Abstract
The article is devoted to the problem of the distribution of intergovernmental transfers in Ukraine, taking into account fiscal decentralization trends. To perform the delegated functions, local governments need to have sufficient funding. However, the revenues of local budgets are insufficient to cover all necessary expenses. Therefore, inter-budget transfers, which in Ukraine are the main instrument of financial equalization, play an important role in ensuring the implementation of delegated powers by local governments. The aim of the article is determination of the priorities for the distribution of intergovernmental transfers in Ukraine in the context of fiscal decentralization. The research methodology combines quantitative and qualitative methods. Using quantitative methods, the principles of fiscal decentralization in Ukraine are observed through the mechanism of distribution of intergovernmental transfers. Using high-quality methods and based on the analysis, the priorities of the distribution of inter-budget transfers in the context of fiscal decentralization are formulated. An analysis of foreign publications on fiscal decentralization has shown that the uncertainty of priorities in this area reduces the effectiveness of fiscal decentralization and inhibits the economic development of regions. Prioritization of the distribution of intergovernmental transfers is preceded by the definition of principles for the distribution of intergovernmental transfers. Based on the results of a quantitative analysis, namely, the identified dynamics of fiscal decentralization indicators and the impact of the distribution of intergovernmental transfers on economic development, the following priorities for the distribution of intergovernmental transfers in fiscal decentralization are identified: supporting the prevalence of targeted transfers over non-targeted transfers, increasing the share of capital transfers, increasing the accountability of local authorities self-government regarding the use of funds received in the form of intergovernmental budget transfers.
Highlights
To perform the delegated functions, local governments need to have sufficient funding.the revenues of local budgets are insufficient to cover all necessary expenses
Compliance with the principle of decentralization in terms of the distribution of intergovernmental transfers can be estimated through the dynamics of intergovernmental transfers, their share in GDP, as well as through the share of subventions and subsidies in the total volume of transfers
Its growth is observed from 0.37 to 0.71 %. Such dynamics of subsidies is associated with changes in budget legislation that provide for the provision of benefits to targeted financing of local budgets through the provision of subventions
Summary
To perform the delegated functions, local governments need to have sufficient funding. The revenues of local budgets are insufficient to cover all necessary expenses. Inter-budget transfers, which in Ukraine are the main instrument of financial equalization, play an important role in ensuring the implementation of delegated powers by local governments. “the need for inter-budget transfers – additional funds transferred from the state budget to local budgets – arises due to a mismatch between the distribution of powers between management bodies and the distribution of revenue sources for their implementation” [1, p. The main idea of using financial equalization mechanisms is to reduce the financial unevenness of the regions. The current mechanism for the distribution of intergovernmental transfers is characterized by a number of shortcomings and does not fulfill the full equalization function
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