THE RELATIONSHIP BETWEEN DEBT POLICY AND ECONOMIC STABILITY

The article examines the impact of Ukraine's debt policy on economic stability, considering both the positive and negative effects of public debt. Focus is placed on the use of public debt as a tool for financing budgetary needs and supporting macroeconomic stability, as well as on the risks associated with debt servicing. Using empirical data and an econometric model, the relationship between public debt, inflation, exchange rate, and unemployment is analyzed. It is important to note that for countries with transition economies, such as Ukraine, which are highly vulnerable to economic and political shocks, debt policy holds particular significance, as it impacts the state’s ability to ensure economic stability amid political and economic uncertainty. The study is based on a comprehensive approach that includes econometric modeling and panel data analysis from 2000 to 2023. Data from the National Bank of Ukraine, the Ministry of Finance of Ukraine, and the World Bank were used. A regression model was formulated, which includes key macroeconomic indicators to determine the impact of public debt on economic stability. The influence of public debt on macroeconomic indicators and the dependence on external borrowing were identified. A comparison with Poland and the Czech Republic shows that a low share of external debt and the development of the domestic bond market contribute to a more stable economy. This underscores the need to reduce the share of external financing for Ukraine. The results highlight the importance of a structured debt policy to ensure the stability of the national economy. The study shows that Ukraine’s debt policy significantly affects economic stability through its relationship with indicators such as inflation, exchange rate, and GDP. Reducing the share of external debt and developing domestic financial instruments may contribute to Ukraine’s economic stability. It is proposed to develop a long-term strategy for state debt management to ensure economic stability; reduce dependence on external financing by developing internal sources to finance economic processes; optimize the debt structure by attracting long-term borrowings on the domestic market; strengthen the institutional framework for debt management, which will ensure transparency and efficiency in managing public finances.