IMBALANCES AND SUSTAINABILITY OF PUBLIC FINANCES IN WARTIME CONDITIONS

Introduction. The financial stability of the state is a key factor in ensuring macroeconomic stability and long-term development. Under martial law, the economic challenges, along with the need to mobilize resources for military resistance to aggression, have reached unprecedented proportions, necessitating the adaptation of financial subsystems of public institutions to new conditions. Structural transformations of public finances are becoming a critical element both for the effective management of a wartime economy and for laying the foundation of sustainable economic growth in the post-war period. Increased defense spending, financing of the security sector, growth of social transfers, and reconstruction of destroyed infrastructure are creating new challenges for public finances. Simultaneous contraction of economic activity, decline in savings of business structures and households, as well as the need to attract significant external and internal borrowings, generate risks of debt unsustainability and threats of default. In such a situation, traditional macroeconomic regulation tools lose their effectiveness, while the digitalization of public finance management becomes strategically important. The purpose of the article is to investigate the models of institutional changes aimed at ensuring the sustainability of Ukraine’s public finances caused by Russia’s full-scale war against our country and global political turbulences. To identify the key digital transformations in fiscal policy, the budget process, and the dynamics of government borrowing. Results. The key digital transformations in fiscal policy, the budget process, and the dynamics of government borrowing have been identified. Digital models of coordinated public institutions within the fiscal space and approaches to assessing the sustainability of public finances in conditions of imbalances and macroeconomic instability have been proposed. The main challenges for the future of public finance have been outlined, as well as possible ways to overcome them.