The Parliament adopts amendments to the Budget Code paving the way to mid-term budgetary planning

3/23/17

The Parliament has adopted amendments to the Budget Code of Ukraine to implement mid-term budgetary planning (Draft Law No. 6161). This is the first step to the full-scale mid-term budgetary planning and to a new effective mechanism for the management of the budgetary process? Transition from the one-year to three-year horizon in budgetary planning is not just a technical change in budget preparation adding two more budgetary periods – it is a systemic change in the budgetary policy which shall establish a strategic approach in setting priorities and distributing limited financial capacities.

What’s it about?

The adopted draft law “On Amendments to Chapter VI “Concluding and Transitional Provisions” of the Budget Code of Ukraine” stipulates that the final date for the presentation of the Key Areas of the Budgetary Policy for 2018-2020 to the Cabinet of Ministers as well as the clarification of the state budget forecast for 2018-2019 shall be shifted to June 1, 2017. Accordingly, the Cabinet of Ministers shall examine and approve these documents within two weeks after their presentation. The timeframe for the preparation and submission of the draft law on the state budget to the Cabinet of Ministers remains without changes. The use of the updated macroeconomic figures shall make it possible to make a more exact forecast for the next three years and to prepare a realistic state budget.

The Government has already set forth the specific features of the budgetary process in the current year and the format for the preparation of the draft key areas of the budgetary policy for 2018-2020. The Key Areas of the Budgetary Policy for 2018-2020 shall for the first time include the following points:

• general spending limits and spending limits for the main entities managing state budget funds for the next three years;
• list of strategic targets and objectives for the main entities managing state budget funds which are expected to be achieved in the mid-term run. This shall demonstrate the dynamics of positive developments in various fields of public administration.

What’s the advantage?

The adopted draft law paves the way for the preparation of the really new draft of Key Areas of the Budgetary Policy for 2018-2020 and means one more step towards the mid-term budgetary planning.

The key four objectives of the mid-term budgetary planning are as follows:
– consistent and predictable budgetary policy;
– better budgetary discipline meaning clear rules for all parties of the budgetary process and compliance with these rules;
– assessment of the impact of the reforms and taking it into account in the mid-term run. Thus, strategic decisions shall be better founded;
– higher effectiveness and productivity of public spending. The new budget-planning system is aimed to contribute to the strategic goals of the Ukrainian state.

What’s next?

The transition to the mid-term budgetary planning requires comprehensive amendments to the Budget Code of Ukraine. The Government is going to prepare these amendments and to submit them to the Parliament by the end of the current year.

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