Object of research is domestic government borrowing in financial system of the country.Goal of research is to substantiate the directions to improve the mechanism of shaping the domestic public debt of Ukraine.Methods of research. Systemic approach for studying a financial mechanism of internal public borrowings. Methods of decomposition, comparison, indexes, statistic analysis.Theoretical and practical outcomes. The basic definitions of public credit theory were specified, elements of the system of internal public borrowing management were examined in terms of their theoretic understanding and regarding concrete forms and methods of borrowing; the functioning mechanism and development peculiarities of national state bonds market were detected; a number of suggestions regarding better effectiveness of domestic public borrowings were developed, they concerns issue of targeted bonds, implementation of mechanism of government credit programs, reform of state guarantees system; methodical recommendations to analyze economic risks of state bonds were substantiated; recommendations on streamlining households funds inflows to public debt market through introduction of new savings bonds were elaborated.The innovations of thesis. Author’s definition of a term “mechanism of shaping domestic public debt” was suggested as a system to determine the order of attracting funds for financing state expenditures through public borrowing and to provide for economic, organizational, legal and informational aspects of this process; the essence of a concept “state credit” was specified; the characteristics of essence of state credit were systematized based on which the major features of government borrowings were determined for the first time, these are fundamental, functional and specific, a new function of the state credit – compensative - was substantiated, which reflects the ability of public loans to provide for more flexible use of budget revenues mechanism via compensating and supplementing of the tax system; the term “absorbing capacity of government bonds market” was defined as the amount of issued state bonds which could be sold without decrease in market liquidity; the division of state bonds market evolution into period was suggested for the first time, it includes five periods: formation, extension at the expense of foreign investments, crisis, after-crisis depression, conceptual reforming of public debt policy; recommendations on improving the management of domestic public debt of Ukraine were grounded, specifically, the measures of debt management for optimization of shaping the domestic debt and the activities to increase the efficiency of loans disbursement; the original methods of analysis of major economic risks of government borrowings (default risk, inflation risk, interest rate risk, liquidity risk) were developed which provide for the assessment of the above risks and the mechanisms of their compensation; the measures for batter purchasing of state bonds by individuals were elaborated which envisage confirmation of willingness and ability of Ukrainian government to meet obligations within a year and backup of state securities with real assets.Application of the thesis’s accomplishments. Analytical materials regarding dynamics and specificities of shaping the domestic public debt of Ukraine were used by the Ministry of Finance for drafting a law On Fundamentals of the State Debt Policy for 2002-2005. Scientific and practical conclusions prepared based on generalized international experience of issuing savings bondswere used when drafting Program of development of medium and long-term state securities market for 2003-2005.Sphere of using. Public finance, public debt management.
