ENSURING FINANCIAL CAPACITY OF THE UNITED TERRITORIAL COMMUNITIES IN UKRAINE

  • Olha Demianchuk
Keywords: financial capacity of united territorial communities, fiscal decentralization, ensuring the financial capacity of UTC

Abstract

In the process of decentralization reform, the issue of ensuring sustainable development at the local territorial level is very relevant and important from the point of view of stabilizing the social and economic situation in the regions of the country. Fiscal and budgetary decentralization has become the basis for a significant increase in the financial resources of the budgets of the joint territorial communities (OTH), but along with additional financial resources, local governments have gained great powers in maintaining budgetary institutions and providing social services to the population of their community.

Therefore, here, it is worthwhile to focus attention on those key problems that arose as a result of these transformational changes in local self-government and the formation of OTH own and attracted funds.

The first among the key problems is the loss of a significant part of tax revenues to the OTH budgets. In particular, the income from personal income tax, land fees, single tax and real estate tax is different from the land plot. The reasons for these losses are: low level of financial control by local governments of economic entities, issues of accounting for legal workers and real trade turnover, understatement of rates of payment for land, and other reasons.

The second problem, as noted above, is the low activity of OTH self-management bodies in developing real investment projects in order to attract additional funds from state and non-state funds.

The next problem can be unequivocally defined as the limited tools for monitoring the use of budgetary funds, as well as total corruption and bureaucracy at the local level.

In order to solve these problems and ensure financial solvency of the budgets of the joint territorial communities at the state and local level, a number of activities are already taking place. To increase the level of efficiency and transparency in the use of OTH funds, in Ukraine, with the support of the Netherlands Embassy (MATRA program), the project "Financial transparency of the united communities" has been launched. This project is aimed at increasing the economic capacity of the united communities, which will permit to more effectively solve issues of local development, increase the competitiveness of territorial communities, fight corruption at the local level, and ensure the welfare of the local population. Within the framework of this project, in 2017, at the regional and district levels, the training of representatives of local self-government bodies are held with the aim to increase the financial capacity of territorial communities, to boost the financial literacy of representatives of territorial communities, in particular in attracting financial resources and their effective use for local development needs. These measures will help to increase the activity of all interested members of the public to influence, control the processes of formation and use of financial resources; citizens will be more actively involved in the processes of local government. As a consequence, all these measures will ensure the creation of conditions for sustainable economic development of the regions of Ukraine and the financial soundness of their budgets.

Published
2018-02-13