Fedevych Liudmyla, PhD (Economics), docent Department of Finance, National University «Lviv Polytechnic», Lviv, Ukraine

ORCID ID: 0000-0002-3097-7467
e-mail: liudmyla.s.fedevych@lpnu.ua

Lyvdar Marta, PhD (Economics), docent Department of Finance, National University «Lviv Polytechnic», Lviv, Ukraine

ORCID ID: 0000-0003-1925-7781
e-mail: marta.v.lyvdar@lpnu.ua

Domestic Government Bonds as a Tool for Investment and Support of the Economy of Ukraine

Abstract. Introduction. This article examines the domestic state loan bond market in Ukraine, taking into account the pandemic and the war with Russia. The deficit state of Ukraine’s budget necessitates attracting additional funds to finance growing expenses. The government securities market is an important component of the country’s financial system. The Ukrainian government most often issues bonds of the domestic state loan (OVDP), in their essence, these debt securities are an important tool of fiscal policy. Circulation of bonds in Ukraine is carried out exclusively in electronic form. The largest volumes of issuance of debt securities were recorded in 2014 and since 2019 till 2021 years. These years were a crisis for Ukraine, and the need for additional resources is justified. The work analyzed that the main buyers on the OVDP market are banking institutions and non-residents, while individuals do not have sufficient knowledge about the possibility of investing in debt securities.

Purpose. The purpose of the article is to study trends in the volume of OVDP issuance on the stock market of Ukraine during 2013-2022, as well as directions for the use of withdrawn funds. If we talk about investing in foreign currency, the article examines that it is more profitable to invest in OVDP, rather than depositing, especially the high yield of bonds denominated in US dollars.

Results. The authors analyzed and demonstrated the size of the issue of OVDP on the primary market and directions of use of funds from this placement. An important economic phenomenon during the issuance of a currency OVDP is the strengthening of the national monetary unit – the hryvnia. In this way, the government can influence the stability of the national currency. However, when the bond matures, there is a reverse effect, which is why it is important to take this into account and to facilitate the maturity of debt securities to coincide with a period when foreign exchange resources are flowing into the country in a larger volume than usual.

Conclusions. Conclusions were made that for the state OVDP is a significant source of financing for state budget expenditures. It is noted that domestic state loan bonds play an essential role in the development of the economy as a whole because the funds received from their issue are used to cover the budget deficit, finance investment, and social projects.

Keywords: domestic government bonds; state budget deficit; yield; investors in domestic government bonds; bond issue.

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