ASSESSMENT OF UKRAINE'S DEBT SUSTAINABILITY

Abstract

This study aims to assess Ukraine's debt sustainability and develop proposals for improving the organisational and methodological basis for such an assessment. Ukraine's debt sustainability is assessed as currently lacking (2022-2024) due to a significant increase in debt burden caused by full-scale military aggression. It should be noted that during 2015-2021, many measures were taken to manage public debt, which made it possible to characterize Ukraine's debt sustainability as satisfactory, based on the analysis of all calculated indicators. The level of organisational support for debt sustainability assessment in Ukraine is limited. The main regulatory act in force that defines economic security indicators and their critical limits until 2025 is the Economic Security Strategy of Ukraine for the period until 2025. Domestic practice and official government documents record a rather limited set of analytical tools, which mainly include research on the structure of debt and the basic indicator of the ratio of public debt to GDP. More complex international assessment methods are not sufficiently applied. Currently, the Methodological Recommendations for Calculating Ukraine's Economic Security Level, which provided for an expanded gradation of debt security assessment based on five indicators (with optimal, satisfactory, unsatisfactory, dangerous and critical values), are no longer in force. The assessment of debt sustainability in Ukraine should be based on a clear methodology, which should be enshrined in a regulatory act and used on a regular basis by the body responsible for managing public debt. The results of Ukraine's debt sustainability assessment should be made public and included in the public debt management strategy. It is not enough to set only a critical threshold for debt sustainability assessment indicators; to differentiate between levels of debt sustainability, it is necessary to introduce an expanded gradation of indicator assessment. It is advisable to return to the use of the gradation of values that was in the Methodological Recommendations (optimal, satisfactory, unsatisfactory, dangerous and critical values), as it considered international recommendations. International approaches and indicators for assessing debt sustainability should be used more actively. When assessing debt sustainability, due attention should be paid to the primary balance of the state budget (primary deficit/surplus), as is common in international studies.