ASSESSMENT OF THE IMPACT OF BUDGET DECENTRALIZATION ON SUSTAINABLE DEVELOPMENT OF TERRITORIAL COMMUNITIES IN UKRAINE

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  Ding Xin

  Tetiana Koliada

  Ganna Muzychenko

Abstract

Peculiarities of territorial community (hromada) development management are revealed and theoretical approaches to budget decentralization in Ukraine are substantiated. Based on the analysis of the composition and structure of local budgets, as well as the calculation of financial independence of territorial communities (hromadas), it is proved that the current budget system of Ukraine is characterized by a high degree of budgetary resources centralization, which does not provide real independence. Building an efficient model of fiscal decentralization consists in determining the tax potential of a separate administrative-territorial unit (territorial community).  For further success of decentralization, it is necessary to determine the optimal amount of government functions that are appropriate and cost-effective to delegate to the appropriate local level on a permanent basis, thereby converting them into the local government's own functions.
Purpose of study.  The aim of the study is to assess the impact of budget decentralization on the sustainable development of territorial communities (hromadas), to determine its relationship with changes in the administrative-territorial structure of Ukraine and to strengthen the financial independence of newly established institutions (amalgamated hromadas).
Methodology. In the course of the research the following methods were used: analogy and comparative analysis to identify the features of the implementation of fiscal decentralization in different countries of the world and in Ukraine; settlement and constructive – used in determining the indicators of territorial communities' financial independence in the process of budget decentralization implementation in Ukraine; abstract-logical to reveal the main threats to the financial security of territorial communities and justify proposals and recommendations to ensure their sustainable development.
Results of the study. The study showed the presence of certain features in the implementation of budget decentralization reform in Ukraine in modern conditions due to a number of macroeconomic and institutional factors with a long-term and globalization nature of manifestation. They led to the emergence of clearly defined trends and patterns of change in the choice of regional development financial instruments, which will further improve the process of development management of Ukrainian administrative-territorial units in terms of decentralization to achieve the priorities of socio-economic development.
Peculiarities of territorial community development management are revealed and theoretical approaches to budget decentralization in Ukraine are substantiated. Based on the analysis of the local budget revenues composition and structure, as well as the calculation of the territorial community financial independence indicators, it was proved that the modern budget system of Ukraine is characterized by a high degree of centralization of budgetary resources.
It has been substantiated that the difficulties arising in the financing of state budget expenditures under both unitary and federal systems are largely due to the imperfection or inconsistency of certain provisions of the Basic Law (the Constitution) with the current state of interstate relations and the domestic political situation.
Conclusion. It is emphasized that the main problem to be solved to build an effective and efficient model of fiscal decentralization is to determine the tax potential of a particular administrative-territorial unit (territorial community) and the optimal volume of state functions that are expedient and cost-effective to delegate to the local level as own functions of local self-government.

How to Cite

Xin, D., Koliada, T., & Muzychenko, G. (2021). ASSESSMENT OF THE IMPACT OF BUDGET DECENTRALIZATION ON SUSTAINABLE DEVELOPMENT OF TERRITORIAL COMMUNITIES IN UKRAINE. Baltic Journal of Economic Studies, 7(4), 8-17. https://doi.org/10.30525/2256-0742/2021-7-4-8-17
Article views: 73 | PDF Downloads: 36

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Keywords

budget decentralization, community (hromada), amalgamated hromadas, sustainable development, hromada financial support, financial security

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