ADAPTIVE MANAGEMENT OF THE BUDGET PROCESS DURING WAR: THE EXPERIENCE OF UKRAINE

Abstract

The article examines adaptive management of the budget process under martial law and heightened macroeconomic uncertainty. It is substantiated that under conditions of large-scale security shocks, traditional budget planning mechanisms oriented toward stability and predictability of fiscal parameters significantly lose their effectiveness. In such circumstances, the ability of the public finance system to respond promptly to external challenges, reallocate budget resources, and maintain the financial stability of the state becomes crucial.

The purpose of the study is to develop a conceptual model of adaptive management of the budget process during wartime, to identify criteria for assessing its effectiveness, and to determine the limits of managerial discretion under the crisis functioning of the budget system. The research employs methods of structural analysis, statistical measures of variation, and econometric tools, including the structural adaptation index based on the L1-metric, the coefficient of variation, and the Chow structural break test.

A model of adaptive budget management is proposed, which includes scenario budgeting, mechanisms for the rapid reallocation of budget resources, centralized coordination of the budget process, liquidity management of public finances, and a feedback system for the regular adjustment of budget decisions. It is shown that the effectiveness of adaptive management depends on the speed of decision-making, the flexibility of the expenditure structure, coordination between different levels of government, and the ability to control fiscal risks.

Based on the analysis of the structure of state budget expenditures of Ukraine for 2021–2025, it is established that the beginning of the full-scale war caused a sharp transformation of budget priorities and a significant reallocation of resources in favor of the security and defense sector. The results of the structural adaptation index indicate a phase of shock restructuring of the budget system in 2022, followed by a transition to a stage of stabilization adaptation.

The scientific novelty of the study lies in the proposed approach to the comprehensive assessment of the adaptability of the budget process, which combines the analysis of structural shifts, the measurement of financial turbulence, and the identification of regime changes in the functioning of the budget system. The practical significance of the results lies in the possibility of applying the proposed tools to improve wartime budgeting mechanisms and to develop strategies for the post-crisis stabilization of public finances.