© OECD UKRAINE GOVERNANCE ASSESSMENT 2006

© OECD Sigma Ukraine governance assessment Public Expenditure Management

© OECD Public Expenditure Management baselines Legal structure of the Budget Parliament/executive relationship Scope of the annual budget Monitoring the deficit and Government debt Medium-Term Budget framework Budget process Budget execution Accounting and reporting

© OECD Legal structure of the Budget The Budget code of is an adequate legal framework for budget management, despite some needs of clarification or complements Parliament/executive relationship The relationship is properly regulated by the legal framework but additional improvements are desirable to discipline budgeting processes (e.g. contents of the spring budget policy guidelines) Scope of the annual budget Significant and successful efforts to get a comprehensive budget. Still efforts required in the areas of quasi-fiscal activities and of special funds

© OECD Monitoring the deficit and Government debt Sound legal framework and basic requirements met but a need to better analyse and assess fiscal risks, also to strengthen the coordination between debt and cash management. Medium-Term Budget framework The budget still has to be placed within a multiyear perspective with, as a first step, the inclusion of a medium- term fiscal framework in the draft budget policy guidelines. Budget process Clear definition of the budget preparation calendar and timely adoption of the budget so far. The reinforcement of the link between budget and policy is necessary, and the approach of programme budgeting needs revisiting.

© OECD Budget execution Cash execution is under control, but improvement is needed in : - Commitment registrations -Decreasing the number of advance payments -Minimising costs of cash management -Developing PIFC systems Accounting and reporting - Basic reports timely produced - Need for better alignment to IPSAS - Supporting line ministries in their management system development

© OECD Ukraine has already achieved significant results in upgrading its public expenditure management system l an operational State Treasury is established l payments are channelled through a TSA l a new legal framework has been implemented l former EBF are consolidated into the budget l capital expenditures are appropriately budgeted l a great number of technical assistance projects are ongoing or planned in the Ministry of Finance, further assistance should now more focus on strengthening the capacity at line ministry level

© OECD What needs to be done ? −Pursue ongoing activities to support treasury reform, incl.”white paper on PF modernisation”(WB recommendation), reorganisation of MoF, expand group of stakeholders (line ministries) and continuation of current EU/Tacis project (accounting methods, cash management) −MTEF development −Start PFM project according to schedule −Revise budget process at the stage of spring guidelines −Support line ministries in programme-budgeting (mid-term) −Comprehensive review of special funds −Improve budget documents to fully disclose non-fiscal activities (amongst others…)