Economic Turbulence Research Articles

METHODOLOGICAL APPROACHES TO ASSESSING THE EFFICIENCY OF STRATEGIC MANAGEMENT OF INVESTMENT ACTIVITIES OF INDUSTRIAL ENTERPRISES

The article addresses contemporary issues faced by industrial enterprises and their crisis situation since the onset of the war in Ukraine, emphasizing the necessity of investment attraction and implementation of investment activities in a strategic perspective. The scope of reduction of industrial enterprises and their losses is determined. Modern methodological approaches to evaluating the effectiveness of strategic investment management of industrial enterprises are discussed, and new perspectives are developed based on researched scientific foundations. Methodology: A wide range of general scientific and specialized methods of scientific research have been employed to achieve the stated objective: scientific abstraction, scientific fact, deduction, analysis, and synthesis - to determine the current state of industrial enterprises and strategic investment management on them, as a basis for forming methodological approaches to assessing their effectiveness. Results: The article discusses, analyzes, and specifies the amount of losses incurred by industrial enterprises since the beginning of the war initiated by the Russian Federation. Ways to improve the economic situation in industrial enterprises through investment attraction are proposed as a means of obtaining additional opportunities for economic development and stability amid economic turbulence. Views of scientists on this issue are considered, highlighting the necessity of conducting investment activities and strategic management. Modern methodological approaches to evaluating the effectiveness of strategic investment management are formulated as markers of enterprise activity. Scientific novelty: It is theoretically substantiated that the most effective and accessible way to improve the situation in industrial enterprises is through investments. Enterprises engaging in investment activities on a regular basis and strategically managing them have a number of advantages in the economic market due to the mobilization of additional resources into their activities. Formulated and updated methodological approaches to evaluating the effectiveness of strategic management of industrial enterprises allow for successful investment activities by correctly allocating resources. Practical significance: The practical conclusions formulated and proposed in the article emphasize the importance for industrial enterprises, during this period of economic turbulence, to attract investments and engage in investment activities as a means of mobilizing additional resources for development and maintaining market positions. Enterprises that utilize the updated and formulated methodological approaches to evaluating the effectiveness of strategic management presented in this article will be able to manage and sift through inefficient elements of investment activities, freeing up resources for more effective future endeavors.

Sharia Bank Deposits and Financing: Does Economic Turbulence Matter?

The decline in national economic performance as a result of COVID-19 can cause a reduction in company and community income, which will reduce the availability of third-party funds and financing channeled by Sharia banks. This research aims to examine the determinants of third-party deposits and Sharia bank financing in Indonesia using a sample of ten Sharia banks from 2017-2022 that did not carry out mergers or acquisitions. Testing was also carried out on each type of deposit and financing contract because of the potential for different behavior between types of contracts. Data were analyzed using panel data techniques, where the selected model had a fixed effect. The test results prove that there is a positive reciprocal influence between third-party deposits and Sharia bank financing. Economic turbulence has a significant negative impact on deposits, but it is not significant on financing. This turbulence significantly only reduced profit-sharing deposits but not wadiah deposits. Likewise, this economic condition only has a negative impact on financing with receivables contracts but not on profit-sharing financing. This finding implies the importance of Sharia banks in maintaining adequate availability of third-party funds to support financing growth. The Government and Bank Indonesia are important to maintain economic stability. Furthermore, the Financial Services Authority needs to increase monitoring of banks with low capital because of the potential for moral hazard.

LOGISTICS OF EXPORT DELIVERY IN THE CONTEXT OF CROSS-BORDER TRADE

The article is devoted to one of the aspects of the formation of new export logistics, capable of responding to the challenges of a turbulent global economy. The authors analyze modern logistics problems of export supplies. Particular attention is paid to exports as an integral part of cross-border trade. The authors dwell not only on the general problems of logistics of export activities, but also identify the specifics of the logistics of cross-border trade, choosing as the object of study the countries of Greater Altai, which includes the border territories of the Russian Federation, Mongolia, the Republic of Kazakhstan and the People's Republic of China.
 The study analyzed the dynamics and structure of exports of the Russian Federation and the Altai Territory, and showed the features of new logistics in a turbulent economy. Given the high share of logistics costs in the overall cost structure of the production and sale of exported products, cross-border trade has advantages when it is carried out with lower logistics costs due to shorter transport routes and transportation times. The advantages of cross-border export include the absence of transit through the territories of third countries, which significantly reduces risks and simplifies information and customs logistics. Stable supply chains in cross-border trade in the Altai Territory, which have emerged as a result of many years of cooperation with the countries of Greater Altai, also help reduce risks and logistics costs.

Reconfiguration of the Regional Economy As a Tool to Overcome the Unbalanced Development of the Economic Entity

Relevance. The relevance of this study is predetermined by the fact that during the period of economic turbulence, the positions of “weak” regions significantly worsen, while at the same time there is a decrease in the pace of their development. Accordingly, it is necessary to stabilize the development of regions of this type based on the use of various economic and managerial tools, including through the use of transformation mechanisms, reconfiguration of economic objects, which in the future, with the rational use of these technologies, may affect both the level of competitiveness of the region and its development potential. The purpose of the study is to study the directions of reconfiguration of the regional economy as a tool to overcome the unbalanced development of an individual economic entity. Objectives. Achieving this goal predetermined the solution of the following tasks: studying the theoretical possibilities of using reconfiguration mechanisms to overcome the negative "rut effect", identifying individual areas of reconfiguration ("soft" reconfiguration and "hard" reconfiguration), research and evaluation of "turning" (control) points of reconfiguration of the regional development in terms of sectoral and territorial development, as well as external and internal factors. Methodology. The basis of the research is the historical-logical and monographic methods, as well as the methods of statistical data analysis, induction, deduction, synthesis, other general scientific methods, as well as semantic analysis. Results. It seems necessary to include the results obtained in the course of the study: the construction of a structural-logical scheme that reflects the directions of the reconfiguration of the region in order to achieve balanced development; systematization of "turning" (control) points of reconfiguration of regional development from the standpoint of both sectoral and territorial development, and endogenous and exogenous impact; assessment of indicators of reconfiguration of an unbalanced region (on the example of the Republic of Buryatia). Conclusions. In conclusion, conclusions are drawn that the reconfiguration of the regional economy is predetermined by both internal and external (including shock) factors. In modern conditions of turbulence and sanctions pressure, the reorientation of economic processes, as well as external factors, can initiate a hard type of reconfiguration, which is rather problematic to implement, in contrast to the “soft” type of reconfiguration, which is especially important for unbalanced regions. With a “soft” reconfiguration, a positive dynamics of particular performance indicators is more likely, characterizing the possibility of a “spurt” and exit of the region from the existing “development track” to the optimal trajectory in the preemptive period.

South Korea: Impact of The Ukraine and Russia conflict

The specter of the Russo-Ukrainian conflict looms large, casting a long and unsettling shadow across the tapestry of the global economy. Its chilling tendrils reach even the most seemingly insulated corners, ensnaring nations like South Korea in its vortex. This vibrant Asian tiger, deeply entwined in the intricate web of global trade, finds itself thrust into the maelstrom of this geopolitical quagmire. The economic ramifications, far from being mere ripples, have unfurled in a multifaceted storm, presenting a formidable challenge to the nation's economic stability and demanding a nuanced and multifaceted response. At the heart of this economic tempest lies the intricate web of financial sanctions woven by a resolute coalition of nations against Russia. These measures, meticulously crafted to sever the arteries of the Russian war machine and isolate its economy, have sent tremors through the very foundations of global finance. Traditional trade and investment flows, once predictable currents, have become turbulent eddies, swirling with uncertainty and risk aversion. South Korea, with its extensive economic tentacles reaching across the dynamic landscapes of Europe and Asia, has inevitably felt the tremors of this financial earthquake. Navigating this altered landscape, where familiar landmarks have shifted and once-reliable harbors now harbor hidden shoals, presents a significant challenge to the nation's financial institutions and policymakers. The delicate dance of mitigating potential exposure to the unfolding economic turbulence requires a deftness of footwork and a keen eye for the ever-shifting sands of the global financial market. Further compounding the economic woes is the pronounced surge in the prices of vital commodities, particularly energy and agricultural products. Both Russia and Ukraine, hitherto considered reliable bastions of resource abundance, have seen their production and export capacities crippled by the conflict. This disruption has sent shockwaves through international markets, triggering a vertiginous spiral in the prices of these essential resources. South Korea, heavily reliant on imported energy and foodstuffs, finds itself on the receiving end of this price escalation. Inflated import costs threaten to erode the very foundations of consumer purchasing power, casting a long shadow over economic growth and raising the specter of potent inflationary pressures. The specter of empty shelves and rising prices haunts Korean households, adding a layer of human anxiety to the broader economic quandary. Finally, the conflict has thrown international supply chains into disarray. The delicate arteries of global trade, once pulsing with the lifeblood of commerce, have been severely constricted by the disruption of land and sea routes, further exacerbated by the sanctions imposed upon Russia. South Korea, intricately woven into the fabric of these globalized production and trade networks, finds itself grappling with the ramifications of these disruptions. Delays in the delivery of raw materials and manufactured components threaten to hobble its own industrial output and hamper its export competitiveness. The very engines of the Korean economic juggernaut sputter and cough, their rhythm disrupted by the absence of vital parts sourced from across the globe. The anxieties of factory owners and the concerns of everyday workers alike paint a poignant picture of the human cost of this economic maelstrom.

Financial aspects of socio-economic rejection in Ukraine in conditions of economic turbulence

Financial aspects of socio-economic rejection in Ukraine in conditions of economic turbulence

FINANCIAL RESTRUCTURING IN CONDITIONS OF WARTIAL LAW

The article focuses on the analysis of financial restructuring in times of war, specifically its significance, strategies, and challenges arising in the context of armed conflict. Key aspects such as reduced economic activity, financial pressure, and the threat of corporate bankruptcy in wartime conditions are examined. The article also identifies unresolved issues like socio-economic inequality and banking system instability. It highlights the importance of financial restructuring as a tool to overcome economic difficulties and ensure stability during a crisis conflict. The purpose of the article is to identify financial restructuring strategies in times of war, illuminate key challenges and unresolved issues in this context, and indicate possible ways to improve the effectiveness of financial reforms to ensure the stability of the economy and financial system during wartime. The relevance of researching financial restructuring in times of war for Ukraine is extremely high, given the country's complex geopolitical conditions and the challenges it faces. War, aggressive actions by neighboring states, and global instability make Ukraine's financial sector vulnerable to external shocks and economic turbulence. The significance of this topic is underscored by the necessity to develop and implement strategies aimed at ensuring the stability of the financial system, supporting economic development, and ensuring social well-being in the context of wartime conflict. Further research in this direction is a crucial step in understanding the impact of wartime on financial markets and in developing innovative strategies that will enable Ukraine to effectively adapt to challenges and maintain economic resilience in these unpredictable conditions. The analysis reveals prospects for improving financial restructuring through the adoption of innovative technologies and enhancement of regulatory mechanisms. The research provides practical recommendations for leadership and financial institutions to more effectively address financial challenges during wartime. In conclusion, the article emphasizes the importance of further research in this area and suggests possible paths for developing strategies aimed at stabilizing the financial system and ensuring economic resilience in unpredictable wartime conditions.

Тенденции развития столичного рынка офисной недвижимости в современных условиях

The article analyzes the state of the Moscow office real estate market during the crisis periods. The aim of the study is to consider how the real estate market changes under conditions of uncertainty. The objectives are to analyze the impact of crisis situations on demand, supply, as well as to assess the correlation of these indica-tors with the general economic environment. Research methods used in the article are comparative analysis, statistical methods. The study revealed patterns in changes in the volume of demand for office real estate dur-ing a period of high economic turbulence. At the same time, it is noted that the volume of supply at the moment is not growing significantly as interest increases after the peak crisis stages due to the long period of construc-tion of a new facility and the rise in the cost of project financing, conceived in connection with bank lending. The practical significance of the research results lies in the possibility of applicable in forecasting the market situa-tion, using the extrapolation method.

ЭФФЕКТИВНОСТЬ УПРАВЛЕНИЯ В УСЛОВИЯХ ПОЛИТИКО-ЭКОНОМИЧЕСКОЙ ТУРБУЛЕНТНОСТИ

The article considers discusses the issues of effective business conduct in conditions of growing uncertainty in the business environment. In recent years, that uncertainty has increased sharply, which is determined, in particular, by two successive macroshocks (pandemic, 2020 and sanctions, 2022), which gave rise to poorly predictable changes in the Russian economy. The authors define the situation as political-economic turbulence. Political and economic turbulence in general negatively affects the efficiency of management in the economy, which is confirmed by available statistical data. At the same time, there are numerous counterexamples when, even in a turbulent environment, due to effective management it is possible to obtain high results in economic activity. It is shown that the current economic conditions require a revision of management approaches. Renewed management must be focused on protecting against the risks caused by turbulence, while at the same time taking advantage of the new opportunities it generates. In that regard, it is recommended to more actively use the project approach in management. The formation of a portfolio of projects balanced in terms of risks and performance allows economic systems to successfully function and develop even in conditions of political and economic turbulence.

ІНВЕСТИЦІЙНА НЕВИЗНАЧЕНІСТЬ: ВИКЛИКИ ТА МОЖЛИВОСТІ ДЛЯ УКРАЇНИ

The article highlights the problems of attracting foreign direct investment in the conditions of war and the postwar period, which should be defined for the country as a period of investment uncertainty. It was emphasized that for Ukraine, which actively attracts investments from abroad, such a situation leads to the loss of opportunities for economic development and deterioration of competitiveness and can also affect the general decrease in the rate of economic growth. The volume of investment in the national economy before the war had unstable dynamics, but with the beginning of the war, the fall in investment became critical. It was noted that political instability, economic turbulence, changes in government policy, geopolitical conflicts, technological changes, or natural disasters are among the causes of investment uncertainty. It was pointed out that the result of investment uncertainty may be the delay or rejection of the implementation of investment projects. It was determined that to overcome uncertainty in the investment sphere, it is necessary to develop effective strategies for attracting investments, which is currently the most difficult task. Most of the countries that are large exporters of foreign direct investments, such as the USA, Germany, Great Britain, Japan, and others, have already aided Ukraine since the beginning of the war, so further attracting investments and their involvement in the restoration of the national economy in the post-war period will be problematic. It was emphasized that when building investment strategies, the principal things are: understanding modern investment trends (for Ukraine, in this context, it is possible to attract investments per the implementation of the Sustainable Development Goals); ensuring effective management of investment risks (insurance of direct foreign investment during wartime is especially relevant); transparency of government policy and regulatory measures, as well as the creation of a favorable business environment that will form the basis of investment stability and reliability

Moderating Effect of Government Policies and Regulations on the Relationship Between Diversification Strategies and Organizational Performance Among Star Rated Hotels in the Kenyan Coast

Nowadays, organizations must exploit opportunities and avoid risks by applying relevant strategies and developing various strategic approaches that will improve their competitive edge and overall performance. One of the possible ways to improve business efficiency and performance is through diversification in light of available government policies and regulations. The purpose of this study was to evaluate the moderating effect of government policies and regulations on diversification strategies and organizational performance amidst organizational and environmental forces within star rated hotels in the coast region of Kenya. The specific objectives were; to determine the moderating effects of government policies and regulations on the relationship between diversification strategies and organizational performance among star rated hotels in the Kenyan Coast. Notably, 36 star rated hotels were selected while 419 respondents were involved which comprised; strategic managers, tactical and operational managers. This represented a response rate of 92.4% and 80.6% for the questionnaires and interviews respectively. Stratified sampling was used to select the hotels while purposive sampling was used to select the managers. Questionnaires and interview schedules were used during data collection. Data analyze was both analyzed using both descriptive and inferential analysis. The model summary results indicate that R-Square value improves (from 0.598 to 0.617) when the moderating variable (Government policies and regulations) was added to the regression model. This means that government policies and regulations improve the relationship between related diversification strategies and performance of star rated hotels in the Kenyan Coast. The model summary results in Table 5 show that the value of R-Square improves from 0.558 without the moderating variable to 0.670 with the moderating variable. The moderating variable therefore improves the relationship between unrelated diversification strategies and performance of star rated hotels in the Kenyan Coast. The null hypothesis “Government policies and regulations do not have a significant moderating effect on the relationship diversification strategies with performance of star rated hotels in the Kenyan Coast” was rejected. In conclusion, government policies and regulations have a significant moderating effect on the effect of diversification strategies on performance of star rated hotels, annihilating the simple linear relations between predictor and outcome variables. The government should encourage diversification among hotel industry by providing favourable environment to conduct business through reduced tax and subsidies especially during economic turbulence.

SPILLOVER EFFECTS OF COVID-19 ON USA EDUCATION GROUP STOCKS

In this paper, we explore the price dynamics of 16 representative records of USA Education Group stocks, encompassing two non-overlapping periods (before, during, and after COVID-19). Based on information theory and cluster analysis techniques, our study provides insights into disorder, predictability, efficiency, similarity, and resilience/weakness, considering the most diverse financial stakeholders. Our findings contribute significantly to understanding price dynamics in the education sector, encompassing non-crisis and crisis periods, and provide valuable information for financial risk management, highlighting the importance of considering financial assets’ efficiency and resilience/weakness during economic turbulence, such as the COVID-19 crisis.

РАЗВИТИЕ ИННОВАЦИОННОГО ПОТЕНЦИАЛА СТРАНЫ В УСЛОВИЯХ ЭКОНОМИЧЕСКОЙ ТУРБУЛЕНТНОСТИ

The article is devoted to the study of opportunities for the formation and development of the country’s innovative potential in the conditions of emerging economic turbulence, the specifics of which are determined by the sanctions policy against Russia and the number of sanctions imposed. The authors analyze the historical experience of the People’s Republic of China from the position of the conditions of economic sanctions and pressure from the West under the policy of reforms and openness, which emerged in 1989. The factors, due to which China managed to form innovative potential and use it for innovative development of the country, are highlighted. Studying the factors influencing the formation of Russia’s innovation potential, the authors conclude that as a result of economic turbulence, intensified under the influence of various reasons both economic (sanctions) and geopolitical, there is a situation that contributes to the formation and development of the country’s innovation potential.

ИННОВАЦИОННЫЕ СТАРТАПЫ: ТРАНСФОРМАЦИЯ ФОРМ ФИНАНСИРОВАНИЯ И ФАКТОРЫ КОНКУРЕНТОСПОСОБНОСТИ

The article studies innovative schemes of startup financing, identifies priority areas (venture billers, venture studios) in the conditions of economic turbulence. New and already proven effective forms of attracting initial capital by startup funders in innovative spheres of economy, including the peculiarities of Chinese experience, are analyzed. The factors of startup competitiveness in the process of attracting investments are revealed.

INFRASTRUCTURE PROVISION FOR SUSTAINABLE DEVELOPMENT OF THE UKRAINIAN BANKING (CREDIT) SYSTEM

A modern banking system is an integral part of the economic development of any country, as it ensures the functioning of the financial market, mobilizes resources of business entities, facilitates the expansion of credit opportunities and ensures the sustainability of the financial system as a whole. Ukraine, as a country with a transition economy, has faced numerous challenges and tasks in developing its banking system in recent decades. One of the main aspects is the infrastructure support for the sustainable development of the banking system, which is the country's key financial intermediary. Accordingly, in the era of dynamic economic shifts and global financial transformations, the role of infrastructural support in ensuring the sustainable development of banking systems is of primary importance. This issue is of great practical importance and is relevant for further research, given the impact of socio-political and economic turbulence observed in Ukraine where the banking sector is a key financial intermediary of the national economy. Therefore, for a timely and effective response to the challenges of the financial system and the needs of business entities, the Ukrainian banking system needs a reliable and adaptive infrastructure. In this context, the study aims to analyze the infrastructure support for the sustainable development of the banking (credit) system of Ukraine. The theoretical aspects of the sustainable development of the banking sector, which are highlighted in the eighth goal of the UN Sustainable Development Concept, are defined. The main indicators of payment (number of bank branches, number of ATMs) and monetary (number of bank accounts) infrastructure are allocated and analyzed. The goals and tools for implementing the Strategy for the Development of the Financial Sector of Ukraine until 2025 as a key document in the context of sustainable development of the banking sector are described. The following tools were used in the course of the study: grouping, comparison and generalization, analysis and synthesis, and graphical methods. The results of the study can be a source of information for public authorities, banks and other stakeholders seeking to promote the sustainable development of the banking system in Ukraine.

МІЖНАРОДНИЙ БІЗНЕС В УМОВАХ ТУРБУЛЕНТНОСТІ ГЛОБАЛЬНОЇ ЕКОНОМІКИ

The article is devoted to the study of trends in the evolutionary changes of international business in the context of global economic turbulence. It is established that the global economy is currently at the stage of turbulent fluctuations, the factors and at the same time the results of which are the strengthening of new features that are almost polar to the attributes of the economy of the past decade. The turbulence of the global economy provokes relevant trends in the development of international business: a decrease in the rate of scaling of the international companies activities; comprehensive digitization of business processes; reformatting of global chains of value formation in terms of length, fragmentation and localization; strengthening cyber security and information protection in order to minimize financial and reputational risks; the growth of e-commerce; multichannel communications with consumers; increasing the social responsibility of international companies and increasing investments in sustainable development; increasing the value of human capital and permanent modernization of the international companies HR management. Artificial intelligence and human creative capital are becoming the identifying carrier of globalization changes, which is a source of innovative efficiency of international business processes and a critical factor for sustainable development. This stimulates a steady increase of investment in the development of artificial intelligence and its implementation in international business practices. Artificial intelligence has become a factor in the development of traditional economic sectors and a driver of the creative economy as a new global phenomenon. It is established that the growth of the creative economy is characterized by the disparity between countries with different levels of development in international trade in goods and services of creative industries: a clear dominance of developed countries in the services segment and a dynamic increase in the contribution of developing countries in the segment of creative goods. On a global scale, artificial intelligence is not limited to international business and is being actively integrated into the process of developing and implementing sustainable development strategies.

Правовые механизмы и инструменты повышения внутренней устойчивости экономики Республики Беларусь

Improving the internal stability of the economy is one of the leading tasks of public policy in most countries. The Republic of Belarus is continuously actively searching for effective legal mechanisms and tools aimed at creating favorable conditions for stable economic growth and improving its qualitative characteristics. Purpose. The author's aim is to determine effective legal mechanisms and tools to increase the internal stability of the economy of the Republic of Belarus, based on the essential content and causes of the economic crisis. Methodology. The research is based on general scientific and private scientific methods: dialectical, formal-logical, system-structural, terminological; general logical methods. Results. The study allowed us to reveal the concept of economic stability, the prerequisites of crisis situations, to identify legal mechanisms and tools to increase the internal stability of the economy, to develop practical recommendations for their implementation. Conclusion. The choice of legal tools for improving the internal stability of the economy directly depends on the causes, scale, direction and duration of the crisis situation. In order to effectively solve the problems of countering economic collapses, it is proposed to consider the possibility of switching to special legal regulation to streamline relevant public relations and adopt an anti-crisis law of a model nature at the national level, fixing a single procedure for actions in conditions of economic turbulence.

Investigating the Gold Investment Decision during the COVID-19 Pandemic in Bengkulu City, Indonesia

The current landscape of the Indonesian economy bears the weight of the COVID-19 pandemic, witnessing a widespread downturn across nearly all sectors. In response to this economic strain, one potential avenue for bolstering or preserving individual welfare levels lies in investment strategies. This study scrutinises the impact of various sociodemographic factors on individuals' decisions to invest in gold amidst the COVID-19 crisis. Specifically, gender, age, education, occupation, income, and risk tolerance are examined to discern their influence on gold investment decisions. Conducted within Bengkulu City, the study engages with 190 respondents and employs multiple regression techniques to illuminate key insights. This research reveals a nuanced interplay between sociodemographic variables and gold investment choices during the pandemic. Gender, age, income, and risk tolerance are significant influencers, exerting discernible effects on individuals' inclinations toward gold investment. Notably, the analysis unveils that gender and age dynamics, alongside income disparities, play pivotal roles in shaping investment behaviours, with certain demographics exhibiting a heightened propensity for gold investment in the face of economic uncertainty. Conversely, the impact of education and occupation on gold investment decisions appears less pronounced within the context of Bengkulu City during the pandemic. While these variables undoubtedly shape individuals' financial dispositions, their direct influence on the inclination toward gold investment seems less substantial amidst the prevailing economic challenges. In essence, this study underscores the multifaceted nature of investment decision-making during times of crisis, shedding light on the intricate interplay between sociodemographic factors and investment behaviours. By unravelling these dynamics, policymakers, and investors can glean valuable insights into crafting tailored strategies to navigate economic turbulence and safeguard individual welfare amid uncertainty.

Фінансування дефіциту державного бюджету України в умовах воєнного стану

As a country that faces constant economic turbulence, Ukraine is dealing with several challenges. This includes a significant increase in the deficit of budget resources while needing to finance military expenses, all while trying to maintain macroeconomic stability. This article focuses on the specifics of financing the deficit of the state budget of Ukraine during martial law. The financing of the state budget deficit is analyzed in terms of the classification of budget financing by the type of creditor and the type of debt obligation. These indicators were significantly affected by the military challenges in 2022 and the first half of 2023. The article also covers the budget deficit’s coverage analysis at the expense of revenues from the privatization of state property and the issuance of military government bonds, which gained popularity in Ukraine. The authors emphasized the importance of cooperation between the state and IFIs and other institutions as an essential source of financing for overcoming the deficit of the state budget. This form of cooperation is necessary for maintaining the country’s financial stability and resilience to face complex challenges. The article examines the measures to cover the budget deficit in military conditions, including the need to carry out budget system reforms, cost optimization, searching for new sources of income, expanding the tax base, and improving the efficiency of the tax system, which can provide additional funds in the budget. Other measures include financial transparency, investment stimulation, budget consolidation, increasing transparency, fighting corruption, improving conditions for entrepreneurship, achieving low and stable inflation, expanding the tax base, and speeding up the privatization of state enterprises.

Does the government finance its own spending by taxing the population or relying on newly created funds from the central bank?

In reality, a government funds its own expenditure mainly by taxation, borrowings, and fees and charges. Additional sources of government revenue include seigniorage, natural resource revenues, and foreign aid and grants. The specific mix of revenue sources and their relative importance varies from one government to another based on factors such as the country’s economic structure, tax policies, natural resources, and external financial assistance. Suppose a government ends taxing and funds its own expenditure purely by borrowings. In that case, it may lead to an inefficient market, a turbulent economy, social and economic inequality, and reduced social productivity and welfare.