Modern Economics (Sep 2018)
THE EXTERNAL STATE DEBT OF UKRAINE: FORMATION, MANAGEMENT AND SERVICING
Abstract
Introduction. State debt is a substantial instrument of the macroeconomic and the fiscal policy of the state and it affects a social and an economic condition in Ukraine. At the same time, the rapid growth in volumes of a gross external debt in absolute value and in ratio to GDP increases the currency risks of the country. Significant debt to the international organizations and the foreign governments threatens the country’s economic security. Undeveloped market of government securities complicates the borrowing of loans and lack of the comprehensive legal support and a perfect institutional mechanism hamper a process of the effective management of the state debt. Purpose. The purpose of the article is to research a practice of forming and servicing of the external state debt borrows, to identify the priority directions of improving the management of the external state debt. Results. It was substantiated that in Ukraine the growth of the state debt and expends of its servicing are gaining more menacing traits. It was determined that the gross external debt includes the state external debt of the government and the National Bank, as well as private banks, national and joint-stock companies, etc. Ukraine’s gross external debt as of the end of 2017 amounted to 116,578 million USD and it is current decreasing of the total volume of 3,060 million USD compared to the beginning of the year. It was investigated that according to the results of 2010-2017, the aggregate volume of the external state debt increased by 40% or 14,229 million USD to a level of 48,989 million USD. According to indicators of growth rates of the external state debt of 2010-2017, the trend is characterized by slowing in the growth of the debt since 2011-2013, rapid increase in 2015 due to economic and political aggravations in Ukraine and decreasing in growth rate in 2016- 2017, which is a result of restructuring of the country’s debt to foreign private creditors. It was emphasized that rapid reduce of the volumes of gold and foreign exchange reserves of Ukraine during the period of the new economic crisis of 2014 and a gradual steady increasing in volumes in subsequent years are both logical. The years of the most intense debt growth with the simultaneous gradual increase in the volumes of gold and foreign exchange reserves can be admitted 2014-2017, which are characterized by aggravation of the economic instability of the country due to high currency borrowing risks and the significant debt burden on the budget. We determined that an indicator of Ukraine’s external state debt per 1 person in 2017 amounted to 2,744 USD, exceeding the maximum permissible limit more than 10 times. We noted that one of the actual threats to the national security of Ukraine is the ineffective management of the state debt. Conclusions. External loans in the short term increase the financial potential of a borrowing country however, in the long term they contribute to reduction of the national income and deepen financial dependence on other countries. System of the management of the external state debt remains ineffective and leads to shifting of the debt burden for servicing and repayment of the state debt upon taxpayers and subsequent generations. The policy of such borrowings is a significant threat to the fiscal security, financial stability and further socio-economic development of the state. The above mentioned demonstrate objective need for further scientific research in order to improve the system of the management and servicing of the external state debt.
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