Debt Growth Research Articles

Does systemic property cause the continuing accumulation of severe debt in developed economies?

Even developed economies experience continuing severe debt problems. Debt crises were an old phenomenon, but since the global financial crisis of 2008, economists began to pay renewed interest on the subject. Recent studies show that unsustainable financial conditions that exist may be the decisive macroeconomic challenge in the 21st century. Unsustainable financial conditions mean nothing other than the overwhelming debt and debt relations. In this paper, the authors question whether there could be an inherent fundamental systemic cause that leads to creating unsustainable debt bubbles when the basic economic activity of supply and demand takes place. Upon making a scientific inquiry on the said problem, by employing deductive methodology, this paper finds out that there exists an ‘unavoidable inherent systemic contradiction’ in the economic system that leads to creating unsustainable debt growth. Understanding this unique behaviour of any money-based exchange economic system (not limited to capitalism) is essential to device new macroeconomic policy tools bringing stability to the global economy.

Inflation, the global financial crisis, and COVID-19 pandemic

In the years 2021–2022, world inflation has drastically increased. The analyses of the main characteristics of the 2007–2009 financial crisis and of the economic crisis caused by the COVID-19 pandemic as well as of the rise in total debt of the non-financial sector suggest that the growth in inflation was triggered by excessive debt growth of the government sector in 2020–2021. In that period, the main goal of the debt growth of the government sector was to finance the aid schemes limiting the negative effects of the COVID-19 pandemic. These aid programmes were indispensable to avoid deep and long-term global economic recession, however, their value was too high to keep inflation in the world under control. The fiscal intervention of particular countries should be co-ordinated internationally, as the cumulative result of the operations undertaken by particular states might have detrimental effects globally.

Public debt of Ukraine: Essence, current trends and management

At the present stage of the market economy, in the conditions of rapid development of globalisation and cooperation of states in political, economic, and social aspects, public debt is an objectively determined phenomenon, it is an integral part of the country’s financial system. Nowadays, Ukraine is in a difficult situation caused by the outbreak of a large-scale war with russia, which is one of the main reasons for the existence of the public debt. Due to the insufficient amount of monetary resources in the budget, the state is forced to attract financial resources in order to perform its functions. The purpose of this study was to substantiate the theoretical essence of public debt, analyse current trends in the generation of public debt, and identify optimisation ways for effective public debt management in order to reduce it. The authors used the following scientific methods: empirical (description and comparison), theoretical (analysis, synthesis, and generalisation), and statistical. The study considers the essence of public debt according to the views of foreign and Ukrainian researchers. Based on statistical data, the current state of the public debt of Ukraine is characterised, and the dynamics of the public and government-backed debt for the period 2019-2022 are analysed. The volume of expenditures on repayment and servicing of the public debt of Ukraine is analysed. Based on the conducted research, the main reasons for the presence and growth of debt were identified, including the COVID-19 epidemic and the beginning of armed aggression on the part of russia; a decrease in the exchange rate of the national currency; a decline in production and a reduction in tax revenues; a decrease in the volume of the gross domestic product in real terms; a state budget deficit and a negative balance of payments; an increase in spending on ensuring the country’s defenсe capability and servicing public debt. The proposed recommendations would reduce the country’s public debt and increase the competitiveness of the economy at the world level, namely: increase the level of GDP, stimulate the development of small and medium-sized businesses to increase tax revenues to the budget, develop an effective strategy for managing public debt, etc.

Institutions Determine Debt–Growth Relationship: Evidence from Fourth Wave of Debt in EMDEs

ABSTRACT The last decade witnessed global debt levels to reach record high. In Emerging Market and Developing Economies (EMDEs) like never before, the (public and private) debt–GDP ratio has been dismally high. An upward spree of the debt–GDP ratio coupled with a looming economic crisis led to concerns about institutional qualities (IQ). We explore how different dimensions of IQ (namely, political, legal and governance) impact the debt–growth relationship in the EMDEs amidst the current fourth wave of debt (2010–2019). We examine whether the relation is monotonic or it varies around a particular threshold value of IQ. By applying a dynamic panel threshold regression model, we obtain two regime-dependent marginal effects of regressors (upper and lower regimes) that are distinguished by a threshold value of IQ. Our results reveal that for each of our considered IQ, there exists a statistically significant threshold value. For public debt, across all dimensions of IQ debt hurts growth in the lower regime, while in the upper regime the association is favourable. While private debt is growth enhancing in the lower regime of all IQs (excepting corruption), while it is inimical in the upper regime.

External public debt of the Russian Federation: risk assessment and improvement of the management system

This scientific article deals with issues related to risks arising from external public debt. The authors of the article note that the state's own resources and funds do not always allow satisfying the country's unlimited needs, so borrowing from abroad becomes necessary. One of the reasons why states are forced to resort to external borrowing is the problems associated with financing budget expenditures. In today's realities, it is very important to rationally approach the issue of managing external debt, because its cancellation can seriously affect the future stability and ensure the country's national economic security. The growth of the external debt of the state, according to the authors, can lead to an increase in tax rates, diversion of funds, economic recession, inequality between people, as well as the transfer of debt to subsequent generations. Consequently, the external debt management policy is designed to enable the state to attract funds from other sources, solve social problems and ensure economic security. According to the authors, external debt is an essential link in the macroeconomic system of any country, because it affects public finances, the investment climate, money circulation and international cooperation. Those relationships that develop during the formation and repayment of debt can significantly affect the long-term economic potential of the country. In this regard, the authors note that it is necessary to conduct a comprehensive policy of the state in relation to external debt and balance its income and expenses so that there is no need for borrowing from abroad, and so that a situation does not arise in which external debt becomes the most serious obstacle to difficult path of economic transformation.

Srilankan Economic Crisis

Sri Lanka’s economy was already showing signs of weakness before the COVID-19 pandemic. Growth and poverty reduction had slowed down in the last five years. A restrictive trade regime, weak investment climate, episodes of loose monetary policy and an administered exchange rate had contributed to external imbalances. Sustained fiscal disparities, driven primarily by low revenue collections, combined with tax cuts in 2019, has contributed to high fiscal deficits, large gross financing needs, and a rapid growth in unsustainable debt . The Sri Lankan economic crisis is an ongoing crisis in the island country of Sri Lanka that started in 2019. It is the country's worst economic crisis since its independence in 1948. It has led to unprecedented levels of inflation, near-depletion of foreign exchange reserves, shortages of medical supplies, and an increase in prices of basic commodities

Exploring The Role of High Government Debt on Economic Growth: A Nonlinearity and Threshold Analysis for Africa’s Developing Countries

Purpose: This paper empirically investigated the impact of high government debt on economic growth, using a panel data of 12 developing countries in Africa for the period between 1991 and 2020. Furthermore, it sought to find the existence of nonlinearity between government debt and economic growth. The study used a cross-country panel data approach estimated through the panel smooth transition regression to find the threshold effect. The results reveal a threshold of 60.5% of government debt on economic growth, suggesting an inverted U-shaped relationship between government debt and economic growth for the whole sample. After this threshold, additional government debt starts impeding economic growth. The estimated slope parameter of 18.11 supports the smoothness of government debt from a low regime to a high regime of debt. In the lower debt regime, government debt boosts economic growth; however as the level of debt growth surpasses the peak point, economic growth decreases. By implication, policymakers should have strict debt management policies in place to keep the level of government debt low, and be able to respond robustly to an economic shock. While resorting to borrowing to finance public spending, especially during economic crises, may be an imperative, it should be done in a circumspect manner so that the borrowings are kept at tolerable levels and reduced and/or repaid when there is a recovery in the economy.

Дипломатичний супровід зовнішнього державного боргу України

The purpose of the article is to substantiate the measures regarding diplomatic support of the Ukraine's foreign public debt in the conditions of a critical budget deficit. The analytical basis of the proposals are the results of the assessment of trends in the development of international flows of debt capital and the world experience of diplomatic assistance to countries in the process of overcoming their debt crisis. It has been established that the process of international movement of loan capital, in which countries are active participants regardless of the economic development level, is characterized by dynamic trends of value growth. A critical factor in the growth of public debt in Ukraine is the decrease in the value of GDP and the inability to cover the budget deficit as a result of high military and social costs. It has been proved that the minimization of risks associated with the State's dependence on international borrowing is possible under the condition of effective diplomatic support of the external debt at all stages of its formation and maintenance. Ukraine has positive results of diplomatic debt support (favorable conditions for obtaining new loans, partial restructuring of existing debt). However, in the future, under conditions of preservation of current trends, the growth of foreign debt will pose a threat to the economic security of the State. Based on the analysis of alternative options for overcoming the debt crisis, the authors substantiate the expediency of Ukraine's diplomatic request to international creditors for preferential debt restructuring; active cooperation with foreign countries regarding mediation in interaction with international financial organizations in the direction of initiating special programs of financial support for Ukraine. Diplomatic support of foreign public debt should occur simultaneously with the further integration of Ukraine into the European Union, measures to stimulate economic growth in the country, which will contribute to increasing the international investment attractiveness and credit ratings of the national economy.

ОСОБЛИВОСТІ УПРАВЛІННЯ ДЕБІТОРСЬКОЮ ЗАБОРГОВАНІСТЮ В УМОВАХ КРИЗИ НЕПЛАТЕЖІВ

Effective management of the company's receivables allows to optimize usage of the company's resources, in particular, cash flows. Effective management of the company's receivables stimulates attracting new customers, supporting business processes as well as avoiding formation of overdue debts and reducing risk of insolvency, which will ensure financial stability and company’s competitiveness. At the same time increasing repayment period of receivables causes debt growth, which can lead to the shortage of cash; worses the structure of current assets, and leads to attracting additional funds to finance operational activities. The system of analysis and management of receivables includes constant monitoring of some parameters, among them: the period of turnover, analysis of debtors according to various characteristics, monitoring of the obligations fulfillment, system of reservation of doubtful debts, system of measures against dishonest buyers. Thus after analyzing receivables, it is important to determine ways of their managing, which includes five directions. Among them: determining conditions for credit while selling goods, guarantees for the loan is granted; reliability of the buyer; the amount of credit to each buyer, which depends on the risk level, solvency and credit history; policy of repayment, in particular using factoring schemes. Factoring is widely used in countries with the developed market economy, while its usage in Ukraine is not so widespread. However, nowadays it is one of the few banking products aimed at real support and development of entrepreneurship. In general, credit policy should take into consideration: company’s strategic goals (growth in sales, maximization of profit, increasing of business activity; practice of granting loans to enterprises; distribution channels.

ВОПРОСЫ СОВЕРШЕНСТВОВАНИЯ УПРАВЛЕНИЯ ГОСУДАРСТВЕННЫМ ДОЛГОМ

In the modern world, the growth of public debt is a complex and at the same time very largescale phenomenon. By analyzing the features of the state’s debt policy, it is possible to study this issue globally and find a solution to the problem by settling the public debt with the help of effective and at the same time correct solutions in this area.

Inflation in the United States: Will it Come Back?

This article covers the major trends and changes in consumer price development in the US economy during 2022-2023. The major incentive for American inflation is a great increase in the budget deficit and public debt. The author considers that further growth of federal debt will become an obstacle to the problem of inflation targeting. Presently Federal Reserve System is financing government debt by purchasing Treasure notes. To provide these activities FRS has to increase money volume in circulation. In fact this monetary policy has significant negative effects on US inflation. Traditional corporations have also some possibilities to increase their sale prices and to accelerate inflation. Oil prices, which have tendency to grow, are considered to add some value to current inflation. In the Section 2 the major points of Inflation Reduction Act of 2022 (IRA) are being analyzed. IRA is considered to be a remarkable law which aims to curb inflation by reducing budget deficit and investing into domestic energy production. According to the Budget Office, this Act will raise 738 billion dollars and authorize 391 billion dollars on energy change and 238 billion dollars in deficit reduction and tax reform. The law includes a large expansion and modernization efforts for the Internal Revenue Service (IRS). In the Section 3 the problem of imported inflation is being analyzed. The estimates prove that in 2015-2022 U.S. export pr ices grew much faster than import prices. In the result US terms of trade improved and in fact United States exported inflation trends to other countries. Expensive dollar accelerated this process.

ОСОБЛИВОСТІ ФОРМУВАННЯ ТА ВИКОНАННЯ ДЕРЖАВНОГО БЮДЖЕТУ УКРАЇНИ В УМОВАХ ВОЄННОГО СТАНУ

The purpose of the scientific article is the analysis and assessment of indicators that demonstrate the peculiarities of the formation and implementation of the State Budget of Ukraine, taking into account the realities of wartime. In the conditions of martial law and the growth of the state debt, questions regarding the implementation of the processes of formation and implementation of the State Budget of Ukraine become particularly relevant, because financial resources are distributed from the budget, as they affect all spheres of life of the population. The scientific work examines the peculiarities of the formation and execution of the State Budget of Ukraine in the conditions of martial law. It has been proven that the state budget occupies a key place in regulating economic processes, ensuring financial stability, as well as social development and welfare of the population, especially in wartime conditions. The dynamics of the specific weight of the state budget in terms of revenues and expenditures in 2018-2022 were studied. The main indicators of the balance of the State Budget of Ukraine over the past 5 years have been analyzed. It is noted that the reasons for the significant increase in the state budget deficit. The revenue part of the state budget was analyzed in terms of revenues in 2018-2022. It is noted that the differentiated structure of the sources of filling the budget reflects the effectiveness of the budget policy. It has been proven that tax revenues occupy an important place in filling the revenue part of the State Budget of Ukraine and their share in the structure of state budget revenues in recent years is the most significant. Sources of international financing of the State Budget of Ukraine during the war period are considered. The structure of expenditures of the State Budget of Ukraine in 2018-2022 was analyzed and characterized. It is noted that during the year of the war, the largest amount of funds was invested in defense, and their share in the structure of state budget expenditures is almost half of all budget expenditures. It has been proven that during the war, state budget expenditures play an important role in financially ensuring the needs of the population and its well-being.

Investment activities on the stock market: information security in the network economy

Introduction. The network economy is developing in the conditions of geopolitical conflicts, military confrontation, the growth of public debt, and the scaling of investment attraction and investment through the use of technologies, products, and processes using network electronic interaction. An important place in the financial sector is occupied by the stock market, which in the conditions of digitalization opens up wide opportunities for investment activities of international donors, and institutional and private investors to restore the economy of Ukraine. Purpose. The purpose of the article is to consider the key problems of information provision of investment activities on the stock market, taking into account new regulatory provisions on capital markets, financial services, financial companies, and trading of financial instruments at operators of organized capital markets using network electronic interaction to increase liquidity. Method (methodology). The theoretical and applied basis is the scientific works of foreign and Ukrainian scientists researching the network economy, market microstructure, investments; modern statistical and information base of the stock market. The methods of dialectical logic, critical and scientific analysis, graphic, structural-functional, and expert evaluations are applied. Results. The relationship between the network economy and the stock market regarding the formation of a developed market microstructure, innovativeness, promotion of business activity, algorithmization of an integral set of quantitative and qualitative characteristics of investment activity, creation of new stock instruments and products are revealed. Attention is focused on reforming state regulators, taking into account the trends of digitalization of processes, and canceling the adjustment of regulatory acts, which makes it possible to direct investment policy to the coordination of geo-economic fragmentation of investments during the recovery of the economy. The methodical and applied approaches of information support for attracting investment from donors and stock market participants in reconstruction projects by the four freedoms regarding the movement of capital, goods, services, and free movement of the labor force are characterized.

From Neoliberal Dreams to Precarity: Micro-Entrepreneurs and Family Debt in Kyrgyzstan

AbstractThis article argues that precarity partly arises from the growth of household debt in the age of rentier capitalism. It examines the mechanisms of neoliberal finance and its debt-based economic growth model in shaping precarious work and life in Kyrgyzstan. The unequal social relationship between lenders and borrowers generates considerable economic dispossession, appropriation, precarity, and harm. For debt-ridden micro-entrepreneurs, some of the pressures and consequences of debt are acutely felt within their family context, where members struggle to negotiate and ameliorate the impact. By drawing on three case studies of a small farmer, a bakery owner, and a petty trader turned petty producer, the article examines how usurious interest loans plunged them and their families into distress, insecurity, fear, loss, and powerlessness. The first-person accounts of these micro-entrepreneurs-cum-borrowers explain how debt was produced and experienced, and how it was inseparable from the country's rentier capitalist transformation. The study also draws on twenty-nine semi-structured interviews with financial institutions and thirty-three semi-structured interviews with borrowers conducted in Kyrgyzstan.

Реструктуризація боргів: перспективи для України

The Ukrainian economy was badly affected by the war and works in extremely difficult conditions. The huge budget deficit and the continuing emergency need for financing drew attention to the topic of restructuring Ukraine's Eurobonds. Restructuring does not seem inevitable, given the generous financial aid Ukraine receives from its allies.This article clarifies modern ways of debt restructuring, possible ways of reducing the debt burden on Ukraine's economy caused by the state of war. On the basis of various official statistical data, the structure of the state debt of Ukraine was investigated, as well as the main trends of indebtedness and specific features of its formation were revealed. Based on the analysis, problems were identified and ways of optimizing the state debt and improving Ukraine's debt policy were proposed.The current state of Ukraine's debt burden is analyzed. The main measures to overcome the debt crisis are described. The current state of public debt management in Ukraine is considered and the principles that should be followed when solving the issue of debt restructuring in Ukraine are determined.Using the example of other countries, the impact of the rapid growth of external debt due to crises and other situations that destabilize the situation in the country has been studied. The experience of countries in the process of external debt restructuring and the consequences faced by countries after that were considered.

ЗАГРОЗИ ЕКОНОМІЧНІЙ БЕЗПЕЦІ УКРАЇНИ В УМОВАХ ВОЄННОГО СТАНУ

The article identifies and systematises the main threats to Ukraine’s economic security under martial law and in terms of its components. The study used such scientific methods as analysis and synthesis, induction and deduction, generalisation and comparison, graphical and tabular methods, etc. It is substantiated that when considering threats to economic security in wartime, it is advisable to distinguish between internal and external sources of their origin. Internal threats are triggered by crises within the country and can be publicly managed and eliminated. External threats are caused by processes over which the country has no leverage, but can only adapt and minimise the negative consequences. The author confirms the exhaustiveness of the decomposition of the country’s economic security by components, as well as its sufficiency for identifying and systematising relevant wartime threats. The analysis systematises the external and internal threats under martial law to the production, demographic, energy, foreign economic, investment and innovation, macroeconomic, food, social and financial components of Ukraine’s economic security. It is proved that in the context of the Russian-Ukrainian war and the occupation of 18% of the territory (with the overwhelming concentration of industrial and agricultural production), the first year of the large-scale invasion and, accordingly, martial law was a period of the deepest macroeconomic decline in the history of independent Ukraine. The greatest threats to Ukraine’s economic security are identified as follows: physical destruction of the population; forced internal emigration with the status of internally displaced person and external emigration with the status of refugee; kidnapping of Ukrainian children to the territory of the aggressor country as a crime against humanity; unprecedented destruction of energy infrastructure; a passive balance of payments; stagflation as an economic phenomenon when there is a simultaneous economic downturn, rising inflation and rising unemployment; denunciation of the Black Sea Grain Initiative; deterioration in the welfare of citizens; growth of public debt to over 60% of GDP, etc.

The implications of mismanaged central bank loans on the future bankruptcy of Iraq

This study explores whether the CBI's poor credit management may bankrupt Iraq. This study investigates the causes and consequences of improper loan use. Central bank loans affect the Iraqi economy, and misallocating them has effects. The explanation emphasizes the long-term impact on Iraq's economy and finances. This study investigates how Iraq's central bank loans have harmed its finances and raised its bankruptcy risk. Qualitative and quantitative research methodologies meet the study’s aims. Interviews with banking leaders, government records, and annual reports give information. The analysis suggests that central bank loan mismanagement damaged Iraq's economy. Bribery, incompetence, and a lack of internal controls caused poor management. This mishandling led to Iraq's bankruptcy, growth in the national debt, and investor distrust. The research suggests ways to fix problems and lower financial risk. Proposals include strengthening banking regulation, loan distribution transparency, and governance. These measures will boost Iraq's economy and banking. This analysis concluded that managing the Central Bank of Iraq’s loans to the Iraqi government is critical. Reallocate these obligations to avoid bankruptcy and enhance Iraq's economy. Bankruptcy hurts both goals.

CURRENCY SECURITY FOR SMALL ENTERPRISES IN UKRAINE

The work is devoted to the analysis of threats to the currency security of small businesses in Ukraine, which is a component of the financial security of Ukraine. A full-scale war in Ukraine requires a review of approaches to the formation of monetary policy in the sphere of state regulation of the financial system and the search for new effective methods of state management. The main challenges for the current financial system of Ukraine are a decline in production, an increase in the number of unemployed, a weakening of the stability of state finances, and threats to the stability of the currency. It has been proved that today the currency security of Ukraine is under the influence of a large number of internal and external threats, including the growth of the foreign debt, the outflow of funds abroad, the high degree of dollarisation of the economy, the inefficient structure of gold and foreign currency reserves, the imperfection of the currency and exchange rate policy, the presence of currency risks, the conduct of illegal currency transactions, the intervention of international financial organisations, foreign advisers and consultants in the currency policy of Ukraine. The conducted monitoring of the financial activity of a small enterprise is aimed at making certain effective management decisions providing the enterprise with currency and financial security in the modern conditions of the financial system of Ukraine as a whole. The current state of currency security of small businesses of Ukraine is analysed in terms of the need for a deeper study of it in order to solve existing problems related to its provision. As a result of the study of this problem, it is proposed to take measures to ensure the currency security of the country's small businesses and to support the long-term stability of the national monetary unit. The role of state banks in the implementation of state programmes for the support of small business should be strengthened, and for the safety of their activities a comprehensive system of state banks should be created, including highly specialised state commercial banks, state banks of a broad profile, state development banks, partner financial institutions, regional funds, insurance organisations.

ПОДАТКОВІ ВТРАТИ БЮДЖЕТУ ТА ЇХ ВПЛИВ НА РОЗВИТОК НАЦІОНАЛЬНОЇ ЕКОНОМІКИ

The article is devoted to the study of tax debt as a key element of tax losses of the budget and its impact on the development of the national economy. Tax debt is the main component of tax losses, as it contributes to a significant decrease in revenues to the budget of Ukraine, violates confidence in the tax system, increases the financial burden on the population and business, and limits the opportunities for financial development of the country. The concept of «Tax Debt» is considered, which is not only an economic, but also a legal concept that reflects the essence of its interrelated components: an agreed monetary obligation, penalties and penalties. It should also be noted that the definition of tax debt has been legally enshrined in the tax legislation. The dynamics of the volume of tax debt for 2016–2022 is analyzed, highlighting its importance in the structure of budget losses. We would like to note that both objective and subjective factors have a direct impact on the dynamics of tax debt, which has remained at a high level in recent years. The article substantiates the growth of tax debt in 2022 to the amount of UAH 145.0 billion. Compared to previous periods, it is due to the enormous burden on the economy from the imposition of martial law in Ukraine by the Decrees of the President of Ukraine dated 24.02.2022 No. 64/2022 "On the introduction of martial law in Ukraine" (as amended).Particular attention is paid to the system of tax control over the financial condition of the real tax debtor, since the analysis for the period 2017–2022 demonstrates large volumes of write-off of bad tax debt, which indicate the ineffectiveness of tax policy measures and negative consequences for the budget system of the country and the economy as a whole. Particular attention is paid to the analysis of possible ways to improve tax debt management and minimize its impact on the economy. The article aims to identify strategies and tools that can be used to reduce the impact of tax debt on the budget and the national economy as a whole. The aim of the article is to draw attention to the importance of this problem and to help find effective ways to solve it in the interests of sustainable economic development of Ukraine in future periods.

A sustainable lending strategy considering the impact of dispositive factors

The article analyses the factors of credit relations of an organisation under modern economic conditions. The purpose of the study is to find ways to ensure sustainable development and improve bank credit activities. The relevance is determined in connection with the rapid growth of the population's debts and the accumulation of multiple risks. As a result of the research ways of perfection of credit relations of the bank on the basis of consideration of dispositive factors, including creation of clear system of subordination and further development of service system and development of the bank, analysis and estimation of solvency of the client are presented.