Decentralization of the Budget as a Prerequisite for Sustainable Territory Development.

Abstract

Local authorities, which are closer to the residents of the respective administrative and territorial units and possess the necessary information about the needs of residents and economic situation in the region, perform their tasks and functions more effectively than under a centralized system of management. Budgetary decentralization is a way of organizing the relations of the fiscal system among the budgets of different levels through the transfer of powers with the appropriate financial resources from the center to the regional and local levels of self-government. The reallocation of functions accompanies it among different levels of authorities for the benefit of regional and local governments. The consideration of the problems of development of inter-budgetary relations should begin with an analysis of two concepts: the concept of financial centralization and the concept of fiscal decentralization. The concept of financial centralization implies an explicit subordination of local governments to higher levels of authorities and their vertical subordination based on the relevant legal acts. Under the current conditions, decentralization of power, as a component of state regional development policy, is one of the defining reforms in Ukraine.