Conceptual framework for managing debt financing of public budgets

Abstract

Introduction. Overcoming the consequences of the COVID-19 pandemic and full-scale Russian aggression against Ukraine caused the destruction of a stable system of managing financial flows not only in our country, but also in many states. Market and regulatory mechanisms for mobilization and the use of financial resources were undermined. Fiscal consolidation measures were changed in favor of expansion. The need to increase the resource base on the basis of state debt has intensified. The use of standardized approaches in the field of fiscal policy did not make it possible to limit risks under new conditions. The task of implementing new conceptual approaches to the management of public budget financing based on the use of debt instruments has arisen. Problem Statement. An increase in debt financing of public budgets helps to expand the volume of resources for the implementation of state plans. At the same time, the pressure on the financial system is growing, which requires making significant changes to the formation of the structure of debt instruments, their placement on domestic and foreign financial markets, attraction of resources on preferential terms from foreign partners, fulfillment of repayment and servicing obligations, refinancing and restructuring of loans. Determining rational management decisions on these issues involves the development of a conceptual framework for public debt financing. The purpose is to study the formation of a conceptual framework for managing debt financing of public budgets and their use in the practice of public administration. Methods. Research methods are used: historical, logical, abstraction, description, generalization, comparison, grouping, analysis and synthesis. Results. The adoption of the debt framework guides the definition of debt strategy, debt management goals, indicators of its volume and structure, debt management tasks, as well as mechanisms and tools for their implementation. The debt strategy reflects the orientation of the debt policy, the goals of public debt management for long and medium-term periods, its indicators, the use of tools and mechanisms for achieving the adopted goals, the formation of the debt portfolio for the specified terms, the classification of risks of government debt management taking into account their impact on the performance of state budget, the application of refinancing and restructuring mechanisms for state liabilities. Conclusions. The conceptual framework for managing debt financing of public budget is an important guiding document aimed at taking into account the conditions for placing debt obligations among investors (state institutions, non-state depositors, non-residents), access to international financial markets, cooperation with international organizations and financial institutions, acceptance of debt portfolio (the structure of state budget financing), built according to types of debt instruments, sources of financing, currencies of loan repayment and servicing, repayment terms, loan servicing rates and debt refinancing. The development and implementation of the conceptual framework for the management of public debt transactions is important for Ukraine. In the conditions of overcoming the consequences of the war and post-war reconstruction, it is necessary to apply a comprehensive approach to the formation, distribution and use of resources raised on the basis of the use of public debt instruments.