Ukraine’s balance of payments financial account as an indicator of economic stability

Economic Annals-ХХI: Volume 143, Issue 7-8(2), Pages: 40-43

Citation information:
Makarenko, M., & Ponomarenko, O. (2014). Ukraine’s balance of payments financial account as an indicator of economic stability. Economic Annals-XXI, 7-8(2), 40-43. https://ea21journal.world/index.php/ea-v143-10/

Mykhaylo Makarenko
D.Sc. (Economics),
Professor,
Head of the Department,
Ukrainian Academy of Banking of the National Bank of Ukraine
57 Petropavlivska Str., Sumy, 40000, Ukraine
makarenko@uabs.edu.ua

Oksana Ponomarenko
PhD Student,
Ukrainian Academy of Banking of the National Bank of Ukraine
57 Petropavlivska Str., Sumy, 40000, Ukraine
ok.o.ponomarenko@gmail.com

Ukraine’s balance of payments financial account as an indicator of economic stability

Abstract. Ensuring financial stability of the state economy in many countries is one of the key central bank’s objectives. Given the peculiarities of the Ukrainian economy in 2012-2014, it is extremely urgent to focus attention on the financial account for the crisis prevention. For a long time, the financial account has discharged purely the compensatory function, i.e. covered the deficit of the current account balance and enhanced the international reserves. Still the political instability in 2013-2014, negative investment climate, corruption and deterioration of economic outlook in general have led to increasing the crisis of financial account of the balance. We describe the key issues of financial account and infer that there are several ways of the economic recovery. Firstly, it is necessary to establish trade relations with partners in EU by using the grace period in 2014. Secondly, a policy of pulling the economy out of the «shadow» should be one of the key priorities in new economic programs. Thirdly, we should carry out informed and concerted action in cooperation with other countries in order to stabilize political crisis in the country and restore cooperation with international financial institutions (including IMF). Then it is useful to reduce the current account deficit through using the policy of import substitution and supporting the national enterprises. Finally, support of small and medium enterprises can make a real difference too. In conclusion, we reckon that these issues will help not only safe our economy but also develop it in advance.

Keywords: Financial Account; Balance of Payments; Financial Stability; Investment

JEL Classification: E44; F21; F31

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Received 31.05.2014