Financial support of territorial communities of Ukraine in the context of decentralization

Abstract

The experience of the countries of the European Union shows that the driving force behind their social and economic development is local self-government, in Ukraine it is territorial communities. Decentralization reform should ensure that local governments are able to independently resolve all local issues with their own resources. The problem of financial provision of territorial communities is of particular relevance in the context of financial instability in the country. The methodological basis of the study was: a systematic approach - for the theoretical definition of the essence of the financial support of territorial communities and their assessment; methods of comparative analysis and synthesis - to identify patterns of financial support and the structure of budgetary resources of territorial communities; statistical methods for assessing the effectiveness of financial support for territorial communities; graphic - to display the main trends in the formation of monetary resources of territorial communities. To analyze the dynamics of financial provision of TC in Ukraine, statistical data for the last 5 years were used. The article considers the impact of decentralization on the financial support of territorial communities. Its advantages and disadvantages are determined. The filling of local budgets in Ukraine in the conditions of decentralization is analyzed. It was studied that own revenues of local budgets have been constantly growing during 2016-2020, which positively characterizes the introduction of decentralization. Although, compared to 2019, the total revenues of local budgets reduced due to a decrease in transfers from the state budget. The dynamics and structure of interbudgetary transfers in 2016-2020 are analyzed. The mechanism of equalization and receipt of basic subsidies is considered. The main sources of formation of incomes of local budgets are determined. The importance in the structure of incomes of territorial communities of the tax on the income of individuals is noted. An evaluation model of the sufficiency of financial support for territorial communities is considered and a ranked series of territorial units is constructed. The problems of the financial support system for territorial communities due to the existence of post-conflict and temporarily occupied territories are identified. Directions for improving the financial provision of territorial communities are proposed and alternative sources of funds for the budgets of territorial communities are considered.