EUROPEAN MODELS OF SOLUTION TO THE PUBLIC DEBT PROBLEM: WHAT SHOULD UKRAINE CHOOSE

Анотація

The article is devoted to the analysis of Ukraine’s debt challenges in the conditions of a full-scale war and in the period of post-war recovery. Despite significant external financial pressure and the growth of public debt to critically high values, the financial system of Ukraine maintains relative stability thanks to large-scale international support. The paper systematizes modern theoretical approaches to overcoming debt crises, covering models of fiscal consolidation, economic growth, financial repression, debt monetization and various forms of restructuring. The international experience of managing excessive public debt in the EU countries (Greece, Portugal, Ireland) and in the post-conflict states of South-Eastern Europe (Croatia, Bosnia and Herzegovina) is analyzed. It is shown that despite the different nature of the crises, the key elements of successful strategies were the restructuring of external debt, external financial support and the implementation of deep structural reforms. Based on a comparative analysis, specific factors limiting Ukraine’s capabilities are identified, including a high share of external debt, significant payments in the coming years, and large-scale needs for financing reconstruction. It is argued that an effective Ukrainian strategy for overcoming debt risks should be comprehensive and include a combination of debt restructuring, new loans on preferential terms, improving fiscal rules, and implementing structural reforms. The importance of creating conditions for the inflow of private investment, which will reduce dependence on debt financing, as well as the use of instruments similar to the Baker and Brady plans to reduce the cost of borrowing, is emphasized. It is concluded that in the conditions of war and post-war reconstruction, a combined approach is the only possible way to ensure Ukraine’s debt sustainability.

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