AH financial indicators are the best argument in favour of decentralisation. Experience of Rivne Oblast

Decentralisation processes in Ukraine are accompanied by the transfer of not only large powers, but also considerable financial resources to newly formed hromadas. The interview with Ruslan Syvyi, director of the Rivne Local Government Development Centre, features the overall financial situation of AHs of the Rivne Oblast, the way hromadas use the funds they are provided with, and the level of confidence of local budgets.



Mr Syvyi, let's start with general characteristics of the financial state of hromadas. How would you describe it?

The amalgamated hromadas show high and dynamic growth rates of their own revenues. 25 out of 28 AHs of the Rivne Oblast have direct interbudgetary relations. All AHs of the oblast accomplished last fiscal year with over-fulfillment of planned revenues. The same trend persists as a result of five months of 2018. The Buhryn village council (120%), Mala Lyubasha village council (126%), and the Krupets village council (121.4%) are the leaders by fulfillment of the general fund revenue indices.

I would like to note that after amalgamation, the size of AH budgets has increased significantly, and not only due to transfers from the state budget, but also due to own revenues.

And what about budget expenditures? After all, expenses for maintenance of all facilities of communal ownership, transferred to hromadas, grow along with revenues.

First of all, before amalgamation, there is a thorough calculation of the financial capacity of the potential hromada. It includes as many as 34 specific indicators. If hromada is recognised financially incapable – nobody will allow its formation. And secondly: experience shows that after amalgamation, the hromada, starting a thorough analysis of its expenditures, greatly optimises them.

We started talking about state support of hromadas. Please tell us more about it. Are these funds directed at so-called “consuming” or targeted at development?

When we talk about state support provided to AHs, we traditionally mean subvention for infrastructure development, although hromadas’ support is far from being limited by it. There are additional subsidies and a subvention for the development of rural healthcare, educational and medical subventions, financial support from the road fund, SFRD, etc. The state has increased the amount of financial support to local authorities for infrastructure development. This year, it amounts to UAH 1.9 billion, and 62.4 million UAH of this sum are envisaged for the AHs of our oblast.

The village has never seen such state support before the reform! Besides, money is distributed by the AH according to the needs of all settlements that are part of the hromada.

In 2018, a subvention for the construction, reconstruction, repair and maintenance of public roads of local importance is envisaged in the amount of UAH 11.5 billion. The share of our region in this amount is 281.3 million UAH. Of these, more than 100 million has already been funded.

You mentioned own revenues of AH budgets. What, in fact, fills these budgets on the ground? What factors are important for their fulfillment?

As before, the personal income tax accounts for the largest share in the revenues of local budgets. In total, this year we expect hromadas’ budgets to receive UAH 244 million 907 thousand 900 of PIT.

The second largest share belongs to the single tax, the collection of which last year resulted in UAH 43 million 841 thousand 400 of revenues.

Land payment, related to the property tax and a component of local taxes, is the third significant source of local budget revenues (accounting for 11.6% in the revenue structure).

Mr Syvyi, thank you for an interesting conversation, and what would you like or recommend to still non-amalgamated hromadas?

I wish wisdom to those who still hesitate, seek flaws, believe in myths and frank slanders regarding the reform. There is no way back. Each of us wants to live in a flowering street in a lovely village, settlement or city, to use equipped infrastructure facilities, receive administrative services quickly and in a high-quality way.

The path to it has already been opened, we should only walk along it. That’s the very secret of success! And I’m sincerely glad that more and more hromadas of the Rivne Oblast step on this path! Finally, I want to assure that the Rivne LGDC will be pleased to help everyone who decides to change their lives and joins the cohort of successful hromadas of the oblast.

The full version is available in Ukrainian – please click HERE


amalgamation of hromadas


Рівненська область


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