TOOLS FOR INCREASING THE FINANCIAL SUSTAINABILITY OF LOCAL BUDGETS IN THE CONTEXT OF SUSTAINABLE DEVELOPMENT

Abstract

This article highlights the main problems of financing Ukraine's needs in the conditions of war and economic instability.  Macroeconomic indicators and financial security of the state budget are considered. The key factors influencing the financial system of the state are identified and the dependence of the budget on international assistance is analyzed. Financial sustainability of local budgets represents a crucial feature of the budgetary system, reflecting its ability to function effectively amid changing economic environments, macro-financial fluctuations, and emerging threats. Under conditions of war, economic instability, migration, and growing pressure on local finances, ensuring fiscal balance and  self financing capacity of communities becomes paramount. This article aims to substantiate the theoretical foundations of local budget financial sustainability, identify its key determinants, and systematize modern tools to strengthen local finances within sustainable development goals. The study highlights that local budget sustainability is vital for maintaining stable funding of social services, infrastructure projects, and community development. It depends on balanced revenues and expenditures, sufficient own income sources, flexible fiscal policies, financial reserves, and debt minimization. Numerous Ukrainian and foreign scholars have contributed to this topic, exploring fiscal decentralization, intergovernmental relations, program-based budgeting, and innovative financial instruments. The analysis reveals that factors affecting financial sustainability are complex, ranging from economic conditions and demographic changes to institutional capacity and environmental challenges. Emphasis is placed on innovative financial management tools such as revenue base expansion, medium-term budgeting, expenditure optimization, municipal borrowing, and alternative financing sources, including green and social bonds. The research concludes that enhancing financial sustainability is not an end in itself but a means to ensure sustainable socio-economic development, social equity, and environmental protection at the local level.