JUSTIFICATION OF THE EXPENDITURE PRIOIRITY INDEX IN UKRAINE’S WARTIME BUDGETARY POLICY
DOI:
https://doi.org/10.35774/Keywords:
budgetary policy, expenditures, State budget, fiscal space, budget expenditure priority index.Abstract
Introduction. The article examines approaches to prioritizing expenditures of the State Budget of Ukraine in the context of a war economy and limited fiscal space. The relevance of the topic is due to the fact that starting from 2022, the state finances of Ukraine have been operating in conditions of long-term military aggression, which has caused a significant transformation of budget priorities, a sharp increase in spending on the security and defense sector, and the need to simultaneously maintain funding for key social and state functions.
The purpose of the article is to develop and verify the Expenditure Priority Index (BEPI) as a tool for quantitative ranking of functional expenditures of the State Budget of Ukraine.
Results. Theoretical approaches to prioritizing budget expenditures were generalized, a system of evaluation criteria was formed, an integral BEPI index was constructed and its calculations were carried out for the main functional areas of State Budget expenditures. Using the index for analytical substantiation of budget decisions and optimization of the structure of public expenditures is proposed.
Conclusions. The obtained ranking of functional areas of State Budget expenditures for the period 2020–2025 according to the integral index of expenditure priority demonstrated the patterns inherent in the state in wartime conditions and can serve as a basis for substantiating the redistribution of resources in the budget cycle of 2026–2027. First of all, the results confirm that the defense and security expenditures is an unalternative priority of budget policy in wartime. The second key priority is social protection and healthcare as stabilizing functions of the budget system. The next important priorities of budget policy are adequate financing of the state-wide functions of ensuring law and order, fiscal management, and institutional stability. Financing of education and the development of economic activity in wartime conditions appear to be less of a priority, but in the period of post-war recovery they acquire fundamental importance in order to restore the socio-economic development of Ukraine.
References
1. Bruni, F., Tentori, D., Villafranca, A. (2022). New Fiscal Rules: The EU Beyond Covid and the War. Sipotra. 2022. Available at: https://www.sipotra.it/wp-content/uploads/2022/05/New-Fiscal-Rules-The-EU-Beyond-Covid-and-the-War.pdf
2. De Haas, R., Pivovarsky, A. (2022). The reconstruction and development of Ukraine’s financial sector after the war. European Bank for Reconstruction and Development (EBRD). Working Paper, 273. Available at: https://www.ebrd.com/content/dam/ebrd_dxp/assets/pdfs/office-ofthe-chief-economist/working-papers/working-papers-2022/WP-273.pdf.
3. Schick, A. (2006). Sustainable budget policy: Concepts and approaches. OECD Journal on Budgeting, 5/1. https://doi.org/10.1787/budget-v5-art5-en.
4. Tandberg, E., Allen, R. (2020). Managing public investment spending during the crisis. IMF PFM Blog. Available at: https://blog-pfm.imf.org/en/pfmblog/2020/05/managing-public-investment-spending-during-the-covid-19-crisis.
5. Yefymenko, T. I., Ivanov, Yu. B., Karpova, V. V. (2022). Podatkovi pilhy v umovakh voiennoho stanu: upravlinnia komplaiens-ryzykom [Tax incentives under martial law: Compliance risk management]. Finansy Ukrainy – Finances of Ukraine, 4, 7–26. https://doi.org/10.33763/finukr2022.04.007.
6. Lunina, I. O. (2022). Potentsial publichnykh finansiv dlia zabezpechennia vydatkiv voiennoho periodu ta postvoiennoho vidnovlennia Ukrainy [The potential of public finances for providing expenditures of the war period and post-war recovery of Ukraine]. Finansy Ukrainy – Finances of Ukraine, 8, 7–26. https://doi.org/10.33763/finukr2022.08.007.
7. Radionov, Yu. D. (2022). Derzhavni finansy u voiennyi ta postvoiennyi periody [State finances in the war and post-war periods]. Finansy Ukrainy – Finances of Ukraine, 10, 44–65. https://doi.org/10.33763/finukr2022.10.044.
8. Liutyi, I., Rozhko, O., Liutyi, S. (2022). Optymizatsiia vydatkiv derzhavnoho biudzhetu Ukrainy v umovakh viiny [Optimization of expenditures of the state budget of Ukraine in war conditions]. Svit finansiv – World of Finance, 4, 45–55. https://doi.org/10.35774/sf2022.04.045.
9. Kyrylenko, O. P., Humen, V. S. (2025). Biudzhetni vydatky na sotsialnyi zakhyst ta probleme zabezpechennia fiskalnoi konsolidatsii v period voiennoho stanu v Ukraini [Budget expenditures on social protection and problems of ensuring fiscal consolidation during martial law in Ukraine]. Svit finansiv – World of Finance, 4, 86–96. https://doi.org/10.35774/sf2025.04.86.
10. Krysovatyy, A. (2025). Dysbalansy i stiikist publichnykh finansiv v umovakh viiny [Imbalances and sustainability of public finances in war conditions]. Svit finansiv – World of Finance, 2, 8–17. https://doi.org/10.35774/SF2025.02.008.
11. Liutyi, I. O., Miedviedkova, N. S. (2023). Suchasna paradyhma finansovoi polityky derzhavy ta osoblyvosti yii realizatsii v umovakh viiny na terytorii Ukrainy [Modern paradigm of the state financial policy and peculiarities of its implementation under the conditions of war on the territory of Ukraine]. Finansy Ukrainy – Finances of Ukraine, 6, 61–74. https://doi.org/10.33763/finukr2023.06.061.
12. OpenBudget. (n.d.). State budget of Ukraine: Expenditures, functional classification. Available at: https://openbudget.gov.ua/en/national-budget/expenses.
13. Yefymenko, T. I. (2024). Priorytety zabezpechennia stiikosti derzhavnykh finansiv Ukrainy v suchasnykh umovakh [Priorities for ensuring the sustainability of state finances of Ukraine in modern conditions]. Finansy Ukrainy – Finances of Ukraine, 1, 7–24. https://doi.org/10.33763/finukr2024.01.007.
14. Radionov, Yu. D. (2023). Priorytety biudzhetnoi polityky v umovakh voiennoho stanu ta povoiennoho vidnovlennia Ukrainy [Priorities of budget policy in the conditions of martial law and post-war recovery of Ukraine]. Finansy Ukrainy – Finances of Ukraine, 9, 24–47. https://doi.org/10.33763/finukr2023.09.024.
15. International Monetary Fund. (2025). Fiscal Monitor: Spending Smarter – How Efficient and Well-Allocated Public Spending Can Boost Economic Growth. Available at: https://www.imf.org/en/Publications/FM.
16. Centre for Economic Strategy. (2024). Overview of the Budget 2025. Available at: https://ces.org.ua/wp-content/uploads/2024/12/engbudget-2025.pdf.
17. Centre for Economic Strategy. (2024). Overview of the Budget 2025 (short analytical version). Available at: https://ces.org.ua/en/overviewof-the-budget-2025/.
18. Marzian, J., Trebesch, C. (2026). Guns and butter: The fiscal consequences of rearmament and war (CESifo). Working Paper, 12469. Available at: https://www.ifo.de/DocDL/cesifo1_wp12469.pdf.
19. Organisation for Economic Co-operation and Development. (2022). Best practices for spending reviews. OECD Journal on Budgeting, 22. Available at: https://econpapers.repec.org/RePEc:oec:govkaa:90f9002c.
20. Organisation for Economic Co-operation and Development. (2023). Government at a glance 2023. Paris. OECD Publishing. Available at: https://www.oecd.org/en/publications/government-at-aglanc2023_3d5c5d31en.html.
21. World Bank. (2024). PEACE in Ukraine Project: Agreed-Upon Procedures Review Report. Available at: https://documents1.worldbank.org/curated/en/099844104032538660/pdf/IDU-064198f2-6c74-446a-b50f-c20ffea8a981.pdf.
22. UNICEF (2023). Ukraine state budget 2024: Social protection, health and education allocations. Available at: https://www.unicef.org/ukraine/media/38981/file/National%20Budget%202024.pdf.
