Ministry of Finance starts to implement mid-term budget planning

1/10/19

Attending today’s meeting of the Cabinet of Ministers, Minister of Finance Oksana Markarova presented the innovations in the budget process that entered into force according to the Law of Ukraine No. 8044 “On Amendments to the Budget Code of Ukraine (On the Legal Basis for the Implementation of Mid-Term Budget Planning)” signed by the President of Ukraine on January 8, 2019.

Addressing the participants of the meeting, Oksana Markarova identified the switch to mid-term budget planning as the main budget reform of Ukraine.

“For the last three years we have managed to present, to negotiate and to execute the state budget on time. However, we did see issues that we could not handle under the one-year budgeting scheme. They include the impossibility to predict the budgetary and tax policy, the lack of an integral strategic planning system – meaning that we have a strategy, but the state budget only allows us to implement some of its points for one year only, whereas the period above that only has vague prospects – as well as the focus set on spending only. From now on, we are in position to solve all these issues,” the Minister of Finance said.

The main innovations, which are now legally binding, include coordination between strategic and budget planning measures, the implementation of the new Budget Declaration that in fact becomes the main document of the budget process, the new budget calendar and the extension of the budgeting regulations.

The content of the Budget Declaration changes significantly. In addition to the requirements that remain unchanged – deficit, public debt, GDP growth pace – new ones come along. They include general threshold spending values for three years, spending limits for each of the main entities entitled to manage the budget funds, state policy goals in the respective areas as well as the assessment of fiscal risks and spending reviews.

“We will be presenting the new Budget Declaration to the Cabinet of Ministers by May 15, but it does not mean that we have extra time now, so we have to start working on that next week already,” Oksana Markarova pointed out.

In February, the Ministry of Finance expects to receive information from the main entities managing the budget funds that will include proposals on changes in their spending structure (including changes in the list and content of budget programs) based on the new policies and the cost calculation for each policy.

In April, the Ministry of Finance will inform the main managing entities about the indicative spending limits, and the main managing entities will have to inform the Ministry of Finance about the goals of the state policy in the respective area and the respective performance indicators.

“We expect the Parliament to approve the Budget Declaration by July 15 to have clear figures for the next three years and to submit the draft state budget on time – before September 15,” the Minister of Finance said.

You can mark the parts of text you like, which will be available at the link in the address bar of your browser

You can mark the parts of text you like, which will be available at the link in the address bar of your browser