Interbudgetary transfers as an tool of financial equalization of regions: Theoretical aspects and international practice

Lesia Ishchuk, А. Martyniuk and Yu. Reveychuk

E-Forum Working Papers, 2021, vol. 11, issue 4, 49-53

Abstract: The article examines the nature, types and significance of interbudgetary transfers. A synonymous connection between the terms official and intergovernmental transfers has been established. A significant part of the existing scientific approaches to the examined concept is considered, the differences and similarities between them is designated. According to the analysis of existing theoretical definitions of «interbudgetary transfer» it is established that it means a financial mechanism consisting of free and non-refundable transfer of funds from one budget to another, to finance expenditures in the declared amount and for socio-economic development. Among the interbudgetary transfers there are basic dotation, subventions, reverse dotation, and additional dotation. The functions of intergovernmental transfers, in particular allocation, redistributive, regulatory, administrative, equalizing, stimulating, are defined and disclosed. The significance of intergovernmental transfers has been studied and, in fact, the necessity of the existence of this instrument in modern realities has been established, even with the implementation of the decentralization policy. It is established that high-level transfer regulation and the implementation of decentralization policy are essentially mutually exclusive phenomena. Therefore, at the present stage of development of local budgets and local authorities, the importance of interbudgetary transfers is to ensure the financing of expenditures in transition, equalization of the economic situation of the territories, as well as providing funding for socially significant and resource costly areas. A thorough analysis of world practice on budget equalization was made, which allowed to establish the most optimal and appropriate option for building inter-budgetary relations in Ukraine, which considers the strengths and avoidance of risks that have arisen in other countries. This approach allowed to define the theoretical basis for the use in Ukraine of a comprehensive system of inter-budgetary relations, which involves the use of various mechanisms in certain parts of them

Keywords: local budget revenues; transfers; tax and non-tax revenues (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:cuc:eforum:v:11:y:2021:i:4:p:49-53

DOI: 10.36910/6775-2308-8559-2021-4-7

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