Currency Risk in the Mechanism of Providing International Assistance to Local Community Budgets

Анотація

The article examines the nature and characteristics of currency risk in the mechanisms for providing international assistance to local budgets for the implementation of territorial communities' development projects in Ukraine.It analyses the main models of interaction between donors, non-governmental organisations and local self-government bodies, and highlights the impact of exchange rate fluctuations on the effective use of international grant resources.Particular attention is given to transactional and accounting risks that arise during currency conversion, as well as to practical tools for mitigating these risks.These include currency forecasting, reserve formation, cooperation with financial institutions and the contractual determination of acceptable deviation rates in grant agreements.Purpose.This article aims to enhance theoretical and practical approaches to managing currency risk in the implementation of international programmes that support local communities.To this end, the impact of exchange rate fluctuations on the efficient use of financial resources during martial law and macroeconomic instability was assessed, and currency risks were analysed.Results.The research conducted demonstrates that currency risk is an integral part of international development assistance, becoming particularly evident when foreign currency is converted into the national currency.An examination of donor funding mechanisms revealed two dominant cooperation models: the indirect model, which operates through intermediary organisations, and the direct model, which establishes financial relations directly between donors and recipient communities.

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