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Liburkina L. M.

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The Fiscal-Monetary Coordination in Ukraine Amid Wartime Financing and Inflation Persistence
Pirnykoza P. V.

Pirnykoza, Pavlo V. (2026) “The Fiscal-Monetary Coordination in Ukraine Amid Wartime Financing and Inflation Persistence.” Business Inform 8:366–375.
https://doi.org/10.32983/2222-4459-2026-8-366-375

Section: Finance, Money Circulation and Credit

Article is written in Ukrainian
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UDC 336.02:336.74(477)

Abstract:
Existing studies of fiscal and monetary interaction rarely combine a transparent measure of fiscal and monetary pressure with a regime-based assessment of inflation persistence. Aim – the study evaluates fiscal-monetary policy coordination in Ukraine in 2019–2025 and compares inflation persistence across the pre-pandemic, pandemic, and martial law regimes. The analysis draws on official data from the National Bank of Ukraine and the IMF’s International Financial Statistics. The monthly year-on-year inflation series extends through December 2025. A sample-normalized fiscal-monetary coordination pressure index aggregates the consolidated budget deficit excluding grants, the National Bank’s net purchases of government securities, and the positive deviation of December inflation from the 5% target. Annual inflation persistence is estimated with regime-specific AR(1) models using Newey–West standard errors with 12 lags. Augmented Dickey–Fuller tests assess stationarity, while approximate pairwise Wald tests compare the regime coefficients. The index peaked at 98.2 in 2022, when a deficit of 25.3% of GDP, UAH 400 billion in central-bank government bond purchases, and inflation of 26.6% occurred simultaneously. The index subsequently equaled 33.5 in 2023, 40.3 in 2024, and 35.5 in 2025. The persistence coefficient was 0.680 in 2016–2019, 0.998 in 2020–2021, and 0.978 in 2022–2025. Wald tests showed higher persistence of the pandemic and martial law regimes compared to the pre-war period, but they did not find a statistically significant difference between the two crisis regimes. The estimates are diagnostic rather than structurally causal. The study operationalizes coordination pressure as the intensity of conditions requiring policy alignment without treating it as a measure of policy quality. The results support a quarterly fiscal-monetary risk map, a coordinated domestic borrowing calendar, and predefined activation and exit conditions for emergency monetary financing.

Keywords: fiscal-monetary policy coordination; wartime financing; inflation persistence; budget deficit; monetary financing; key policy rate; Ukraine.

Fig.: 1. Tabl.: 2. Formulae: 2. Bibl.: 19.

Pirnykoza Pavlo V. – Candidate of Sciences (Economics), Candidate on Doctor Degree, Department of Finance named after S. I. Yurii, West Ukrainian National University (11 Lvivska Str., Ternopil, 46009, Ukraine)

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