ASSESSMENT OF THE STATE OF UKRAINE’S NATIONAL DEBT AND DIRECTIONS OF ITS OPTIMIZATION

Introduction. Russia's full-scale aggression against Ukraine has forced Ukrainians to adapt to new realities in all aspects of life, including the financial sector. For almost three years, Ukraine has been in a state of full-scale war, with government revenues significantly decreasing while expenditures have doubled. The country has developed a new system of priorities in key fiscal matters. Specifically, the top priority is spending on national security and defense, as well as the implementation of martial law measures, while the second priority includes social expenditures and servicing the national debt. As a result of this imbalance, the budget deficit has significantly increased, and to cover it, the government is compelled to attract additional financial resources. Purpose. The aim of the article is to examine the current state of Ukraine's national debt and identify ways to optimize it in the context of new threats — the full-scale war. Materials and methods. The research is based on the principles of modern financial science regarding the formation of national debt and the implementation of debt policy. The source base for the study includes legislative acts on national debt, statistical and analytical materials from the Ministry of Finance of Ukraine, as well as scientific works by both domestic and foreign scholars. Results. In the current context, government borrowing is considered an important source for covering the budget deficit. National loans play a crucial role in stimulating economic development, serving as a source of investment financing and helping to mitigate the negative impact of external factors. However, excessive accumulation of national debt may threaten the country's solvency and ultimately lead to a debt crisis. An analysis of Ukraine's national debt reveals that the full-scale invasion has significantly impacted the state and dynamics of both national and government-guaranteed debt, which increased 3.5 times in dollar terms and six times in hryvnia terms between 2014 and 2024. During the same period, the share of guaranteed debt was halved, while the proportion of direct national debt grew substantially. To finance the large budget deficit and the recovery of an economy that suffers daily from Russia's aggression, Ukraine is forced to continue borrowing. In such circumstances, the national debt management policy must be focused on minimizing the negative impact of structural shocks on the country's financial stability. Key instruments may include political support from international partners to secure non-repayable financial aid, the development of a new national debt management strategy, the restructuring of debt obligations through agreements with creditors, as well as increasing the investment attractiveness of government bonds, which play an important role in financing Ukraine's priority military expenditures. Additionally, efforts to seize Russian assets and those of its citizens, both in Ukraine and abroad, could be explored to cover financial losses. Discussion. Future research should focus more on studying foreign experiences in public debt management, particularly during periods of structural upheavals such as crises, wars, political instability, and other factors.