Financial Capacity of Territorial Communities: The Challenges of Wartime and Post-War Recovery Strategy

The article presents a comprehensive study of the financial capacity of Ukrainian territorial communities in the context of the ongoing full-scale war and outlines the strategic directions for their post-war recovery. The relevance of the topic is determined by the unprecedented challenges faced by local budgets: a sharp decline in tax revenues caused by the destruction of the economy and population migration, along with a simultaneous exponential increase in expenses for restoring critical infrastructure and supporting internally displaced persons (IDPs). This critical imbalance has created financial difficulties that threaten the effective functioning of communities and lead to the emergence of the so-called «negative economic cycle». The aim of the research is to develop and scientifically substantiate a new conceptual model that ensures the financial capacity of territorial communities based on the organic unity of their financial potential and institutional capacity. The methodological foundation of the work incorporates a systemic approach that enables the consideration of financial capability as a complex, multi-component system. The article presents a model of the community’s «Financial DNA» as a scientific metaphor. This model illustrates the organic unity of two key components – financial potential (the ability to form a resource base and mobilize income) and institutional capacity (the ability of local government bodies to effectively manage resources and adapt to changes). The scientific results obtained demonstrate that to break the «negative economic cycle» and create a «positive cycle» of development, it is critically essential to shift from a policy of «survival» to strategic planning. It has been proved that success depends on the synergy of three key areas: 1) enhancing financial potential through the diversification of income sources; 2) strengthening institutional capacity through the introduction of adaptive management mechanisms; 3) minimization of risks through financial security tools, including military risk insurance and social investment. The conclusions obtained can be utilized by government authorities to adjust fiscal policy, as well as by local governments to enhance financial stability and effective resource management in complex, unpredictable conditions.

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