“Ukraine is faced with serious challenges in public finances management, especially against the background of war and a decrease in external assistance. The cost of safety, social sphere and health care is increasingly criticized for inefficiency. Therefore, the issue of rationalization of budget expenditures is becoming increasingly relevant. Are controlled control mechanisms effectively perform their role and what needs to be changed in order to rationally […]”, – WRITE: Businessua.com.ua
Ukraine is faced with serious challenges in public finances management, especially against the background of war and a decrease in external assistance. Safety costs, Social sphere and health care are increasingly criticized for inefficiency. Therefore, the issue of rationalization of budget expenditures is becoming increasingly relevant. Are controlled control mechanisms to effectively play their role and what to change in order to rationally spend limited state budget funds? The chairman of the Verkhovna Rada Committee on Finance, Tax and Customs Policy tells Danilo Getmantsev
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The questions about the efficiency of using public resources are often asked by my readers, and recently and viewers of my videos. It is violated regularly during numerous meetings with businesses that offered a reduction in irrational budget expenditures as one of the alternatives to raising taxes in the fall of 2024.
Over time, this issue will be even more acute, because when you enter in 2026, we will have objectively smaller external assistance in programs such as Ukraine Facility from the EU and ERA from G7, most of which we will choose by the end of 2025.
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So one way or another, we would like anyone or not, but we will have to rationalize budget expenditures.
I myself agree that much of the state funds are used inefficiently, and the response from the state is insufficient. Every year, I submit proposals to the budget declaration and the project of the State Budget of Ukraine, seeing things in them, the financing of which (especially during a full -scale war) can either be removed at all, or at least postponed for later. At the same time, carefully examined what result we had in the relevant directions in the previous years.
In 2023, the Accounting Chamber checked 399 objects that disposed of a total resource of UAH 771 billion.
Violations and shortcomings in the process of disposal of public finances by UAH 60.8 billion, more than 60% of which accounted for three areas: “Safety and defense”, “State budget revenues” and “Social sphere and health care”.
The share of inefficient expenditures and funds used by 7.9% of the amount of proven costs.
By the end of April 2025, we expect the Accounting Chamber report for 2024. I don’t think less will be found there.
We have a tool such as an annual overview of the state budget expenditures. On April 15, the Government approved the order №348-p “On holding in 2025 inspections of expenditures of the state budget in certain areas”.
During the year, they plan to cover 31 spheres of activity of 19 main budget spending units: Ministry of Economy, Ministry of Foreign Affairs, Ministry of Education, Ministry of Energy, Ministry of Energy, Ministry DUSSNSCCUs, ARMA, National Academy of Legal Sciences, National Academy of Sciences, Economic and Financial Department of the CMU Secretariat.
Four “but” tools In general, it is allegedly the right tool – it is planned to analyze many areas of spending of public funds. But there are several “but”.
A narrow list of fund managers that will be covered by review of government expenditures. In total, in 2025 we have the main spending units of the state budget – 71, spending units of the state budget of lower level – 7273, recipients of budget funds of the state budget – 785.
And these are only state budgets. There are also local budgets that also receive funds from state through subsidies, grants, etc., where the total number of spending units and recipients of funds is 38 471 entities.
So, only 27% of the main spending units will take part in the reviews this year, the rest can exhale.
Not all areas of their activity will be viewed, but very selective. From the scope of the CMU of the Economic and Financial Department, the CMU Secretariat will analyze solely the efficiency of use of funds aimed at inter-ethnic relations, religion and protection of the rights of indigenous peoples and national minorities. In the field of the Ministry of Agriculture – the work of agricultural universities and geospatial data. DUS – production of state awards, cases and documents thereto, as well as payment of state awards.
In total, such areas and areas are 31. Even if one area is covered by several budget programs, there will be mathematically not more than 10% of all budget programs financed from the state budget this year.
If you look at the amount of funding of these SF The ER, in most cases, will be inspected mainly minor, small programs. In the field of the CMU Secretariat, the CMU Secretariat will analyze the program with annual expenditures of UAH 20.2 million (2.5 times less than one budget of the government newspaper “Government Courier”) is a total of 0.2% of the funds that the GFU disposes of SKMU.
In the field of the Ministry of Health (total budget of UAH 216.7 billion) will analyze the effectiveness of two international assistance programs: “Improvement of health care in people” (in the budget-2025-UAH 361.5 million, 0.2% of the funds at the Ministry of Health) and “Emergency Response to COVID-1925-Vaccination in Ukraine” (in the budget.
In the field of Mindovquil (total budget UAH 10 billion) will be inspected by forestry expenditures, which are provided in the amount of UAH 371.2 million (relatively more, but still only 3.7%).
Questions about objectivity and impartial results. In the composition of the working groups, which will inspect the efficiency, the total number of representatives of the chief manager of the state budget, determined by the responsible for conducting expenses, and representatives of enterprises, institutions and organizations belonging to the sphere of its management or in its management, should be 50% of the total number of members of the working group (including the head of the working group).
Therefore, the efficiency will essentially be performed by those who spend money or persons under the control of them.
Given that the voice of the head of the working group as a result of 50%/50% will be crucial, it is not difficult to guess what estimates can be obtained. I will not be mistaken if I predict – the same as the results of the annual evaluation of top civil servants, where among others the chairman and all members of the liquidated for inefficiency of dowers were only “excellent”.
Why did I analyze this question so carefully?
Under the guise of a civilized, European tool for viewing the effectiveness of budget expenditures, we do not have the “military censorship of expenditures” on which I insist, but a convenient tool for justifying waste, often very low efficiency that society sees.
To release a couple, at best, “inefficiency per 100 hryvnias” will be found, which compensate for the budget with the pump.
The system must be reformatted.
Three steps to “military censorship” of expenditures An annual analysis of expenditures should be applied to all 100% of government spending, not the most “convenient” or small items. If there are no institutional capabilities, there are two ways to resolve this issue.
The first is its ability, an increase (if there is an organ, which is 1.2 billion expenditures, and in its current capacity, it causes inefficiency and abuse of UAH 60.8 billion, I am ready to double its budget and the number of specialists who will give even more caught by state.
The second is an analogue of a risky -oriented approach: the annual analysis of 50-70–100 largest programs, the total budget of which is 90%+ from all government expenditures. Finding an elephant in the aviary is always easier than a needle in haystack.
Efficiency analysis groups have at least 90% of the public: experts, independent auditors, investigative journalists (including “universals” and “thematic specialists”), consumers of services of the respective budget spending units. The remaining 10% should be supplemented by state auditors from the relevant state control bodies (Accounting Chamber, State Audit Office).
If a cost review report contains conclusions about their inefficiency or misconduct, it must have clear legal consequences. State (and budgetary, in particular) funds do not spend themselves, for each penny there is an official with a specific name.
If ineffectiveness is a consequence of unprofessionalism, there should be a personnel decision, and if the consequence of deliberate actions is much tougher. And most importantly – both the spent of public funds and the damage caused must be completely reimbursed.
It is this system that will work effectively and trust people.
The faster and larger we will launch a system of “military censorship” of expenditures, the more efficient and rational we will spend multi-billions, but still limited state resources.
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