Debt dependence and devaluation cycle in the Ukrainian economy
DOI:
https://doi.org/10.51599/are.2020.06.01.07Keywords:
devaluation cycle, bond of the internal state loan, external debt, debt burden.Abstract
Purpose. The purpose of the article is to present the results of research of causes and mechanism of increasing the external debt of Ukraine, the relationship of these processes with the formation of the depreciation cycle in the Ukrainian economy, as well as expediency analysis of the policy of external borrowings accumulation in the future.
Methodology / approach. To achieve the determined goal a system approach was applied, as well as the methods of generalization, induction, deduction, analysis, synthesis and comparison. In addition, we used the following special methods: statistical analysis and monographic methods (to evaluate and analyze the debt burden of the Ukrainian economy); abstract-logical method (for theoretic generalization and analysis of the study results). As an empirical basis, official statistic databases of the National Bank of Ukraine and the Ministry of Finance of Ukraine were used.
Results. The article explores the cause and the mechanism of increasing the external debt of Ukraine, the interrelatedness of these processes with the formation of the devaluation cycle in the economy of the country. The expedience and the risks of the policy for the external borrowings accumulation in the future have been analyzed as well. It has been established that the debt policy in Ukraine requires transformation in accordance with the national interests. It has been proved that the public debt has to be managed taking into account the risks, primarily, the risk of actual loss of independence of the country. As the speculative capital involved due to highly lucrative return on investments in bond funds of the internal state loan is not an investment in the real economy, thus impeding shattering hryvnia devaluation.
Originality / scientific novelty. As a result of the study, for the first time, the interrelation between the processes and external debt accumulation and devaluation cycle formation in the economy of the country is substantiated. The research of the risks of extension of the external debt of Ukraine accumulation was further developed.
Practical value / implications. The results of the research can be used for further scientific surveys on the mechanism of preventing risk imbalance of the financial system in the context of debt dependence and devaluation cycles in the economy of any country.
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