№ 3/2020

Fìnansi Ukr. 2020 (3): 80–93https://doi.org/10.33763/finukr2020.03.080

BUDGET POLICY

STORONIANSKA Iryna ¹, BENOVSKA Liliya ²

¹SI “Institute of regional research named after M. I. Dolishniy of the NAS of Ukraine
OrcID ID : https://orcid.org/0000-0002-0237-1409
²SI "Institute of Regional Reseach named after M. I. Dolishniy jf the NAS of Ukraine"
OrcID ID : https://orcid.org/0000-0002-6987-5724

Risks of the budgetary equalization system in the conditions of administrative and financial decentralization

The consequence of administrative and financial decentralization is strengthening the uneven social and economic development of the territories, which determines the necessity of strengthening the role of the state as a regulator of territorial development and the change of the system of financial equalization. In order to strengthen the financial base of the local budgets, the vector of regulation has been shifted from equalization “by expenditures” to equalization “by revenues”. Although the introduction of a new equalization system contributes to the interest of local authorities in increasing the revenue base of local budgets, but it is associated with the emergence of the risks. The purpose of the article is to identify the risks of the functioning of the system of budgetary equalization in the conditions of administrative and financial decentralization and to outline the directions of their leveling. To carry out the study of the financial equalization problems the following methods were used: abstract and logical, comparative analysis, graphical visualization, statistical. The review of theoretical concepts and practical experience of the implementation of decentralized management in different countries of the world was carried out, which allowed to highlight, along with positive effects, a number of risks associated with this process. The risks of the system of budgetary equalization in the conditions of administrative and financial decentralization in Ukraine are identified: the risk of violation of social justice in the regional dimension; the risk of strengthening the differentiation of the development of the capital and regions, urban and rural, united territorial communities and territorial communities which are not united; the risk of decrease of the level of autonomy of local self-government bodies in making decisions concerning the directions of using transfers received from the state budget and the solution to issues of local importance; the risk of politicizing the process of budgetary regulation and strengthening the lobbying component of the distribution of intergovernmental transfers. The directions of leveling the risks of budgetary regulation with the observance of the principle of territorial justice with horizontal redistribution of financial resources are outlined as well as the improvement of the mechanism for calculating the index of taxability of territorial development.

Keywords:risks, budgetary equalization, administrative and financial decentralization, territorial communities, budget

JEL: H62, H77, G18

STORONIANSKA I. . Risks of the budgetary equalization system in the conditions of administrative and financial decentralization / I. STORONIANSKA, L. Benovska // Фінанси України. - 2020. - № 3. - C. 80-93.

Article original in Ukrainian (pp. 80 - 93)

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