DEBT OVERHANG RISKS TO THE COUNTRY'S ECONOMY

Abstract

The article examines the main definitions of the term "debt canopy", its components and main theories that consider one or another aspect of the debt load. The concept of debt burden is separated from the debt canopy, and their differences are indicated. The concept of public debt, which is the basis of the formation of the debt canopy, is considered. The work describes the main reasons for the accumulation of public debt. The risks that a debt overhang on the economy can cause are studied, and the positive aspects of the presence of public debt are also highlighted. In the article, the authors singled out the impact of the debt ceiling on the real sector of the economy. The paper investigated the impact of the debt ceiling on the country's economy at the microeconomic and macroeconomic levels. The specifics of the influence of the debt ceiling at the macroeconomic level on financial stability, financial policy, inflationary processes and the credit rating of the country, and at the microeconomic level regarding the emergence of currency and investment risks, which may be exacerbated by the crowding-out effect, as well as in the field of international trade, are indicated. The credit rating for Ukraine is extremely low due to the military actions and the difficulties in the work of enterprises in such conditions, the reduction of the tax base due to the occupation of the territories, which reduced the state budget and directed it to military and social expenses. It is noted that debt borrowing can have not only negative consequences, but also a positive effect, which is manifested in their number and the balance between costs and benefits of their involvement. It was determined that in the presence of the crowding-out effect, even small borrowings can create a negative trend, which is risky for the country's economy. But even with large borrowings, it is possible to achieve economic growth. It was found that the currency risks of Ukraine's economy are no less dangerous because of its import dependence. The mentioned risks have a certain interdependence and can put pressure on the economy at the same time, reinforcing each other. It was determined that compliance with the ratio of debt burden and available reserves for its repayment eliminates the need to comply with defined macroeconomic norms for the country's debt security.