FINANCIAL SUSTAINABILITY OF TERRITORIAL COMMUNITIES IN REGIONS WITH ELEVATED SECURITY RISKS

Abstract

This article examines the theoretical and methodological foundations of the financial sustainability of territorial communities in regions with elevated security risks under martial law. The study substantiates financial sustainability as an integrated category combining the financial autonomy, capacity, and self-sufficiency of local governments. Under wartime conditions, the financial sustainability of local budgets largely depends on the scale of infrastructure destruction, tax base contraction, migration processes, and the effectiveness of interbudgetary regulation mechanisms.
The paper identifies key destructive factors affecting the financial systems of frontline territorial communities, including the destruction of production facilities, declining entrepreneurial activity, forced migration, land contamination by mines, and increasing dependence on state budget transfers. The financial sustainability of these frontline regions was assessed using the coefficient of expenditure coverage by own revenues and the coefficient of fiscal autonomy. The results reveal substantial differentiation among them: the Luhansk region demonstrates a critical level of transfer dependence, whereas the Kharkiv and Mykolaiv regions maintain relatively high levels of fiscal autonomy and financial capacity despite significant security challenges.
Ultimately, the financial sustainability of territorial communities under crisis conditions depends not only on resource availability but also on institutional flexibility and the ability of local authorities to adapt financial management to wartime challenges. Strategic priorities for strengthening sustainability during wartime and post-war recovery include diversifying revenue sources, expanding the local tax base, stimulating investment activity, optimizing budget expenditures, and implementing digital instruments for adaptive financial management and transparent budgeting.