Ministry of Finance initiates amendments to the Budget Code to launch mid-term budgetary planning

At today’s meeting of the Government, Minister of Finance Oleksandr Danyliuk has initiated amendments to the Budget Code of Ukraine aimed to implement mid-term budgetary planning. This is a further crucial step in the budget reform making it possible to implement a new effective mechanism steering the budgetary process.

What’s it about?

The draft law “On Amendments to Chapter VI “Final and Transitional Provisions” of the Budget Code of Ukraine” approved by the Government was elaborated to ensure transition to mid-term budgetary planning in line with the Strategy of the Transformation of the Public Finance Management System for the period from 2017 till 2020. This Strategy was elaborated by the Ministry of Finance and approved by the Government a short while ago.

The Minister of Finance explained the specific features of the new model compared to the current system of one-year planning as well as presented the key in the process of preparing the draft Key Areas of the Budgetary Policy for the period from 2018 till 2020.

One of the changes refers to the Budget Declaration which – apart from the parameters which have been the element of the Key Areas of the Budgetary Policy so far – shall now also determine overall spending limits as well as spending limits for the main entities entitled to manage state budget funds for each year of the respective mid-term period. These will be the key tools of the mid-term budgetary planning.

Also, when discussing the Budget Declaration in Parliament, the main entities entitled to manage state budget funds shall report on their results and on their mid-term plans.

Taking into account changes in the preparation of budget documents and the complicated adjustment process regarding the transition to the mid-term budgetary planning, the Ministry of Finance proposes to postpone the submission of the draft Key Areas of the Budgetary Policy for the period from 2018 till 2020 and the discussion meant to further clarify the state budget forecast for the period from 2018 till 2019 till June 1, 2017. The relevant amendments to the Budget Code were unanimously approved by the Government members.

“I want to stress that these amendments, as an exception, are proposed for this year only. Based on the results of this “pilot” scheme, we will determine the optimal timeframe for the preparation and adoption of the budget declaration taking into account the system’s capacities as well as the capacities of the entities entitled to manage state budget funds. Thus, we will be able to prepare a proper draft document”, the Minister of Finance said.

What’s the advantage?

Transition to mid-term budgetary planning in Ukraine means the following:

-predictable and well-balanced budgetary and tax policy;

-implementation of long-term development priorities;

-execution of tasks set by the Mid-Term Plan of Priority Actions for the Government for the period till 2020;

-higher attractiveness for investors and better business climate.