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The “Good Financial Governance” Project is realized on behalf of German and UK Governments by the federal enterprise Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.

Good Financial Governance Project

More transparency in the financial budgeting process and an effective control of public spending

Project name:
Good Financial Governance
Commissioned by:
Federal Ministry for Economic Cooperation and Development (BMZ), UK Aid from the UK Government
Partner:
Ministry of Finance
Current term:
2012-2016
Тривалість:
2014 – 2017
Budget:
EUR 6.2 million

The “Good Financial Governance” Project is realized on behalf of German and UK Governments by the federal enterprise Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.

Download Project factsheet

Objective

Ministry of Finance and Parliament improve the management of public finances. The Court of Auditors controls public finances according to international standards. Taxation is based on the economic performance of taxpayers, and strictly follows the laws of Ukraine. Companies abide by the taxation laws, and tax evasion is made harder.

Challenges

Ukraine has signed an Association Agreement with the European Union and is pushing for economic integration into the EU internal market. The agreement foresees the adoption of EU legal and economic standards. To fulfil its obligations under the agreement, the Ministry of Finance, Parliament and the Court of Auditors will have to modernise their procedures and make them more transparent.

Activities

GIZ supports the gradual adaptation of the financial budgeting process to EU standards. The aim is to have a budget that reflects the political priorities as defined by the government. This will help improve public services, for example in the areas of education and social services. The Court of Auditors is strengthened so that it can act as an independent institution that is able to monitor all public income and expenditure according to international standards. Furthermore, it should be able to provide members of the parliament’s Public Accounts Committee with the information they need to exercise their control function. Tax laws and the tax administration are being modernised.

Results

At the end of 2014 the Parliament of Ukraine agreed on changes to the budget and taxation laws. This has been one of the most important reforms since the Ukrainian revolution. The decentralisation of the tax system means that municipal budgets of this year are 35% higher than in 2014. The additional funds can be used for public services and investments in infrastructure projects.