On July 3, the Minister of Finance Serhii Marchenko and the Special Envoy of the Government of Germany for Reforms in Ukraine Georg Milbradt held an online meeting to tackle reform in the budget system in the context of the decentralization process and the introduction of a new model of interbudget relations.

"An increase in balances on the accounts indicates a significant increase in the revenues of local budgets. Specialists of the Ministry of Finance are working to develop appropriate amendments to the Budget Code of Ukraine to ensure the introduction of medium-term planning, both at the state and local levels. The transition to medium-term budgeting will facilitate the introduction of a proactive governance mechanism, which provides for timely decision-making and taking measures to ensure financial stability and economic growth in the medium term," said Finance Minister Serhii Marchenko.

Moreover, together with Georg Milbradt, the Minister discussed achievements and challenges facing Ukraine in the field of decentralization. In particular, during the first stage of the reform several important results were achieved:

• the financial capacity of local budgets strengthened;
• the provision of quality public services to consumers ensured due to the expansion of expenditure powers of local governments.

Background

In 2015-2019, local budgets (general and special funds) increased the revenue part by two and a half times (general fund by almost three times, special fund by 20.5%). Transfers from the state budget to local budgets for the implementation of state-delegated powers and transfers in the shape of investment grew by almost half (49.6%).

In January-May 2020, the general fund of local budgets received UAH 109.7 billion (37.5% of the annual revenues approved by local councils). The increase against the corresponding period of 2019 is + 1.6% or + UAH 1.7 billion.