Budgetary decentralization as a factor in enhancing the financial capacity of Ukraine's regions

Abstract

Relevance of the research topic. The relevance of studying fiscal decentralization as a factor in strengthening the financial capacity of Ukraine's regions stems from the limited opportunities for optimizing budgetary policy amid significant financial constraints caused by priority expenditures on defense and the social sphere. The traditional centralized model of the budgetary system, despite its historical justification, demonstrates inefficiency due to regions' dependence on interbudgetary transfers and limited adaptability to local needs. At the same time, decentralization, while offering prospects for enhancing autonomy and more efficient resource utilization, is accompanied by risks of regional disparities and requires balanced control to maintain the macroeconomic stability of the state.The purpose of the article is to examine fiscal decentralization as a key factor in strengthening the financial capacity of Ukraine's regions.Research objectives are to analyze the impact of decentralization on the revenue base structure of local budgets, to identify the advantages and risks of this process under contemporary conditions, and to substantiate directions for improving interbudgetary relations mechanisms in order to ensure the stability and autonomy of subnational finances.Research methods: analysis, synthesis, statistical assessments, graphical evaluations, induction, deduction, scientific abstraction.Main research findings. The article examines the role of fiscal decentralization as a key factor in strengthening the financial capacity of Ukraine's regions, and analyzes the transformation of the revenue base structure of local budgets as well as interbudgetary relations mechanisms under contemporary conditions. It is substantiated that the reform contributes to enhancing the autonomy of subnational levels of government, more efficient satisfaction of local needs, and reduction of dependence on central transfers, although it is accompanied by risks of deepening regional disparities and fiscal asymmetry. Directions are proposed for improving financial equalization instruments, revising the distribution of revenue sources, and strengthening monitoring to ensure a balance between the financial independence of communities and the macroeconomic stability of the state.Field of application of the results: The findings of the study can be applied in the process of shaping and improving the state's budgetary policy, developing normative–legal acts in the sphere of interbudgetary relations, as well as in preparing recommendations for local self–government bodies aimed at enhancing the financial capacity of territorial communities. In addition, the materials of the article hold practical value for research activities in the fields of public finance, regional economics, and decentralized governance.