Introduction. In conditions of martial law, the role and importance of budget expenditures in solving the problems of a warring country increases. After all, expenditures on the country's defense determine the degree of resistance to the aggressor, the completeness of providing the needs of the Armed Forces of Ukraine in ammunition, modern combat equipment, FPV drones and other technological weapons. Problem Statement. In conditions of martial law, as in peacetime, the key task of the budget system is to increase its efficiency, including through transparency, accountability, promoting innovation and investment attractiveness, sustainability of public finances, etc. This can be achieved by fulfilling a number of important scientific and practical tasks, including optimization of budget expenditures, effective allocation of funds, prioritization of budget programs, investment projects, targeted use, as well as timeliness and completeness of financing in order to achieve the predicted final result. The purpose is an analytical assessment of changes in the management of state budget expenditures during the war and the development of mechanisms for increasing their effectiveness while maintaining financial stability. Methods. General scientific and special methods were used: comparative analysis, synthesis, grouping, description, tabular method, theoretical generalization and abstract-logical. Results. The budget legislation on the management of budget expenditures, which is applied in peacetime and under martial law, was analyzed. The dynamics of the growth of the share of State Budget expenditures and, accordingly, the decrease in the share of local budgets in the overall structure of expenditures of the consolidated budget of Ukraine were highlighted. The dynamics of the consolidated budget were analyzed by functional classification and the priorities of budget expenditures were established in peacetime, as well as during the period of full-scale Russian invasion. The reasons for the emergence of such a permanent phenomenon for the domestic budget system as a budget deficit were indicated. The emergence of a deficit in wartime and the forced need to increase Ukraine's military-industrial potential in order to stop the aggressor are substantiated. A mechanism for improving approaches to managing defense budget expenditures is proposed. Conclusions. It is important to effectively manage budget expenditures both in peacetime and in martial law to meet urgent public needs. The priorities of budget expenditures in peacetime are significantly different from the needs of a warring country: these now include ensuring the financing of the Armed Forces of Ukraine and the security sector in general, as well as maintaining a balance between financing military needs and social protection of the population. The relevance of the problem of finding sources of covering the budget deficit has increased, since the war has not only exacerbated chronic problems, but also brought new challenges associated with external shocks and threats, in particular, the lack of access to external financial markets. In such a situation, the burden on the budget system increases significantly. Currently, the Government of Ukraine has managed to avoid default, so the situation is under control and requires efforts to introduce efficient mechanisms for effective management of budget expenditures, which will have a positive impact on the recovery of public finances and guarantee long-term macro-financial stability.
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