Subnational Governance Reform and Local Government Finance in Ukraine: 2014-2018 (original) (raw)
In the spring of 2014, and in response to Russian (and Western) demands to “federalize” Ukraine, the government of newly elected President Poroshenko put “decentralization” at the top of its reform agenda. This paper examines what the government has actually done against the background of earlier “decentralization” efforts. We argue that the government has shown a strong commitment to decentralization by not recentralizing public finances in the face of armed conflict. But it has proved too weak to pass key laws, most importantly legislation that would require the consolidation of Ukraine’s 10,000 tiny villages into larger townships (amalgamated gromada). As result, it has been forced to rely on a voluntary process of jurisdictional consolidation, and on amendments to the tax and budget codes. Voluntary amalgamation combined with financial reform are clearly “municipalizing” oblast power, and beginning to “gromadize” rayon power. Nonetheless, reformers have avoided talking about their efforts in these terms. Instead, they have advertised the reforms by highlighting the new money that has been given to all subnational governments. But these claims are false once inflation is taken into account. They also mask the structural shifts in power across subnational governments that have been produced by the reforms. Finally, this ‘financialization’ of the discourse around decentralization is creating expectations that will be hard to fulfil going forward, and may even become politically self-blocking because when the movement towards a single-payer health care system requires cutting subnational budgets.
Ukraine's Local Governance Reform and Territorial Consolidation in 2014-20
Ukraine’s Decentralization: Challenges and Implications of the Local Governance Reform after the Euromaidan Revolution, 2024
This chapter examines the core aspects of the post-2014 decentralization reform: local amalgamation and fiscal decentralization. Taken together, these two policies radically changed the division of responsibilities and finances at substate scales and aided Ukraine's territorial consolidation. The 2019 shift of the balance of power in Kyiv did not alter the reform's trajectory. Indeed, the newly elected President Zelenskyy fostered, as we show, implementation of the reform by approving the previously drafted laws on decentralization whose progress had stalled prior to 2019-2020. Evidence of this commitment was the policy of merging rayons (upper subregional units) that was quickly implemented once nationwide local amalgamation was completed.
Amalgamation and Local Finance: A Case Study of Ukraine
Central European Public Administration Review
Purpose: The article aims to measure the impact of the voluntary amalgamation approach applied in Ukraine in the course of the decentralization reforms undertaken over a period of five years, and assess how much these reforms have been successful in improving the local government fiscal situation. Ukraine began a long-delayed decentralization process in 2015 through amalgamation based on a voluntary approach, with an emphasis on improving the fiscal resources of the amalgamated units. The decentralization reform was based on three pillars: (1) voluntary amalgamation of the territorial units, (2) enhanced financial resources through own source revenues and infrastructure grants, and (3) utilization of inter-municipal cooperation to support improved service delivery.Methodology: A time series of fiscal data from amalgamated territorial communities in selected regions of Ukraine have been analysed to measure the impact of the amalgamation policy on the amalgamated territorial units.Fin...
Харківський ННІ ДВНЗ *Університет банківської справи*, 2019
In the context of deepening administrative and financial decentralization in Ukraine, issues of the effective functioning of the system of budgetary control at the local level are of particular importance. It is shown that local self-government bodies, having received new powers and additional resources, are not always able to manage them rationally, sometimes allowing misuse or even illegal use of them, are not engaged in finding reserves for increasing the local budgets. The institutional (organizational and legal) problems of functioning of the budgetary control system at the local level are found out. Among the main ones there are: excessive number of institutions with control powers; the lack of a unified legal framework for the functioning of budgetary control bodies at the level of local self-government; disorderly rights and responsibilities of entities authorized to control the compliance with budget legislation at the level of local self-government; weak public control over decisions of local self-government bodies regarding the use of community funds. The violations that take place in local government bodies at all stages of the budget process are systematized and their quantitative parameters are analyzed. The objective and subjective factors that give rise to such problems are revealed. The range of practical recommendations on improving the domestic system of budgetary control at the local level is given, in particular creation of a single budgetary control authority at the level of local selfgovernment with the legitimate delegation of control functions to it and ensuring the independence from the government and local self-government bodies; strengthening and legislating the level of control and responsibility of the heads of the amalgamated territorial communities; implementation of follow-up monitoring of decisions taken by ATCs for their compliance with the current legislation of Ukraine; carrying out a complete inventory of ATCs land and its valuation, etc.
Financial decentralization in Ukraine: prerequisites, problems, prospects, 2019
The purpose of the article is to analyze the prerequisites, advantages, problems and prospects for the development of the processes of financial decentralization in Ukraine. Initially, the article reveals the features of the federal and unitary arrangements of states. As research has shown, the principles of fiscal federalism have been increasingly used by unitary states. The legislative and normative legal acts regulating the implementation of the decentralization policy in Ukraine are justified and given. Characteristics of the formation of new structures, such as: united territorial societies and their sources of financing are characterized. Changes in incomes in local budgets as a result of decentralization are analyzed, and their significant growth is observed. The mechanism of horizontal leveling of the tax ability of territories has been developed, which helps to remove imbalances and unevenness, most of the budgets of Ukraine are recipients of budgetary funds, since they receive a basic subsidy. The influence of the development of information technologies on entrepreneurial activity in small towns and villages is determined. Information technology is a tool of points of growth of territories. Decentralization will not gradually increase due to urbanization processes, but will be accompanied by new development mechanisms, where the labor force and the means of production will unite and help create a qualitatively new environment.
Baltic Journal of Economic Studies, 2016
This article presents the status and the main objectives of the decentralisation process and local self-government development in Ukraine. Decentralisation is analyzed as an integrated part of wider public administration reform. A well-functioning public administration is necessary for democratic governance. It also directly impacts upon governments' ability to provide public (administrative and municipal) services and to foster competitiveness and growth. Public administration reform should lead to enhanced transparency, accountability and effectiveness and ensure a greater focus on the needs of citizens and business. On the basis the analysis of the Ukrainian legislation, the best national and international practices, the proposals and the recommendations concerning possible ways of further local self-government development, in particular in the framework of the European integration policy implementation, are highlighted.
Ukrainian Local Governance Prior to Euromaidan: The Pre-History of Ukraine’s Decentralization Reform
Kennan Cable , 2019
Pre-Euromaidan attempts to promote decentralization in Ukraine not only generated valuable evidence-based domestic expertise on how (and how not) to reform center-periphery relations. Russia’s exploitation of the structural incoherence of the Ukrainian state also demonstrated that it is dangerous to neglect local governments and to fail to increase their authority. The continuing post-Euromaidan decentralization’s remarkable broadness, growing sustainability, and increasing depth increases the likelihood that this reform effort will succeed, unlike previous attempts. This should make Ukraine a more successful democracy in which stronger self-government leads to faster economic development and better public services.
Decentralization of Power in Ukraine and Europe: Security and Finance Issues
Financial and credit activity: problems of theory and practice, 2020
The decentralization is not a new phenomenon for Ukraine. The processes, directed to establish and to develop the local self-government according to European model, going away from complete subordination of local power to the state power during Soviet times, were activated since the state acquired the independence.The purpose of article is to study how the processes for decentralization of power, finances, etc. are run under conditions of financial, economical and political crisis that take place in Ukraine and countries of Europe.The local self-government and decentralization of power shall ideally have the connection with the territorial community. The decentralization of power in Ukraine is not the aspiration of territorial community but the attempt to remove someone from power, to divide the power, being received, between other people.It is necessary to establish the regulatory background for development of local self-government, as well as to work out and to implement the norms...