THE ROLE OF FINANCIAL DECENTRALIZATION IN THE DEVELOPMENT OF LOCAL COMMUNITIES IN UKRAINE

Abstract

The article is devoted to the study of the process and peculiarities of implementation of financial decentralization in the context of delegation of powers from the national level to the regional and local levels of government in the field of formation and use of financial resources.

The author analyzes financial decentralization in Ukraine as a key component of reforming the budget system and increasing the financial capacity of territorial communities. Thanks to the reform, local authorities have received more resources for infrastructure development, improvement of public services and local initiatives. The share of communities' own revenues has increased, reducing their dependence on government subsidies. The responsibility of local authorities to their residents has also increased, as communities independently decide on the allocation of budget funds.

The article also examines the peculiarities of redistribution of financial resources between the state and local budgets and the mechanisms of interbudgetary transfers. The main challenges that arise in the process of decentralization are identified, including the issues of financial self-sufficiency of communities, transparency of funds management, efficiency of tax policy and regional development.

Particular attention is paid to the impact of the war on the economic situation in the country and the role of decentralization in overcoming the crisis. It is determined that in times of crisis, reform plays an important role, as it allows communities to respond quickly to new needs, restore critical infrastructure and support people affected by the fighting. However, this situation has also emphasized the need to further improve intergovernmental fiscal relations and to find additional sources of revenue.

The article also examines the legal aspects of financial decentralization, analyzes the changes made to the Budget and Tax Codes that contributed to the redistribution of revenues between levels of government, strengthening local budgets and expanding tax revenues at the community level, and which resulted in an increase in the share of local budgets' own revenues.

As a result, the author identifies the prospects for further improvement of the mechanisms of financial decentralization, in particular, the need to improve coordination between levels of government, ensure uniform development of territorial communities and increase the efficiency of budgetary funds.