Proceedings of the International scientific and practical conference ―Modern Research and Education‖ (May 2-4, 2026) / Publisher website: www.naukainfo.com. – Warsaw, Poland, 2026. - 523 p.

31 is noted that the inefficient use of budget funds is one of the factors of the system's vulnerability. It is established that in recent years, especially in war conditions, the state budget has been executed with a deficit, and the existence of a significant budget deficit leads to movement along a "debt spiral". To execute the budget, the Government relies on international institutions and Ukraine's partner countries to attract funds to the budget. Thus, the budget deficit, public debt, and inefficient use of budget funds are internal factors that increase the vulnerability of the financial system and undermine its stability. Keywords: financial system; sustainability; stability; budget; budget expenditures; inefficient use of funds; socio-economic development of the country; vulnerability; martial law The war in Ukraine, external and internal challenges on the one hand, and on the other - meeting the needs of the population to live in better, more comfortable conditions, to receive more and in sufficient quantity and quality of goods, public goods, social services, requires special attention to establishing the effective functioning of the financial system. The country's financial system is a powerful tool for implementing state economic policy, a mechanism for redistributing a significant share of GDP, and provides financing for the real sector of the economy through an established mechanism of financial infrastructure. The above convinces of the importance of the uninterrupted functioning of the financial system, its timely, prompt response to destabilizing exogenous and endogenous factors that arise or may arise at any time in the future. Hence, ensuring the stability of the financial system, improving its mechanisms, clarity of interpretation, developing mechanisms to prevent vulnerability and taking into account the components of its reliable, uninterrupted functioning is extremely relevant for Ukraine, which led to the conduct of this study. Among most scientists who study issues of financial, budgetary, monetary, economic policy and not only, the use of scientific terminology related to the stability of the financial system is widespread. Although our detailed analysis of the concept