CONSISTENCY OF FISCAL AND MONETARY POLICY TO ENSURE FINANCIAL STABILITY IN UKRAINE

Abstract

The topicalityof the publication is basedto the need to analyze and evaluate the effectiveness of monetary and fiscal policy interconnections (as a combination of budgetary, fiscal and debt policies), as well as their combined impact on financial stability. Today, this is one of the most pressing challenges faced by the society and the Government of Ukraine, since, public authorities do not always effectively calculate the mutual effects of their own policies. The article is aimed to identifying the main issues and weaknesses in the implementation of monetary and fiscal policies, their interconnection and the impact on ensuring financial stability, as well as the development recommendations for their coordination. It is established that the shortcomings in the cooperation between the Ministry of Finance and the National Bank (NBU) in terms of developing approaches to their own policies and the possible consequences of their impact on the financial stability and development of the economy as a whole have led to the need to revise the State Budget of Ukraine for 2019, and posed additional risks in the implementation of economic policies and in ensuring financial stability. The main issues are: the focus on the ‘narrow-profile’ and short-term issues of fiscal and monetary policies that lead to imbalances in the future, and the shortcomings in the prediction of individual macro indicators and factors  having direct impact on them, that leads to the inaccurate prediction of budget revenues and expenitures. It is proposed to improve the approaches to ensuring cooperation between the NBU and the Ministry of Finance in terms of calculating the possible consequences of monetary and fiscal policy, taking into account their impact on the financial stability in the country, practical risk assessment and prompt development of proposals for their minimization, reformatting the work of the Council on financial stability ets.The risks in the process of implementation of fiscal and monetary policy, that were identified, and the steps to prevent them, that were determined, will have a positive impact on ensuring financial stability.