Coordination of fiscal and monetary policies in ensuring macroeconomic stability of Ukraine

Abstract

In the current conditions of macroeconomic instability, intensified by crisis phenomena, pandemic shocks, and a full-scale war, the issue of coordination between fiscal and monetary policies becomes particularly important. For the Ukrainian economy, which is characterized by a chronic budget deficit, growing public debt, and high inflationary and exchange rate sensitivity, the effectiveness of state economic regulation largely depends on the nature of interaction between these policies.

Problem statement. Despite a substantial body of academic research, in practical economic policymaking fiscal and monetary instruments are often applied in a fragmented manner, without proper coordination. This exacerbates macro-financial imbalances, complicates inflation containment, and increases debt-related risks, especially in the context of rising budgetary needs and limited financial resources.

Unresolved issues. Issues related to the empirical assessment of fiscal-monetary interaction remain insufficiently explored, particularly with regard to the exchange rate channel, the structure of debt financing, and the dependence of budget revenues on import operations. There is also a lack of comprehensive studies that integrate the analysis of budget deficits, money supply, interest rates, inflation, and devaluation within a single analytical framework.

Purpose of the article. The purpose of the article is to provide a comprehensive analysis of the interaction between fiscal and monetary policies in ensuring macroeconomic stability in Ukraine under conditions of structural imbalances, crisis developments, and wartime shocks.

Main material. In the article, the dynamics of the state budget deficit, public debt and its burden, the monetary aggregate M2, inflation, the NBU key policy rate, yields on government securities, exchange rate fluctuations, and tax revenues from imports are analyzed. The mechanisms of transmission of fiscal decisions into the monetary sphere and the impact of monetary instruments on budget deficit financing and debt sustainability are examined.

Conclusions. It is substantiated that macroeconomic stability in Ukraine is largely determined by the nature of interaction between fiscal and monetary policies. It is demonstrated that an increase in the budget deficit and debt burden intensifies pressure on monetary policy, limiting its stabilization potential. The study concludes that strengthening economic policy coordination is a prerequisite for reducing macro-financial risks and ensuring economic resilience in the face of crisis challenges.