FINANCIAL SUSTAINABILITY AS A COMPONENT OF FINANCIAL SECURITY OF TERRITORIAL COMMUNITIES IN WARTIME
DOI:
https://doi.org/10.35774/Keywords:
financial security, financial stability, local authority, financial autonomy, financial capacity, local budget, martial law.Abstract
Introduction. This article examines the theoretical foundations of the financial security of local authorities and approaches to structuring it. It sets out the advantages of adopting an analytical approach, within which the financial security of a local authority is understood through a combination of three distinct yet interrelated components: financial autonomy, capacity and resilience. The essence of a community’s financial stability as a component of its financial security is explored; this is characterised by the internal configuration of financial resources (budget revenue and expenditure, debt obligations) and the sensitivity of its financial position to the impact of external destabilising factors. The study also justifies the need to distinguish between the concepts of financial stability and financial resilience of a local authority.
The purpose of the article is to establish the theoretical foundations of a local authority’s financial stability as a component of its financial security and to develop a methodology for assessing it.
Methods. The study utilised general scientific methods of analysis, synthesis and generalisation to elucidate the essence of a local authority’s financial security and the role of financial stability within its structure; comparison to contrast academic approaches to the interpretation of local authorities’ financial stability; a systematic approach and grouping – to develop a system of indicators for assessing the internal and external dimensions of a community’s financial stability; and the tabular method – to present the results of testing the proposed methodology using communities in the Ternopil region as examples.
Results. An analytical approach to structuring the financial security of a local authority has been substantiated, which involves identifying financial autonomy, capacity and sustainability as independent analytical components. The two-dimensional nature of a local authority’s financial sustainability is revealed, encompassing the internal dimension (the optimality of the budget’s revenue and expenditure structure, debt sustainability, and reserve capacity) and the external dimension (the sensitivity of the local authority’s financial position to security, macroeconomic and institutional factors). A system of indicators for assessing the financial sustainability of a local authority has been developed, comprising five groups of indicators. The proposed methodology was tested using the example of local authorities in the Ternopil region for the period 2020–2025, which demonstrated a deterioration in financial stability indicators following the start of the full-scale invasion and their gradual strengthening as the regional economy adapted to wartime conditions.
Prospects. Further research should focus on developing a formalised toolkit for assessing the elasticity of local authorities’ budgetary indicators to the influence of external factors; the implementation of such a toolkit will become possible once a sufficient statistical database of observations has been accumulated.
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