Hennadii Zubko believes that local budget funds should work for hromadas, and not bank interest

In 2018, local budget revenues set up an absolute record of UAH 234 billion. And this is the result of the financial decentralisation that the Government has been carried out since 2015, said Hennadii Zubko, Vice Prime Minister – Minister of Regional Development, Construction, Housing and Communal Services of Ukraine, in an interview to Interfax-Ukraine.

“At the beginning of 2018, we placed an ambitious bar of UAH 230 billion, and finished with an even higher figure. In 2014, when we started the decentralisation reform, the regions came out with a figure of UAH 68 billion, in 2015 – UAH 98 billion, in 2016 – UAH 147 billion, in 2017 – UAH 193 billion, and now we have already received UAH 234 billion. Thus, in course of the first years the volume of funds on deposit accounts of local budgets and balances on treasury accounts increased at the end of the year. But we have lately admitted improvement of the situation: balance volumes are at the level of 2016, although the revenues have increased significantly. This means that municipalities have already started planning and designing. They felt that there will be funds for the projects,” said Hennadii Zubko.

The Vice Prime Minister also commented on the decision of the Ministry of Finance of Ukraine to ban local self-government from placing temporary idle funds of the general fund on deposit accounts. “By this decision, we provided an opportunity for local self-governments, willing to get financial result on the funds’ balance, to buy securities, and not to feed the banking system. In 2017, local self-government earned UAH 1.9 billion from deposit accounts, and 1.3 billion during the previous year. Some mayors perceived this ban as an attack on self-government, though local budgets should work for hromadas,” the official emphasised.

He noted that the Government through the bonds of internal state loan offers the highest financial rate – 18% - in comparison with banks. The deposit rate on deposits of municipalities in banks, on average, is 10.5%. The highest deposit rate was observed at the level of 14%. This is a huge backlash. The state wants these funds to be used and is ready to pay more.

“This year, the Government switched to medium-term planning and is already preparing a Budget Resolution for three years. Local self-government is not limited at all in budgeting – they can see the 3-5-10-year horizon. Their revenues may increase due to the analysis of land resources and land taxes, real estate taxes. We also allowed municipalities to directly borrow funds from international financial institutions for infrastructure development, planning of territories, etc.,” said Hennadii Zubko.

20.02.2019 - 15:18 | Views: 1413
Hennadii Zubko believes that local budget funds should work for hromadas, and not bank interest

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Прес-служба Віце-прем’єр-міністра України

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