An assessment of Ukraine’s financial security: sectoral breakdown and general level

Abstract

Financial security is characterized by the state's ability to ensure stability of the country's financial and economic development and includes the security of various economic activities and spheres of social life. The article assesses the security of the components of Ukraine’s financial sector and calculates the overall level of financial security in this country. The author considers the current mechanism for determining the level of financial security. To date, in Ukraine, the Methodology for determining the level of financial security is in force, which is approved by the Ministry of Economy based on the "Methodological recommendations for calculating the level of economic security of Ukraine" created according to a quantitative study of indicators characterizing the level of Ukraine’s overall economic security and that of financial security as its priority component. Calculated security levels of the financial sectors, namely those of the banking sector and the non-banking financial sector, as well as debt, budget, currency and monetary security. The most problematic is the debt sector whose security level averages 16.9% for the analyzed period. The overall level of financial security has a downward trend (44% in 2021). Ukraine's economy is not protected from financial threats and imbalances. The author identifies a few shortcomings in the above mentioned Methodology. As it was developed in 2013, its indicators no longer reflect the real situatioin in the country, while its methods mainly focus on analyzing financial indicators and ignore non-financial information, external factors, and the impact excerted on overall financial security by its individual components. The article points to the need to improve the mechanism of assessing the level of national financial security and provides a series of corresponding proposals.