Bezkomorna O.D., Turochkin R.O., Rieznik M.A.

Oles Honchar Dnipropetrovsk National University, Ukraine

THE NATIONAL DEBT OF UKRAINE AND ITS DYNAMICS

The problem of the growth of Ukraine’s national debt gets more pressing with each passing year. The dynamics of its growth is also quite disturbing.

When the debt is growing faster than GDP, there are two ways to improve the debt to GDP ratio: one of them is not to accumulate debts, another is to promote the GDP growth rate. The choice isn’t difficult to make, and it is to identify the most potentially effective types of business which can help the Ukrainian manufacturer in getting competitive advantage in world markets, and to invest in them.

Commercial loans that are backed by the state amount to 14.6 billion dollars today. These business structures are developing successfully, but the government isn’t raising the issue of repaying the loans. Should they be returned, there would be no need to pay the interest and the problem would not be so acute. The current debt policy for creditors and investors is not transparent, with the willfully hidden information on foreign debts and state guarantees, information on loans of local authorities is not complete and there isn’t any system of accounting, monitoring and control of the national debt sector.

The main problem of Ukraine’s economy is the destruction of the Soviet-era industrial potential of the country and general corruption, which prevents business from developing. It’s been 20 years since Ukraine became an independent country, and the economy isn’t profitable yet. Privatization has been carried out, many companies has gone bankrupt. The solution to the problem is very easy – it is investing in technology and fighting and winning the war with corruption.

In order to change the situation, we need governmental investments into the sectors of national economy that bring profit. The country currently loses its potential: instead of processing raw materials on the country’s territory, as we should, they are exported. Raw materials make up 80% of the exports of Ukraine. In order to change to the closed-loop production circle and to process raw materials and make goods, we need to solve the problems of domestic and foreign markets. In the domestic market there is such a solution suggested as the rise in wages and pensions in order for people to consume more, in the foreign marker – the idea of selling the products abroad. Ukrainian finished products are not welcomed in the West. Thus, we should explore opportunities of export to the markets in the East. In order to find the product market we need to enter the Customs Union and the Single Economic Space. This will allow us to attract investments for producing finished products and exporting them rather than raw materials.

Tax proceeds reflect the level of economic activity. In Ukraine we can see an increase in industrial production, the growth of GDP, which, as a whole, is a positive dynamics, which will, no doubt, help us develop. However, the national debt is continuously growing which makes us wonder whether the state gives us real numbers. Perhaps the positivetrend exists only on paper, and this is the cause of the problem.

The national debt of Ukraine secured by the government as of the 31st of January 2012 was 475.22 billion hryvnyas which is 59.48 billion dollars, including 306.16 billion hryvnyas (37.7 billion dollars) of external national debt secured by the government (63.37% of the total national debt secured by the government), the national domestic debt secured by the government amounts to 174.06 billion hryvnyas which is 21.78 billion dollars (36.62% of the total amount) [1]. According to the forecasts, by the end of 2012 GDP will have amounted to 1 trillion 5 billion hryvnyas, a budget revenue will have made up 332.8 billion hryvnyas, budget expenditure will have amounted to 358.1 billion hryvnyas. These figures show that the budget deficit will have made up 7.6% by the end of 2012 [2].

According to the predictive estimates of the ministry of finance, 47.4 billion hrn. will be spent to service and repay the national debt in 2012, in 2013 this sum will amount to 55.5 billion hrn., in 2014 – 39.3 billion hrn.

Let us note that the projected figures have been calculated by the ministry of finance all the way up to 2060, when Ukraine will have to pay only 15.3 billion hrn. to repay the debt to the International Monetary Fund [3].

Thus, the implementation of the following measures should be ensured in the process of creating the debt strategy of the state: ensuring the efficient use of national debts for investment purposes rather than for consumption; strengthening the role of internal market loans in the process of financing the budget deficit rather than using external loans; reducing the portion of the foreign currency in the national debt; improving the system of forecasting a set of interrelated parameters that influence the formation of the national debt of Ukraine; increasing the level of the information and analytical support of the debt policy.

Literature:

1. Звіт Міністерства фінансів України щодо стану державного і гарантованого державою боргу на 31 січня 2012 р. [Електронний ресурс]. – Режим доступу: http://www.rbc.ua

2. Закон України “Про Державний бюджет України на 2012 рік” [Електронний ресурс]. – Режим доступу: http://www.rada.gov.ua

3. Прогнозні розрахунки Мінфіну України [Електронний ресурс]. – Режим доступу: http://www.rbc.ua