The State Fund of Regional Development is set to be transformed from a budgetary programme into an autonomous institution. At the same time, plans are in place to change the way its funds are allocated, taking into account the functional types of territories.

This information was reported by Vitalii Bezgin, Minister for Communities, Territories and Internally Displaced Persons of Ukraine, in an interview with the Interfax-Ukraine news agency.

The Minister stated that, in the long term, the State Fund of Regional Development could be funded not only from the state budget, but also through grants and partnership programmes. The Fund could also provide small communities with financial support to enable them to participate in European programmes, particularly ones where expenses are reimbursed after the project has been completed.

‘Unlike Lviv, a small community does not have working capital. However, in most cases, European institutions provide payment after completion. You implement the project using your own funds, submit a report, and then 90% of the project budget is reimbursed. Without working capital, you cannot implement the project,’ noted Vitalii Bezgin.

The Minister emphasised that state investment should be channelled into projects that are aligned with the strategies of communities, regions, and the state. This is particularly important given the limited resources available.

MinRehion also plans to change how it allocates funds from the State Fund of Regional Development (SFRD), doing so according to the functional types of territories. Currently, allocation is based on the region’s population and the tax-raising capacity of local budgets. However, this approach does not always reflect the actual needs of territories affected by the war.

Vitalii Bezgin used the example of Kherson region: a decline in population reduces the region’s calculated funding, but the need for bomb shelters, education, basic services, and recovery does not diminish.

According to the Minister, amendments to the rules governing the use of SFRD funds are expected to be finalised by spring, which will give communities a real opportunity to implement their projects. However, the availability of co-financing resources will depend on the parameters of the state budget.

Source: interview with Vitalii Bezgin for Interfax-Ukraine.