Financial Provision of Sustainable Development of Territorial Communities of Ukraine as a Factor of Real Decentralization of Post-War Recovery

Abstract

The aim of the article is to assess the current state and determine the prospects for financial provision for sustainable development of territorial communities of Ukraine in the context of decentralization for the medium-term period of post-war recovery. The article generalizes the legislative grounds for Ukraine’s provision of the Sustainable Development Goals and the need to take them into account in the development of forecast documents; an analysis of the composition and structure of local budget revenues, their share in consolidated budget revenues and GDP for 2019–2023 is carried out; on the basis of expert assessments, the influence of formal rules on the formation of revenues of local budgets, in particular tax ones, is determined; tendencies and prospects of financial provision of sustainable development of territorial communities of Ukraine for the medium term are substantiated. Based on the analysis of the composition and structure of local budget revenues, a reduction in the share of local budget revenues in consolidated budget revenues (excluding transfers) and in GDP has been identified. This trend reached its maximum value in 2023 and is primarily due to a reduction in the volume of interbudgetary transfers. Taking into account the significant burden on the State budget regarding the financing of the defense function of the State and servicing the public debt, the assumption that the trend towards reducing the volume of interbudgetary transfers for the next 3–5 years remains is substantiated. It is proved that the main budget-forming taxes for the formation of own revenues of local budgets are the personal income tax and the single tax. It is noted that the innovations proposed by the government regarding the administration of these taxes may lead to a reduction in revenues to local budgets in the medium term. Scenarios of tax revenues to local budgets are modeled according to various options for changing the base and rates of budget-forming taxes, and the importance of empowering local self-government bodies to influence the process of their administration, as proposed in the National Revenue Strategy 2030, is emphasized. Proposals on the expediency of using local borrowings and local guarantees as sources of additional revenues of local budgets have been substantiated, having previously assessed potential risks regarding the possibility of effective management of local borrowings and taking them into account in the development of long-term budget forecasts. Prospect for further research in this direction is the restoration of medium-term planning of local budget revenues and, in the future, the transition to a long-term time horizon that will correspond to the process of implementing the requirements of the related EU directives.