№ 3/2020

Fìnansi Ukr. 2020 (3): 94–111https://doi.org/10.33763/finukr2020.03.094

BUDGET POLICY

MALYNIAK Bohdan ¹

¹Ternopil National Economic University
OrcID ID : https://orcid.org/0000-0001-6965-393Х

Budgeting and priorities for community development: harmonization instruments and problems of their implementation

The goal of this study is to identify the composition and the degree of development of the procedures used to subordinate the budget policy at the local level to the strategies of territorial community development, as well as to systematize and to evaluate the practice of their implementation. Proceeding from theoretical enquiry into local self-government and budget management, we found proof of the need for coherence between budget policy and local development planning, and classified all possible tools used to perform this task into two groups. The first group includes mechanisms of coordination between budgeting and development priorities set at the level of territorial communities, whereas the second group contains tools of harmonizing the respective parameters at the level of budgetary units (budget institutions). Based on the study of the problems arising in the course of applying each group of the mechanisms, we have found that the main reasons that impede effective coherence between budget parameters and development goals at the level of territorial communities are the lack of institutional regulation, in particular the indeterminacy with respect to the institutional unit that should approve local budget forecasts; flaws in the mechanism of coordinating the local budget forecast and draft budget with the strategy of community development and the program of social and economic development. The key problems deterring the coherence between the financial performance indicators for budgetary units and the development priorities set by communities were found to stem from imperfections in the coherence mechanism, which coordinates the goal and tasks of budget programs and the respective parameters of community development program documentation. Poor budget program performance indicators and their inadequacy with respect to performance efficiency indicators for local development strategies and programs give rise to disincentives for budgetary units to coordinate their financial activity with the set priorities.

Keywords:local budget, local budget forecast, development strategy, social and economic development program, budget planning

JEL: H70, R51

MALYNIAK B. . Budgeting and priorities for community development: harmonization instruments and problems of their implementation / B. . MALYNIAK // Фінанси України. - 2020. - № 3. - C. 94-111.

Article original in Ukrainian (pp. 94 - 111)

Download

Downloads :112

1. Premchand, A. (1994). Public Expenditure Management. Washington: IMF [in Russian].
2. Allen, R., & Tommasi, D. (2001). Managing Public Expenditure. A Reference Book for Transition Countries. Paris: SIGMA.
doi.org/10.1787/9789264192607-en
3. OpenGov. (2015). Best Practices in Local Government Budgeting. Retrieved from go.opengov.com/ebook-best-practices-local-gov-budgeting.html.
4. White, J. (2014). What are budgeting’s purposes? Comments on OECD’s principles of good budgetary governance. OECD Journal on Budgeting, 3, 131–148.
doi.org/10.1787/budget-14-5jrtl4wnr8zw
5. OECD. (2014). Principles of budgetary governance. OECD Senior Budget Official. Retrieved from www.oecd.org/governance/budgeting/Draft-Principles-Budgetary-Governance.pdf
6. OECD. (2015). Recommendation of the council on budgetary governance. Paris.
7. Holmes, M., & Evans, A. (2003). A Review of Experience in Implementing Medium Term Expenditure Frameworks in a PRSP Context: A Synthesis of Eight Country Studies, Oversees Development Institute. London.
8. Vlaicu, R., Verhoeven, M., Grigoli, F., & Mills, Z. (2014). Multiyear budgets and fiscal performance: Panel data evidence. Journal of Public Economics, 111, 79–95.
doi.org/10.1016/j.jpubeco.2013.12.011
9. Suescun, R. (2019, October 8). A tool for fiscal policy planning in a medium-term fiscal framework: The FMM-MTFF model. Economic Modelling.
doi.org/10.1016/j.econmod.2019.09.053
10. The World Bank. (2013). Beyond the Annual Budget. Global Experience with Medium-Term Expenditure Frameworks. Washington.
11. Shah, A. (Ed.). (2007). Local Budgeting. [Public Sector Governance and Accountability Series]. Washington.
doi.org/10.1596/978-0-8213-6945-6
12. Bland, R. L. (2013). A Budgeting Guide for Local Government. [3rd Ed.]. Washington, D.C.: ICMA.
13. Ahrens, T., & Ferry, L. (2018). Institutional entrepreneurship, practice memory, and cultural memory: Choice and creativity in the pursuit of endogenous change of local authority budgeting. Management Accounting Research, 38, 12–21.
doi.org/10.1016/j.mar.2016.11.001
14. Zhyber, T. (2018, December 14). Medium-term budgeting: A panacea or a regular instrument?. Dzerkalo tyzhnia. Retrieved from dt.ua/macrolevel/serednostrokove-byudzhetne-planuvannya-panaceya-chi-zvichayniy-instrument-297032_.html [in Ukrainian].
15. Pavliuk, K. V., & Shaporenko, O. O. (2018). The development of the medium-term planning in Ukraine. Finanse of Ukraine, 9, 45–59.
doi.org/10.33763/finukr2018.09.045
16. Pleskach, V. L., & Prokopenko, N. O. (2019). Institutional and organizational provision of medium-term budget planning in Ukraine. Ekonomy of Ukraine, 1, 47–59 [in Ukrainian].
17. Lunina, I. (2015, September 25). Simple procedural changes for effective budgetary decisions. Dzerkalo tyzhnia. Retrieved from dt.ua/finances/prosti-procedurni-zmini-dlya-efektivnih-byudzhetnih-rishen-_.html [in Ukrainian].
18. Heyets, V. (Ed.). (2008). State Target Programs and Arrangement of the Program Process in the Budget Sphere. Kyiv: Naukova dumka [in Ukrainian].
19. Kyrylenko, O. P. (2017, November 28). The Practice and Problems of Program Based Budgeting. Third Scientific Readings in Memory of S. I. Yurii, 8–13 [in Ukrainian].
20. Maziarchuk, V. M. (Ed.). (2019). The Budget System: Tendencies of Development. Kyiv: FOP Lopatina O. O [in Ukrainian].
21. Verkhovna Rada of Ukraine. (2010). The Budget Code of Ukraine (Law No. 2456-VI, July 8). Retrieved from zakon.rada.gov.ua/laws/show/2456-17/print [in Ukrainian].
22. Ministry of Finance of Ukraine. (2019). On approval of Methodical Recommendations regarding the preparation and approval of Budget Regulations on the budget process at the local level (Order No. 28, May 31). Retrieved from ips.ligazakon.net/document/MF19043 [in Ukrainian].
23. Ministry of Finance of Ukraine. (2019). On approval of methodical recommendations on preparation of medium-term local budgets in 2019 (Order No. 130, March 29) Retrieved from zakon.rada.gov.ua/rada/show/v0130201-19?lang=en [in Ukrainian].
24. Piontkivska, I., Vasylieva, A., & Ruda, Yu. (2017). Medium-term budgeting in Ukraine (Analytical Note). Kyiv: Centr Ekonomichnoii Stratehii [in Ukrainian].
25. Malyniak, B. (Ed.). (2019). Analytical Report on the Results of Analysis of Local Budgets within the Framework of ‘Budget Scanner’ Project. Kyiv: ISER [in Ukrainian].
26. Ministry of Regional Development, Construction, Housing and Communal Services of Ukraine. (2016). On approval of Methodical Recommendations on preparation and realization of forecasting and program documents of social and economic development of unified territorial community (Order No. 75, March 30). Retrieved from zakon.rada.gov.ua/rada/show/v0075858-16/print [in Ukrainian].
27. Cabinet of Ministers of Ukraine. (2003). On development of forecasting and program documents of economic and social development and preparation of draft Budget Declaration and State Budget (Decree No. 621, April 26). Retrieved from zakon.rada.gov.ua/laws/show/621-2003-%D0%BF/print [in Ukrainian].
28. Ministry of Finance of Ukraine. (2014). On some questions of implementing the program based budgeting method for planning and performing local budgets (Order No. 836, August 26) Retrieved from zakon.rada.gov.ua/laws/show/z1103-14/print [in Ukrainian].
29. Cabinet of Ministers of Ukraine. (2002). On approval of the Conception of implementing program based budgeting method in the budget process (Decree No. 538-r, September 14). Retrieved from zakon.rada.gov.ua/laws/show/538-2002-%D1%80 [in Ukrainian].
30. Shah, A., & Shen, C. (2007). Citizen-Centric Performance Budgeting at the Local Level. Local Budgeting. Washington: The World Bank.
doi.org/10.1596/978-0-8213-6945-6