The transfer to medium-term budget planning in Ukraine is called by experts a systemic change in the budgetary policy.
Such policy should ensure strategic approach to determining priority measures and respective allocation of scarce resources. In addition, the change in the budget system will strengthen the fiscal discipline since it will allow determining and reflecting the consequences of the current policy in the course of next years and ensuring compliance with the expenditure thresholds. An increased predictability of budgetary resources and planning of policy measures is its additional advantage.
It was so stated by Halyna Markovych, Coordinator of the focus area "Local Budgets" of the Project Office for Sectoral Decentralisation.
It is a reminder that the Government, at its meeting held on 14 June, approved a draft of the Main Lines of Budgetary Policy for 2018-2020.
"It is for the first time that the Main Lines are developed for a medium-term period," emphasised the expert.
According to her, the model of medium-term budget planning provides for the enhancement of relation between strategic and budgetary planning, between priorities of the state and budgetary limitations in terms of resources, increase of the efficiency and effectiveness of budgetary expenditures.
In particular, in accordance with the Main Lines of Budgetary Policy, it is envisaged that the Ukrainian economy will grow by 4%, the inflation will decline to 5%, the budget deficit will be reduced to 2%, and the debt/GDP ratio will decrease to 55% by 2020.
Also, the continued decentralisation and strengthening of local budgets, increase of social standards, promotion of industry, and creation of new jobs, as it was stated by the Prime Minister of Ukraine, are priority tasks.
Halyna Markovych clarified separately the matter of the state budgetary policy in terms of the inter-budget relations for a medium-term period. Ensuring the independence of local budgets, enhancing their financial capacity, and increasing the transparency and efficiency of budgetary funds management at the local levels were determined as priorities. It is planned to be achieved by:
The expert reminded that sectoral reforms were also introduced within the framework of implementation of the Concept of Reforming Local Self-Government and Territorial Structure of Power in Ukraine. Primary goals of the structural reforms in the state-funded industries, in particular, to the extent of their impact on on local budgets, were reflected in the draft of the budget resolution which, among other things, provided for:
"The introduction of medium-term planning at the local level will ensure the consistency of budgetary policy, as well as its predictability at the regional and local levels. Such planning will also ensure a strategic approach to determining priority measures for the development of a territory and respective allocation of resources", Halyna Markovych emphasised.
She underlined that the transfer to medium-term planning would facilitate the introduction of a proactive management mechanism. It provides for making of informed decisions and taking measures on a timely basis to ensure financial stability, economic growth over a medium-term period.
The Project Office of Sectoral Decentralisation, which was established at the Ministry of Regional Development under supervision of Vice-Prime Minister - Minister of Regional Development, Construction and Housing and Communal Services of Ukraine Hennadii Zubko, provides practical assistance to the central executive authorities on the matters pertaining to the implementation of sectoral decentralisation (in the areas of education, health care, culture, infrastructure, etc.) aimed at the expansion of accessibility, improvement of quality, and decrease of value of public services while taking into account actual needs of social groups, the optimisation of the system of budget institutions through the development of models of educational and cultural and sporting areas, the enhancement of efficiency and effectiveness of expenditures from local budgets.
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21 August 2018
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