Ministry of Finance has prepared draft amendments to the Budget Code regarding the implementation of mid-term budget planning

As part of the budget reform and the implementation of the Strategy for the Reform of Public Finance Management for 2017-2020, the Ministry of Finance has prepared draft amendments to the Budget Code of Ukraine aimed to implement mid-term budget planning and to improve the program-and-target-based approach.

What’s it about?

The planned amendments to the Budget Code are based on the mid-term budget planning model whose key element is a three-year budget declaration as a tool aligning strategic state priorities and the state budget capacities.

The budget declaration will contain spending limits for the main entities managing public funds which they will have to respect when planning their operations.

To make the state budget more feasible in the mid-term run, a system for fiscal risk management is introduced.

Further development of the program-and-target-based approach will be focused on the improvement of the effectiveness and quality of public services as well as the enhancement of the responsibility of the managing entities for their performance.

It is also planned that the main managing entities will have to report to the Parliament during the examination of the Budget Declaration about the goals and results of their work in the reporting period and in the mid-term run.

What’s the benefit?

Legislative implementation of mid-term budget planning will:

• establish financial framework for strategic initiatives which will significantly improve the discipline of all stakeholders of the budget process and make them set clear priorities in the implementation of reforms within the financial capacities of the state budget;

• make the budget policy predictable thus restoring the trust of citizens to the state and enabling business to plan its operations effectively.

At the same time, the management of fiscal risks shall minimize their negative impact on the state budget.

And new ways in applying the program-and-target-based approach will enable citizens to control the operations of the main entities entitled to manage public funds.