Model of Allocation of Budget and Borrowed Funds for the Armed Forces of Ukraine Development Programs in Compliance with NATO Standards

Abstract

The AFU support budget policy does not have any sufficient modern mechanism for the best budget planning, which would predict the possible state of budget items execution and resolve the alignment of financial processes to NATO standards. And this is caused by the lack of application of particular mathematical tools for budgetary processes prediction and optimization to carry out the evaluation and analysis of the budget use considering the probability fac- tor. A model for managing the use of budget and borrowed funds for the Armed Forces of Ukraine development programs according to NATO standards, considering the levels of long-term development of programs and the probability of their implementation, is developed. The result of the evaluation of the Armed Forces of Ukraine effectiveness based on the utility function and cognitive model was the management model for the processes of budget and borrowed funds use for the AFU development pro- grams in compliance with NATO standards. The model takes into account the long-term programs development levels and the probability of their implementa- tion, affecting the interaction between the indicators of the AFU planning and budget process execution and increasing the effectiveness of defense reform in Ukraine. Its practical use helps to approach NATO standards in budgetary sphere and provides an opportunity to forecast budget under expenditures under the risk of its use. The cognitive model of the impact of interaction between the planning and the AFU budget process execution indicators on the effectiveness of defense re- form in Ukraine establishes the links in the contours of the defense reform effec- tiveness management, which can be defined as critical, i. e. risky and provides an opportunity to assess the risk levels of each contour and to model scenarios and options for improving the processes of planning and use of budget funds for defense reform. The decrease of the Armed Forces of Ukraine budget underfunding initially leads to a vibrational process of impacts on the target vertex, but then the proc- ess stabilizes. In order to study the dynamics of influence of the factors, acting as instruments of the AFU budget resources management on the target vertex, apply the method of impulse processes. This method is used for scenario modeling of alternative decisions.