Public Debt of Ukraine: Features of Formation and Influence on Economic Growth

Abstract

Abstract. Introduction. Nowadays, Ukraine’s economy, as well as other economies, suffers from the global crisis due to Covid-2019. Expenditures of the country increase with a considerable rapidity, especially on healthcare and social protection. Taking into consideration the fact that accumulated budget revenues do not always cover the necessary expenses, country is in need to take credits to cover the budget deficit, which arises. These loans constitute public debt, the increase in maintenance costs of which may lead to a slowdown in economic growth, which is already taking place in Ukraine. Purpose. Determination of the features of the formation of public debt in Ukraine and research of its impact on economic growth in 2011-2019. To achieve this goal, the following tasks are envisaged: study of the main stages of the formation of public debt in Ukraine; analysis of the dynamics and structure of public debt 2011-2019 years; research of the relationship between domestic and foreign debt and GDP with the help of a two-factor model; interpretation of the results and recommendations for optimizing the structure of public debt. Results. The article examines the formation of Ukraine's public debt since the country's independence (1991). Based on statistics and the work of domestic scientists, a brief description of the nine main stages of formation and accumulation of public debt was identified and provided; the structure of public debt (by sources, maturities and types of creditors) for 2011-2019 is analyzed; the dynamics of internal and external debts during the specified period is represented; an empirical analysis of the relationship between domestic and external debt and GDP is done; The Medium-Term Public Debt Management Strategy for 2019 – 2022 of the Ministry of Finance of Ukraine on Public Debt Management was considered. Based on empirical research, it was found that domestic debt has more positive impact on economic growth than external borrowing. The public debt management strategy for 2019-2022 developed in the context of macroeconomic stabilization contains four main objectives of public debt management and the first one is to increase the share of public debt in the national currency. Therefore, we can conclude that the results obtained in the study coincide with the strategic directions of the country's debt policy in the medium term.