The Priorities for Increasing the Efficiency of the Local Budgets’ Formation

Abstract

The article is aimed at substantiating the basic principles of the formation of local budgets for the medium term in the context of improving the efficiency of budget policy. An analysis of socio-demographic and economic indicators of territorial communities is carried out, determining that their consolidation has a positive effect on the optimization of the local budget expenditures. The efficiency of expenditures of local budgets of Central and Eastern Europe was evaluated on the basis of Musgrave criteria and the aggregated indicator of quality of public goods and services. The empirical analysis of the Gini index, consumer inflation, the volatility of economic growth and exchange rate, the level of GDP per capita, the pace of economic growth and unemployment for Ukraine indicate the urgent need to develop the institutional environment of budget policy and improve the budgetary architectonics. An evaluation of the efficiency of local budget expenditures was also carried out through a comparative analysis of the quality of services in the sphere of management, education, infrastructure of healthcare, which was based on international ratings and indicators. It is identified that the highest level of efficiency is provided in the Baltic states, Poland; Armenia and Georgia (due to low GDP expenditures); Belarus. The carried out analysis justifies the need for Ukraine to optimize the expenditure part of the budget in favor of such areas as healthcare and infrastructure. Practical recommendations for increasing the fiscal significance of tax revenues credited to local budgets and for expanding the fiscal space of territorial communities are substantiated. The provisions on optimization of the tax debt of local budgets are presented.