STATE BUDGET DEFICIT AND THE SOURCES OF ITS COVERAGE

Abstract

Analysis of the budget deficit requires clarification of approaches to its content and application in the implementation of fiscal policy. The author has developed conceptual approaches to defining the concept of state budget deficit, its use in managing budget operations, securing a resource base to cover it, as well as the features of financing the budget deficit in Ukraine. The growth of state budget deficit indicators requires its coverage based on raising additional funds (over the revenue base) to balance the expenditure and resource parts of the state budget.

In wartime, spending considerably increase and radical changes are made to its structure, which requires going beyond the revenue base to cover expenditures and using budget deficit mechanisms. To increase the resource to finance spending, state budget financing operations are intensified.

The increase in the deficit involves making changes to the structure of state budget expenditures, transferring part of them to the budget financing, as well as raising additional funds (over the amount of revenues) to balance the expenditure and resource parts of the state budget.

When budget deficit is run, the revenue base necessary to cover expenditures is substituted with funds mobilized in connection with state budget financing. A significant share of the expenditures is covered with resources obtained from the placement of government bonds, and only part of them – with revenues from the privatization of state property and active operations within the state budget. Due to the introduction of such mechanisms exceeding critical levels of financial stability and debt sustainability in Ukraine during the war was avoided.