Comprehensive Assessment of Ukraine’s Budget Security in the Context of Military Threats

Abstract

Purpose: The purpose of this article is to assess Ukraine’s level of budget security under martial law, based on an empirical analysis of key fiscal indicators and multi-variant scenario forecasting for the medium-term period. Design/Methodology/Approach: The assessment is built upon the normative framework of the Methodological Recommendations approved by the Ministry of Economic Development and Trade of Ukraine (2013). The research standardizes four fundamental indicators: the state budget deficit to GDP ratio, the general government sector fund balance, the level of GDP redistribution through the consolidated budget, and the public debt service and repayment ratio. Analytical forecasting is performed using linear trend functions and a scenario approach incorporating trend confidence intervals to account for high volatility under economic crisis conditions. Findings: The study revealed a severe and structural deterioration in Ukraine’s budget security following the full-scale military invasion. In 2023, the composite budget security level plummeted to a critical minimum of 6.7%, driven by the state budget deficit expanding beyond 20% of GDP and GDP redistribution rising to 47.48%. Conversely, temporary relief was observed in debt servicing due to successful restructuring. The regression analysis established a functional correlation confirming that a 1% increase in the budget security level corresponds to a +0.14% expansion in real GDP, with changes in GDP accounting for 55.9% of budget security dynamics. Predictive scenarios for 2024–2026 indicate that under a realistic trajectory, the indicator will remain within the absolutely dangerous zone (5.3–13.2%), and even under optimistic assumptions, it will not exceed critical thresholds (31.3–38.9%). Practical Implications: The practical value of the paper lies in a structured set of anti-crisis measures tailored for wartime public financial management. These include the rigorous reallocation of budget funds towards defence and essential social welfare, conducting comprehensive performance audits of state programs, optimizing tax legislation to mitigate the administrative burden on enterprises, and intensifying institutional cooperation with global creditors (IMF, World Bank, EU) to streamline external financial assistance. Originality/Value: The originality of the research lies in the improved methodological approach to evaluating how armed conflicts systematically shock public finances. By integrating a complex economic-statistical assessment with stochastic modelling, the study provides a robust empirical framework to isolate the acceleration of macroeconomic decline caused specifically by the erosion of budget security.