Since 1991 – the time of declaration of independence of Ukraine, each single government pursued the policy of active attraction of external loans to cover the deficiency of the state budget. Regardless certain attempts to modernize debt policy of Ukraine and adjust the amount of the state debt, the sums of external borrowings grow year to year.
On the one side, the consequence of accelerated globalization processes and integration of global financial markets is easier access to favourable conditions of international crediting and cheap foreign monetary resources, but on the other side, absence of the efficient state mechanism of external debt management results in decrease of resistance of the Ukrainian economy and weakening of its debt sustainability because of excess external borrowings.
In the conditions of non-developed strategy of the efficient management of the state debt, the financial crisis of 2008-2009 and destabilization in the world credit markets complicated already difficult situation with the state debt of Ukraine as the sudden devaluation of the national currency vs. foreign currencies, in which state loans were previously obtained, deepened the problem of management of debt liabilities in both short-term and long-term prospective increasing the external debt burden on the State budget of Ukraine.
An additional factor of financial instability of Ukraine, which effect is still evident, consists in events of the beginning of 2014, when implementation of the geopolitical strategy of the Russian Federation in respect to former USSR countries, which involves formation of a neo-imperialist geopolitical area, resulted in annexation of the AR Crimea and military actions in the East Ukraine.
Thus, Ukraine integrated into the modern globalized world, desperately trying to overcome consequences of the impact of the world financial crisis on own economy and financial system and minimize the damage from destroyed economic links with Russia, which were too strong and interconnected before, needs development of new conceptual basis for the debt strategy and implementation of modern efficient mechanisms of the external state debt management.
This problem is especially critical because now there is very complicated situation in Ukraine when non-reformed, overregulated, heavy system of governance is combined with external aggression and internal conflicts, makes it impossible to respond timely to today’s challenges in the debt policy area. And most importantly, this situation is unprecedented and thus there is no global experience, which might be applied by Ukraine as a standard model.
