Financial security of Ukraine in debt burden: Assessment and forecasting

Анотація

This study aims to comprehensively assess the state’s financial security of Ukraine in the context of mounting debt and economic instability. Particular attention is paid to the security of the financial sector, which determines the overall level of financial system security. This involves constructing a regression model of the relationship between the level of financial security and debt, the size of the economy, and reserves, as well as forecasting likely medium-term dynamics.Modeling revealed imbalances. During the war, the level of financial security dropped to a critical level, providing only about 30% of the required level of economic protection. One of the most vulnerable components was debt security, which shows a high degree of dependence on external financing. Regression modeling demonstrated a clear negative correlation between the amount of external debt and the level of financial security, with each increase in the debt burden being accompanied by a decrease in the integral index. Conversely, despite being observed, the positive impact of GDP growth proves insufficient to counterbalance the identified threats. Consequently, if current trends persist, Ukraine’s financial security level may decline to 16.6% by 2030, indicating an imminent approach to a critical point of macro-financial vulnerability.The study highlights the pressing need to reconsider public financial policy, particularly concerning debt management, budget planning, and the modernization of the financial system. This is essential not only to sustain the economy but also to safeguard the state in the face of an existential threat. AcknowledgmentThis study was financially supported by the NATO SPS Program “Security of territorial communities: evidence from the Eastern European countries”.Also, this article is published as an output of the project “Economic bases for managing Ukraine’s debt security during martial law” (No. 0121U112685).

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