Features of the municipal owned enterprises capital formation process

Abstract

The destruction of the municipal economy of many Ukrainian cities, caused by russian military attacks, and the increase the burden on the municipal economy far from the front line regions, actualize the issue of optimizing the financing of municipal owned enterprises. Against the background of the projected reduction of Ukraine's GDP by 40% in 2022, the ability of local budgets to recapitalize their municipal companies will significantly decrease, which will also encourage local authorities to search for optimal ways of financing municipal owned companies. The purpose of the article is to substantiate the features of capital formation of municipal owned enterprises and to develop proposals regarding priority sources of capital formation. Methods and methodology. In the process of research, general and specific methods of scientific knowledge were applied, namely: the method of scientific generalization, the method of analysis and synthesis, historical and inductive methods, as well as the tabular method. Results. The practice of capital formation of municipal enterprises in Ukraine as a whole and a sample of enterprises in regional centers was studied. The prevalence of the practice a zero amount of authorized capital forming has been established. This leads to the dilution of the owner’s responsibility and minimizes the managers’ responsibility of such enterprises. The low share of internal sources in the capital formation, the low share of targeted financing and the reduction of the borrowed capital share have been proven. Against the background of the low level of grant funding involvement for municipal enterprises, this leads to an increase in the dependence of municipal enterprises on local budgets. Quite high levels of state aid to utility enterprises have been established, which distorts economic competition. The need to develop a policy for optimizing the number of utility enterprises and their financing is substantiated.