Institutional nature of budget deficit and public debt in Ukraine

The article is devoted to the institutional nature of the budget deficit and public debt. The views of the scientists on the nature of the origin of the budget deficit are represented. The difference between active and passive deficit are explained. Main ways of balanced budget are described. Their main disadvantages and risks are outlined. This article explains that the methods of balancing the budget may result in the largest institutional deformation in Ukraine. Institutional imbalances in the ways of balancing the budget are identified. The influence of the size of the budget deficit and budget expenditures on the GDP is evaluated. The peculiarities of public debt in Ukraine are disclosed. The dynamics of budget deficits and public debt to GDP are analyzed.The causes of negative impact of increasing the public debt on the budget deficit are systematized. The threat debt policy of Ukraine with regard to the impact on the budget deficit and the economy are justified. The situation that institutional imbalance in the balance of the budget cannot be overcome by increasing the debt load caused by the negative net exports is shown. The main reasons of the limited debt capacity in Ukraine are named including the critical size of gross external debt achieved, dependence of public debt dynamics on the exchange rate of the hryvnia, the outflow of currency from the country, large contingent liabilities of the government. The strategies to overcome institutional deformations in the process of balancing the budget are justified including the reductions of public debt, balancing of the expenditure policy, optimizing of the size of the budget deficit (not exceeding 3% of GDP), and transformation the passive budget deficit in active.