Responsible debt policy and the financial security of the state

Abstract

Problem setting. Studying the impact of public debt on economic security is particularly important, as debt burden directly affects a country’s ability to ensure macroeconomic stability, creditworthiness, and social obligations. The global increase in public debt, especially after the global crises – financial, pandemic, and energy – creates additional risks for the stability of national economies. For Ukraine, this problem is exacerbated by the ongoing war, the destruction of economic infrastructure, and significant external borrowing, which are creating critical levels of debt pressure. Studying debt risks in conditions of geopolitical instability is necessary for developing an effective financial security strategy and maintaining investor and donor confidence. Therefore, this study is important at both the national and international levels. Analyses of recent researches and publications. Various aspects of debt policy and financial security of the state have been studied by many economists and lawyers. Romanovskaya Yu. A. analyzed Ukraine’s public debt in wartime. Kirov B. S. studied aspects of public debt formation and debt security. The management of Ukraine’s public debt in special conditions was studied by Krupyak I. Y. and Krupyak L. B. The analysis of the impact of external debt on the financial stability and national economic security of Ukraine was carried out by Pikulina O. V., Ogdansky K. M., and Pikulina N. Y. The purpose of this article is to study the impact of external and internal public debt on the financial security of the state and to identify areas for optimizing debt policy in order to strengthen financial stability. Article’s main body. The article examines the relationship between the level of public debt and the financial security of the state, which is one of the key components of national economic security. It is argued that the growth of public debt, especially external debt, increases the risks of losing economic sovereignty, intensifies fiscal pressure, and limits the possibilities of budgetary policy. It is determined that for Ukraine, which is in a state of war, ensuring debt security through transparency, control over borrowing, and compliance with international standards of responsible debt management is of particular importance. The impact of external debt dependence, in particular the conditions of IMF programs, on domestic economic policy and social parameters of the state is analyzed. It is noted that effective debt policy should be aimed at balancing domestic and external borrowing, optimizing the debt structure, and increasing the state’s ability to service its obligations without creating threats to financial stability. The role of the Stockholm Principles as an international ethical standard for preventing debt pyramids and a tool for increasing creditor confidence is highlighted. Conclusions and prospects for the development. Debt security is a component of a state’s financial security, according to which the state is obliged to ensure not only formal solvency, but also a balanced structure of debt obligations that does not pose a threat to sovereignty, macroeconomic stability, and social stability. External debt dependence, which is formed as a result of Ukraine’s participation in programs of the IMF and other creditors, has legally significant consequences for state sovereignty. Responsible debt policy is an element of economic sovereignty. Ukrainian legislation needs to be improved in terms of the regulatory definition of debt security limits and the introduction of a debt risk monitoring system.