FINANCE. TAXES. CREDIT УДК 336.143: 336.27 JEL: H10, H12 1Scientific and Research Financial Institute of the Academy of Financial Management, Research ID : http://www.researcherid.com/rid/https://scholar.google.com.ua/citations?user=vzk_3BQAAAAJ&hl=uk BUDGET DEFICIT AND FINANCING OF CRITICAL SERVICES Approaches to the use of budget deficit in fiscal policy are clarified. It is concluded that the analysis of the deficit contained in the works of domestic scientists does not sufficiently take into account changes in the volume and structure of expenditures, as well as their effects on economic and financial development of the country. It is noted how as a result of the application of deficit financing mechanisms, it’s not only the expenditures on borrowing services that are growing. No less important are the costs of financing the repayment of accumulated debt. To cover them, it is not the state budget revenues that are used, but the funds received on the basis of placing additional borrowings or attracting resources by conducting operations with state assets. During the challenges of the COVID-19 pandemic, additional budget expenditures are directed mainly to the provision of critical services. The factors influencing the attraction of additional resources (in order to finance the budget deficit) are identified: access to capital markets, the level of profitability of government borrowing, the dynamics of macroeconomic indicators, the possibility of conducting operations with government assets. An important condition for financing the budget deficit is to prevent the destructive effects of such operations on the dynamics of macroeconomic and financial indicators of the country. In developed countries, keeping low interest rates has significantly reduced the negative effects of deficit-summing. It is concluded that maintaining high yields on government debt instruments in Ukraine increases the risks of such transactions. During the period of overcoming the consequences of the pandemic, it is advisable to revise the current fiscal rules and apply special measures to restore them after overcoming its consequences. Keywords:state budget deficit; state budget financing; government borrowing; government bonds; critical infrastructure; critical services; financing of anti-epidemic measures; financial stability; fiscal rules
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