Abstract
The modern stage of Ukrainian regions’ economy development, on the one hand, shifts the accents towards administrative and financial decentralization with simultaneous transfer of resources, authorities and responsibilities to the local level, and on the other hand – stipulates efficient use of territories’ internal capacity and orientation at «smart specialization», optimization of the system of authorities and prevention of regional asymmetries. In this sense, an efficient system of inter-budgetary relations is the key to balanced sustainable development of the country and its regions, which should minimize the disproportions of regions’ development, provide efficient redistribution of budget resources inside the budget system caused by territorial asymmetries of revenue base and, therefore, serve as the key instrument to maintain sustainable territorial development. The paper aims to reflect on domestic experience of construction of the inter-budgetary relations model in conditions of financial decentralization in order to outline the perspective directions of its improvement. The paper assesses current functioning condition of the system of inter-budgetary relations in Ukraine according to the results of the first stage of financial decentralization. The risks and challenges of its aggravation for regions’ social and economic development are outlined. The following of them are defined as the most essential: unbalanced local budgets; excessive transfer dependence; imperfect mechanism of subvention allocation for forming of CTCs (consolidated territorial communities) infrastructure; legally unregulated and non-transparent mechanism of investment subventions allocation among the regions; insufficient mechanism of allocation of additional subsidy granted for oblast budgets as compensation of revenue loses by local budgets emerging from delegated liabilities regarding funding the educational and healthcare institutions; accumulation of the volumes of temporarily free local governments’ funds on deposit accounts in state banks. The range of practical recommendations is suggested in order to minimize the risks of inter-budgetary relations’ decentralization, in particular improvement of the procedure of allocating the infrastructural subvention to CTCs and subvention for social and economic development of regions; delineation local governments’ functional liabilities.
Highlights
The modern stage of Ukrainian regions’ economy development, on the one hand, shifts the accents towards administrative and financial decentralization with simultaneous transfer of resources, authorities and responsibilities to the local level, and on the other hand – stipulates efficient use of territories’ internal capacity and orientation at «smart specialization», optimization of the system of authorities and prevention of regional asymmetries
An efficient system of inter-budgetary relations is the key to balanced sustainable development of the country and its regions, which should minimize the disproportions of regions’ development, provide efficient redistribution of budget resources inside the budget system caused by territorial asymmetries of revenue base and, serve as the key instrument to maintain sustainable territorial development
All the abovementioned confirms the existence of substantial challenges in the sphere of inter-budgetary relations in general and in management of budget funds in particular
Summary
The modern stage of Ukrainian regions’ economy development, on the one hand, shifts the accents towards administrative and financial decentralization with simultaneous transfer of resources, authorities and responsibilities to the local level, and on the other hand – stipulates efficient use of territories’ internal capacity and orientation at «smart specialization», optimization of the system of authorities and prevention of regional asymmetries. While reducing the disproportions of regional development through redistribution of financial resources, it is necessary to divide the competences regarding making decisions about providing the social benefits in such a way that the financial resources of the country are optimally distributed by the principle of fiscal justice In this context, the range of problems causes the necessity of improvement of the system of inter-budgetary relations. It is worth mentioning that the basic subsidy goes to local budgets with the Tax Capacity Index 0,9 (these, for example, by personal income tax for 2019 are predicted for 8 Ukrainian oblasts, including Hersonska, Volynska, Rivnenska, Ternopilska, Ivano-Frankivska, Zakarpatska, Luhanska, Chernivetska) This problem along with somewhat declarative nature of financial decentralization in Ukraine and low tax capacity of most local budgets is confirmed by the distribution of inter-budget transfers in regional dimension in 2014-2017 (Fig. 2,3).
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: Financial and credit activity problems of theory and practice
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
