Today, the Cabinet of Ministers has approved the Key Areas of the Budget Policy for 2018-2020 (Budget Resolution) prepared by the Ministry of Finance jointly with the Government, experts, trade unions, employers, Association of the Ukrainian Cities and international partners.
What’s it about?
Midterm budget planning will be implemented for the first time in the budget history of Ukraine.
The approved Budget Resolution is a strategic document prioritizing state funds for the implementation of reforms. Thus, it defines the direction for the future economic development of Ukraine and lays ground for the implementation of comprehensive systemic reforms.
The new Budget Resolution puts the focus on the top-to-the-bottom approach in the budget planning. It means that the total resources are checked first and then distributed between the priority policy areas taking into account necessary changes.
Also, the Budget Resolution determines overall expense limits as well as expense limits for the key entities entitled to manage state budget funds for each year of the respective midterm period.
Also, the new document makes it possible to involve the Parliament in the budget planning at an earlier stage, thus improving the quality of the budget and allowing to avoid inappropriate decisions in the last minute.
Also, the Budget Resolution takes into account strategic objectives set by the Government for the period till 2020. These include the tax and debt policy, implementation of the healthcare as well as pension and land reforms, development of the agriculture, stable funding for the road network, defense and security, decentralization and further upgrade of social standards.
Why is it important?
Transition from the one- to three-year budget planning is not just a technical change confined to adding two more budget periods.
This poses a system change in the budget policy which should ensure a strategic approach to determining priority measures and an efficient distribution of resources.
What are the advantages?
• Consistent and predictable budget policy contributing to financial stability;
• Predictable and efficient budget spending aimed to improve the quality of public services;
• Enhanced budget discipline and setting clear rules of the games which will be followed by all participants of the budget process;
• Control and effective management of the state debt;
• Possibility to secure the necessary expenses for the implementation of the Mid-Term Action Plan of the Government for the period till 2020.
What comes next?
The draft of the Budget Resolution will be submitted to the Parliament.
The Ministry of Finance expects a constructive and appropriate dialogue with the Parliament.
Based on the adopted Budget Resolution, the draft state budget shall be elaborated.