Budget Process Codified

On March 22, Verkhovna Rada passed the Budget Code almost unanimously, something unheard of for such a serious matter, with 391 out of 428 deputies for and eight against. Ukraine’s first Budget Code sets out principles of the budget system, the structure and legal standards of its functioning, the fundamentals of the budgetary process and internal budgetary relations, and responsibility for breaking budget laws.

The code sets, in particular, a single budget-drawing-up rule and introduces simultaneous planning for e budgets at all levels. It also describes in detail the procedure for discussing and approving the national and local budgets and of passing a budget resolution. The document introduces a treasury- based system of national and local budget fulfillment and envisions transition to a standard-setting method of local government budget planning. Henceforth, when the state delegates expenses to local budgets, it is obligated to furnish the latter with the necessary budgetary resources in the form of national taxes, duties, mandatory payments or parts thereof, as well as state budget transfers. The Budget Code forbids all bodies of pubic administration, local government, and other budget-financed institutions from setting up off-budget funds. The councils of cities with a population of over 800,000 have been authorized to resort to external borrowing. The code also introduces a special mechanism for Verkhovna Rada to put on the agenda and discuss bills which could affect the fulfillment of expenditures and revenues laid down in the national budget.