Analysis of financial flows in the budget process of Ukraine under the conditions of structural imbalances of the financial system

Abstract

Adjusting the balanced movement of financial flows in the budget process is a vital component of ensuring the functioning of the financial system. This study aims to identify and outline possible areas for improving the management of financial flows in the budget process of Ukraine to regulate structural imbalances of the financial system. With the help of ranking and clustering, the analysis and assessment of local budgets based on indicators that characterize the movement of financial flows was carried out. The used methods made it possible to consider the differences in the formation and direction of budget flows of territorial communities and determine the progress of administrative-territorial units. An assessment of the state of financial flows consolidated in the treasury single account of Ukraine was conducted: the dynamics of balance, the volume of loans and repayments to local budgets, and the Pension Fund of Ukraine were considered. The assessment results made it possible to determine the directions of setting a stable and balanced movement of financial flows and levers to regulate the impact of structural imbalances of the financial system related to the management of cash balances of the treasury single account and increase of its liquidity. The volumes of revenues, expenditures, deficit, and borrowings to the State Budget of Ukraine were estimated to determine the conditions that cause imbalances in the financial system. The directions for timely and complete execution of the decisions by state authorities and local self-governments are outlined.

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“…Koilo et al (2020) defined government debt security based on the use of four indicators such as solvency, liquidity, internal and external debt of countries with emerging economies. Romenska et al (2022) emphasize rather significant structural imbalances in the system of public finances of Ukraine, which negatively affect the stability of the entire financial system and, therefore, the financial security of the state. When studying the budget security of Ukraine at the level of territorial communities, Voznyak (2021) also substantiates the presence of budget imbalances, which leads to imbalances in the financial system at the local level and forms budget risks and threats to the financial security of Ukraine with different time lags in the conditions of an unstable economy.…”