MANAGING PUBLIC DEBT IN THE CONTEXT OF THE CHALLENGES OF WAR AND DIGITAL TRANSFORMATION

Abstract

This article analyzes the dynamics of Ukraine’s public and government-guaranteed debt for the 2021–2026 period and examines structural changes in its domestic and external components amid full-scale war. The growth in public debt stems from a significant expansion of budget expenditures on defense, social protection, and infrastructure restoration, increasing borrowing requirements. The paper assesses the role of domestic government bonds as a critical borrowing instrument and a focal element of active public debt management. Specifically, it highlights the switch-auction mechanism, which optimizes the maturity structure of debt obligations, reduces the short-term budgetary burden, and maintains domestic financial market liquidity. Furthermore, the article explores external public debt formation, particularly through loans from international financial organizations and foreign governments. It analyzes the role of European Union macro-financial assistance, including the Ukraine Facility, alongside the ERA mechanism and the utilization of proceeds from frozen Russian assets as additional budgetary funding sources. Particular attention is dedicated to the impact of digital transformation within the public finance management system, which enhances the transparency of debt operations, improves analytical support, and minimizes operational risks. Ultimately, combining an active debt policy, diversified funding sources, and modernized digital management serves as a key prerequisite for ensuring Ukraine’s financial stability in wartime.