FISCAL–MONETARY POLICY COORDINATION IN PRESERVING FISCAL SOVEREIGNTY UNDER CRISIS CONDITIONS

Abstract

Introduction. Under crisis conditions, a state’s fiscal sovereignty is determined not merely by its formal authority to make budgetary and tax decisions, but above all by its capacity to finance core public functions without resorting to inflationary financing, debt destabilization, or excessive dependence on external funding. In Ukraine, this problem spans two distinct regimes: the pre-war period of 2020–2021 and the wartime period of 2022–2025.

Purpose. The purpose of the article is to provide a theoretical and applied substantiation of fiscal–monetary policy coordination as a factor in preserving fiscal sovereignty under crisis conditions.

Materials and methods. The study draws on official data from the National Bank of Ukraine, the Ministry of Finance of Ukraine, the Ministry of Economy of Ukraine, the European Commission, the European Central Bank, the European Investment Bank, the OpenBudget portal, as well as scholarly works by domestic and international researchers. The methodological framework combines the systems approach, institutional and comparative analysis, and analytical-statistical generalization.

Results. The findings show that in 2020–2021, fiscal–monetary coordination in Ukraine primarily performed a stabilization and recovery function, whereas in 2022–2025 it assumed the character of wartime anti-crisis management. Against the backdrop of a high budget deficit, rising public debt, and growing reliance on external financing, the alignment of fiscal, debt-management, and monetary responses made it possible to maintain a manageable inflation trajectory, preserve the domestic government borrowing market, and build up international reserves. At the same time, Ukraine’s coordination model remained predominantly defensive and stabilization-oriented, since government credit support programmes were not backed by dedicated long-term monetary instruments capable of strengthening financing for priority segments of the real sector. The EU experience demonstrates that, in times of crisis, fiscal–monetary coordination can combine fiscal stimulus, long-term refinancing, and support for investment lending.