Public debt is the sum of the debt liabilities of a state consisting of pending loans at the respective reporting date which were taken by the state. Public loans are taken to finance the public budget deficit. To receive them, a country issues bonds (debt instruments) for the domestic or international financial market. These funds are taken to be used in the public sector of the economy and for their effective transformation into the growth of public revenues.
Public debt consists of the direct debt and the debt guaranteed by the state:
Direct debt is the sum of the country’s debts resulting from taken and pending loans at the respective reporting date;
Debt guaranteed by the state is the sum of the debts of economic entities residing in Ukraine resulting from taken and pending loans at the respective reporting date whose re-payment is guaranteed by the state.
Depending on the source of the loans, the public debt can be domestic (loans taken from citizens or legal entities buying public domestic bonds) or external (loans taken on the international market).
The public debt of Ukraine is managed jointly by the Cabinet of Ministers, the Ministry of Finance, the National Bank and the State Treasury which are responsible for the elaboration and implementation of an effective state debt strategy aimed to secure financial stability and debt sustainability of the country.
The direct public debt and the debt guaranteed by the state are regulated by the Constitution of Ukraine, the Budget Code of Ukraine and other regulations on the re-payment and processing of the public debt and the debt guaranteed by the state.