THE INTERNAL GOVERNMENT BONDS AS A RELIABLE FINANCIAL INSTRUMENT FOR INVESTMENT IN UKRAINIAN ECONOMY

Abstract

This article is about the benefits of the internal government bonds. Today, the economic situation of Ukraine is really complicated and needs a strong political plan of development. The author in the paper analyzes the dynamic and the structure of owners of internal government bonds and gives the answer to the question what are «the internal government bonds», how they have been developed.

Nowadays, the government bonds take a dominant position in the secondary market as the main tools to attract the investment resources. According to the data of the Ministry of Finance of Ukraine, in 2018 the government bonds were sold to the subjects of economy in amount of 10 billion UAH. These financial resources were directed to cover a budget deficit and the expenses of national companies. Hence, the government can distribute some part of this money to the needs of economy. It helps to receive a short term balance in the stock market. As the result, the internal government bonds became an affective financial instrument for investment. The author considers that the benefits of internal government bonds are:

• firm quotes, fair price formation;
• system for management of bilateral limits;
• speedier settlement. This is possible because the depository of the NBU (National Bank of Ukraine) settles trades based on instructions given by the exchange, and there is no need to employ custodians;
• electronic documents;
• opportunity to enter repo quotes.

In European countries, government bonds are very popular among citizens. They help to accumulate and receive some profits from their savings. In Ukraine, not every subject of economy can buy a bond because of the high primary price that is near 50 thousand UAN. It is a common problem existing from the opening the stock market. Famous economists said that Ukraine must make some options for those people who plan to invest their money. Sometimes, even residents are not able to buy the bonds because the deal before that is being requiring a lot of time. The author looks for the resolutions of these problems existing in stock market. For instance, PrivatBank is developing a new mobile app where everyone is able to purchase the internal government bonds.

Paying attention to the large amount of public debt, government bonds are actively used as a debt instrument for domestic borrowing. The government increases the volume of domestic debt, because in comparison with external – it does not reduce the financial potential of the state.

So, the author suggests to increase the emission of the internal government bonds for achievement a short term economic growth. In this case, the government has to be sure that Ukrainians trust them because without that thing they will not invest money. Unfortunately, there are many economic issues which wrack the done developments. That is why, the institutional and organizational improvements need to be led by new political direction. Ukraine is the country with promising future, it needs just to accumulate investing resources, sells the internal government bonds, so its economy starts to work.