Assessing the Debt Sustainability of Territorial Communities in Ukraine

Abstract

The article examines the essence of debt sustainability of territorial communities. The main factors of influence on ensuring the debt sustainability of territorial communities are considered, among which are: financial support for the functioning of local self-government bodies; infrastructure development; social protection of the community’s population; confidence on the part of investors. The conditions that ensure the debt sustainability of the local budget are defined as follows: rational financial planning; effective cost management; rational management of debt obligations; stability of income; control of risks; economic stability of the community; ability to pay debts. The features that characterize the debt sustainability of territorial communities are considered as follows: the ability to pay interest and the principal amount of debt; stability and balance of the budget; sustainability of income; capability to take into account the risks associated with debt obligations; creation of sufficient reserves; maintaining a low level of debt burden; ensuring and maintaining a favorable credit rating; effective financial management and debt control. An algorithm for diagnosing the current debt sustainability of a territorial community has been developed, which includes the following stages: collection and analysis of indicators of the financial condition of a territorial community; analysis of the debt structure of the territorial community; calculation of debt sustainability indicators; comparison of the actually calculated values of debt indicators with the values of these indicators for previous periods; development of recommendations for the implementation of the policy, taking into account the analyzed indicators of debt sustainability. The calculation of indicators for assessing the current debt sustainability of territorial communities is carried out. Based on their analysis, a number of measures for the effective implementation of debt policy and debt management of territorial communities are proposed.

Keywords

• debt of the territorial community
• local borrowings
• debt sustainability of territorial community.