Public guarantees: risks of fiscal imbalance

The article investigates the amount and structure of public guarantees granted in 2004-2015, borrowings made under the state guarantees and guaranteed debt for the same period. Borrowers under the public guarantees are classified into four groups: general government's institutions, public corporations engaged in quasi-fiscal operations (QFAs) other than the central bank, public corporations not engaged in QFAs, and the central bank. It is proved that in Ukraine the mechanism of government guarantees is often used firstly as an instrument to conceal the budget deficit and central government debt, and secondly, as a form of compensation for part of the losses incurred by public corporations in the course of quasi-fiscal operations. The author analyzes the effects of guaranteed loans for each of the above mentioned groups and proposes various measures to improve the current procedures of the provision of public guarantees for better fiscal and debt sustainability.