The Number of Subsidised Local Budgets Decreased by 24% Due to the Decentralisation, the Association of Ukrainian Cities

Due to the financial decentralisation, the number of local budgets which require additional subsidies decreased by almost 24% over the last two years. It was stated so by Oleksandr Slobozhan, First Deputy Executive Director of the Association of Ukrainian Cities, at a press conference held at the Ukrinform Press Agency of Ukraine.

The decreased level of subsidised local budgets is one of the main indicators giving evidence of the increased financial independence of local self-government bodies. "Before 2014, the percentage of subsidised local budgets totalled 96.3%, whereas 3.7% of the local budgets acted as donors. In comparison with 2014, the number of subsidised budgets decreased by 23.8% in 2017. In its turn, the number of donor budgets currently totals 16.2%, that means the increase by 12.5%", Mr. Oleksandr Slobozhan said.

Before 2014, the status of bodies of local self-government was that of borrowers. "They had to go hat in hand to Kyiv on regular basis to borrow money for funding one or another of their powers", Mr. Oleksandr Slobozhan noted.

According to him, from 2014, the number of borrowings from public coffers to cover temporary cash deficiencies of local budgets decreased by 58 times. "These are positive indicators giving evidence of the success of the decentralisation reform. So, we think that the statements that the Ukrainian village is being destroyed because of the decentralisation are not acceptable," the First Deputy Executive Director of the Association of Ukrainian Cities summarised. 

If earlier there was a widespread practice of blocking by the State Treasury Service of accounts of local budgets in paying expenses to support the living activity of settlements, now the situation has changed. "From 2015, the State Treasury Service has started to operate properly. There were provisions introduced to the Budget Code, which provisions neutralise the adverse effect of the State Treasury Service on the allocation of financial resources owned by local budgets. An automatic system has been introduced and now the State Treasury Service runs like clockwork" Mr. Oleksandr Slobozhan noted. That is, due to the budgetary decentralisation, the municipalities received considerable funds which they use quite easily, freely, without any instructions from the centre, without any blocking, for the purposes of the community.

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