Financial management in AH: performance criteria, monitoring, and successful cases
Decentralisation as one of the lasrge-scale reforms has been ongoing in Ukraine since 2014. Newly formed hromadas have received more financial resources, direct relations with the State Budget, and, at the same time, wider powers and responsibilities.
To understand the realities of hromadas, USAID DOBRE conducted a unique assessment of financial management in 75 partner AHs.
Roundtable abstracts, speaker presentations and research findings can be found below.
Hennadii Plis, Deputy Minister of Finance of Ukraine:
“Regarding local budget revenues, the situation in hromadas is more or less normal, since if in 2014 receipts to the general fund of local budgets amounted to 70 billion, now they reach 266 billion. The budgets of amalgamated hromadas are growing faster than the state budget. If we analyse the regions, we will see that development budgets of local hromadas have increased 67 times, compared to 2014... If we talk about three components of sustainable hromada development as a resource, powers and responsibility, it seems to me that we have more problems with powers and responsibilities than with a resource.”
Vyacheslav Rubliov, Member of Parliament of Ukraine, Member of the Verkhovna Rada Committee on State Building, Local Governance, Regional and Urban Development:
“The major issues that emerge in hromadas are human resources. Unfortunately, few people engage in personnel training in hromadas, so this is another challenge that Ukraine has to cope with. The consolidation that is planned will likely increase both the staffing and economic potential of hromadas. The process of hromada development is irreversible.”
Barry Reed, USAID / DOBRE Programme Director:
“Each hromada startes from different points. Some even from the first assessment are already doing a lot of things right and others are not. And what we see over time (especially in the first two cohorts) is an improvement in their activities: improvement in procurement, budget transparency, basic systemic improvement in how they conduct accounting, how they are organised. It is really essential to show financial management effectiveness for building trust. This creates trust between the hromada and central government, improving the conditions for providing resources to the hromada.”
Angela Bochi, DOBRE expert in financial management and local budgets:
“It is important for us to understand what is happening in the hromadas, how well they are coping with their powers received from central government, and whether they have enough resources. The methodology meets international standards and allows to show progress or problems in each area of financial management in hromadas. This is also the budget process – approval, implementation, budget review, and accounting – availability of internal control systems, ways procurement is carried out, existence of tools to manage assets and their use.”
The monitoring results include a detailed assessment report and recommendations for improvement and a step-by-step plan for improving the financial management of each hromada.
Two hromadas, which are effective and efficient in the field of financial management, took part in the discussion.
Vitaliy Lukov, head of the Voznesenska AH:
“Unlike many countries in the world, local taxes in Ukraine are administered by the state. But local taxes are not central to the State Fiscal Service. The hromada has virtually no leverage in this field. As soon as the Government gave us a definite opportunity, we immediately, within two months, found a young smart lawyer who became a labour inspector. Our main result is a real labour legalisation. Unfortunately, there are simply no other levers in hromadas. And we very much ask the Government, the MPs trust us more.”
Volodymyr Popovych, head of the Lanchynska AH:
“Exactly in 8 months we have registered and built a gas station. We have leased the land, got 8 jobs, excise tax. And now, due to a drastic change of legislation, they want to take away the excise tax. The rules of the game cannot change so drastically.
We leased our land for a solar power plant. These were 20 hectares of shrubs. The land that has never been used before is currently being cultivated and generates 230,000 revenues.
Last year, we, a small hromada, raised UAH 2.5 million to the budget.”
The full version is available in Ukrainian – please click HERE
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