
The assessment of the national debt and the legal framework regarding
changes in the budget legislation became the basis for generalizing and
arranging the directions of the state policy regarding the improvement of
debt security in the country and the prevention of default. Such directions
are proposed to be divided according to the implementation level — national
and international.
The national-level areas include: legislative support, monitoring,
development of the domestic borrowing market, development of the
nancial market, restructuring of public administration, strategic planning.
The international-level directions include: debt restructuring, partial debt
write-o, non-refundable nancial assistance, conscation of Russian
assets.
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Vol.41 Nº 77