DIGITALIZATION OF FINANCIAL INSTRUMENTS AND ITS IMPACT ON STATE PUBLIC FINANCE MANAGEMENT MECHANISMS IN THE CONTEXT OF GEOPOLITICAL RECESSION

Abstract

The article examines the impact of geopolitical recession on public finance management and analyzes the role of digitalization in strengthening state fiscal resilience during global economic turbulence. Particular attention is given to the transformation of public finance management mechanisms caused by geopolitical instability, armed conflicts, and geo-economic fragmentation. The study explores how global and regional tensions affect budget stability, public revenues, debt sustainability, and financial markets. It is determined that geopolitical shocks create significant fiscal risks, including a reduced tax base, disrupted international trade flows, increased defense expenditures, and higher government borrowing costs.
In this context, the digitalization of fiscal instruments becomes an important mechanism for maintaining the stability and transparency of public finance systems. The research demonstrates that implementing digital tools in budgetary, tax, and customs administration improves fiscal management efficiency, reduces transaction costs, strengthens financial monitoring, and enhances transparency in resource allocation. Furthermore, digital platforms, automated risk analysis, and data-driven monitoring increase governmental capacity to respond effectively to external economic shocks.
Using Ukraine as a case study, the article shows that the digital transformation of public finance management acts as a strategic instrument of financial security, mitigating the negative consequences of military and geopolitical crises. The findings emphasize the importance of integrating digital technologies, scenario-based forecasting, and analytical tools into fiscal governance to ensure the state's adaptability, stability, and long-term economic resilience amidst geopolitical uncertainty.