Ukraine’s budget system works against local communities: an economist explains who actually receives the money
18 May 20:17
For decades, Ukraine’s budget system has worked not for the benefit of communities, but for those in power. And this system, unfortunately, has not changed to this day. Economist Andriy Novak spoke about this on the YouTube channel "Komersant Ukrainian".
According to him, 80% of all tax revenues in Ukraine go directly to the central budget—and only 20% remains for all local budgets combined. The Ministry of Finance then distributes these funds in a virtually manual process. And the principle behind this distribution is strikingly simple.
“If you have your own mayor, you get more money from the central budget. If you don’t have your own mayor—if it’s someone else’s—you get less, or nothing at all for certain items,” the economist noted.
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Novak emphasized that before the war, only five cities in Ukraine were actual contributors to the central budget: Kyiv, Kharkiv, Donetsk, Dnipro, and occasionally Odesa. All other local budgets—without exception—received funds from the central government. In other words, they were effectively supported at the expense of the entire country.
“We’ve always had only 4–5 local budgets that subsidized Ukraine’s central budget. All other local budgets, on the contrary, were recipients, receiving funds from the central budget,” he concluded.
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