War and New Challenges for the Financial System
Russia’s aggression against Ukraine has reshaped the geopolitical landscape and significantly impacted the country’s economy. The loss of economic resources, increased defense expenditures, and social assistance have put immense pressure on the state budget. In this context, public debt becomes not just a necessity but a tool to achieve long-term goals.
Why Can Debt Be Beneficial?
Many EU countries have demonstrated that effective debt management can be advantageous. For example:
- Italy. The government used borrowing to develop tourism infrastructure, which became a driver of growth.
- The Netherlands. Green bonds funded renewable energy projects, reducing dependence on fossil fuels.
For Ukraine, public debt can create new opportunities in infrastructure, technology, and energy development.
Priority Directions for Ukraine
To ensure effective debt policy, Ukraine should focus on:
- Developing the green economy. Introducing state programs supporting energy efficiency and alternative energy sources.
- Supporting small and medium-sized businesses. Raising funds to create new jobs in affected regions.
- Infrastructure projects. Investing in rebuilding destroyed bridges, roads, and social facilities.
How to Ensure Transparency?
International institutions like the IMF and World Bank often require strict conditions regarding accountability and transparency in using borrowed funds. Ukraine must implement robust accounting standards to build trust among investors and donors.
European Lessons for Ukraine
The experiences of EU countries prove that public debt can serve as a tool for recovery and development. However, responsible management of these resources is crucial.
Ukraine faces a challenging choice: to perceive public debt as a burden or an opportunity. European experience shows that a strategic approach to debt policy can transform the country, ensuring stability and prosperity in the future.