2002年-世界发展银行全球_Ukraine_-_Review_of_the_Budget_Process___A_Public_Expenditure_and_Institutional_Review_95页_5mb

Summary of the Ukraine Budget Process Review

Core Content

This report, titled Report No. 23356-UA, is a Public Expenditure and Institutional Review (PEIR) of Ukraine's budget process, issued by the World Bank in March 2002. It is a companion to the Country Financial Accountability Assessment (CFAA) and evaluates the institutional and procedural aspects of the budgeting system. The report highlights the progress made in fiscal management since the early 1990s and outlines key challenges and recommendations for further improvement.

Main Features of the Budget Process

• Budget Process Overview: The budget process involves the allocation of funds to spending agencies and is analyzed in terms of decision-making participants, institutions involved, and the modalities of budget preparation and execution.
• Fiscal Transparency: Progress has been made in improving transparency, but more work is needed. The four principles of fiscal transparency are:
  • Clarity of roles and responsibilities
  • Public availability of information
  • Openness of budget preparation, execution, and reporting
  • Independent assurance of integrity

Legal and Institutional Framework

• Budget Code: A new Budget Code was adopted, significantly improving the legal framework for budgeting.
• Accountability and Discipline: Despite improvements, the new code lacks strong enforcement mechanisms and clear accountability for violations.
• Roles of Key Institutions:
  • Ministry of Finance (MOF): Central to the budget process, responsible for financial management and coordination.
  • Ministry of Economy (MOE): Has functions related to capital budgeting that need to be transferred to the MOF.
  • Cabinet of Ministers (CoM): Should act as a collegial body in setting expenditure priorities.
  • Verkhovna Rada: Has shown limited commitment to fiscal discipline.

Budget Preparation

• Division of Labor: The MOF and MOE share budget preparation tasks, which undermines the coherence of the budget as a single document with internal logic.
• Revenue and Expenditure Estimates: These do not fully reflect the government's real revenue capacity or its new role in a market economy.
• Sectoral Priorities: There are few mechanisms to implement realistic sectoral priorities, and spending units are not required to consider budget ceilings when preparing applications.
• Recommendations:
  • Adopt a strategic approach to move toward a performance-based budgeting system.
  • Strengthen the role of the MOF in the budget process.
  • Merge sectoral departments of the MOF with the budget department to ensure better coordination and accountability.
  • Develop a Medium Term Expenditure Framework (MTEF), but only after intermediate steps such as improving strategic policy and sectoral reviews.

Budget Execution

• Historical Context: Until 1999, budget execution was plagued by under-financing and inefficient cash management.
• Current System: The Treasury system has been introduced, improving the situation, but commitment control is still not fully operational.
• Commitment Control: Spending units often exceed their appropriations, leading to increased arrears. A proper system to track and hold accountable those who overspend is needed.
• Cash Management: The current system allocates funds weekly based on the rospis (budget implementation sheet), but it remains inefficient and results in cash accumulation.
• Resource Reallocation: Spending units are not allowed to reallocate funds from other sources, which can lead to cash gaps and inefficiencies.
• Recommendations:
  • Strengthen the commitment control system.
  • Improve the transparency and timeliness of budget execution.
  • Enhance the capacity of the Treasury and MOF to track spending, cost, and performance.
  • Develop a formal mid-year review and improve monthly budget reporting.

Intergovernmental Budgeting

• Local Governments: Account for about 35% of public expenditures, with most going to education, health, and social protection.
• Reforms in 2001: A formula-based system was introduced to determine intergovernmental transfers, which improved accountability and equalization of per capita expenditures.
• Remaining Issues:
  • Unclear timing of direct transfers from the central budget.
  • Lack of transparency in the formula used.
  • No changes in local governments’ rights to hire/fire public employees.
  • Disincentives for revenue mobilization in some oblasts.
  • Inadequate enforcement of the formula, leading to violations.

Fiscal Sustainability and Public Expenditure

• Fiscal Sustainability: Ukraine's fiscal deficit is likely underestimated due to the use of budgetary offsets. The government must maintain a primary fiscal surplus of 1.8% of GDP to stabilize public debt.
• Public Expenditure Size: Public spending as a percentage of GDP has declined significantly (from 70% to 37%), but the government remains relatively large compared to national income.
• Composition of Expenditures:
  • Education and health spending are lower than in other transition countries.
  • Social transfers amount to 13.2% of GDP, which may be inappropriately high given Ukraine's income level and the inefficiency in targeting social assistance.
  • Capital investment is low (less than 1% of GDP), threatening future growth potential.

Key Recommendations

1. Clarify Accountability: Further define the roles of the President, CoM, MOF, and Verkhovna Rada.
2. Improve Coordination: Establish realistic, medium-term budget ceilings and link them to macroeconomic projections.
3. Strengthen Credibility: Implement credible enforcement mechanisms and ensure budget discipline.
4. Enhance Public Availability of Information: Improve the transparency of the budget process and ensure the public is informed about the use of public funds.
5. Move Towards Performance-Based Budgeting: Develop performance indicators and benchmarks to improve the efficiency of public programs.
6. Strengthen Intergovernmental Relations: Improve the enforcement of the formula-based system and ensure local governments have the capacity to mobilize revenue and manage expenditures.

Conclusion

The Ukraine budget process has seen significant improvements in fiscal transparency and institutional reform, but challenges remain in fiscal discipline, commitment control, and operational efficiency. A more strategic, performance-based approach is necessary to ensure sustainable and effective public expenditure management. Strengthening the role of the MOF, improving intergovernmental relations, and enhancing accountability mechanisms are critical steps towards achieving these goals.