Budget Code of Ukraine

Date of entry into force:
January 1, 2011

The Budget Code of Ukraine determines the legal principles for functioning of the budget system of Ukraine, its principles, the principles of the budget process and inter-budget relations, and the liability for violation of the budget legislation.

According to Article 1 of the Code, the Code regulates the relations that arise in the process of drafting, review, approval and execution of budgets, reporting on their execution, and controlling the adherence to the budget legislation, issues of liability for violating the budget legislation, as well as determines the legal principles for creating and repaying the state and local debt.

Article 3 of the Code establishes that the budget period for all budgets that make up the budget system of Ukraine is one calendar year, starting on the 1st of January of each year and ending on the 31st of December of the same year.

Article 5 of the Code envisages that the budget system of Ukraine consists of the state budget and local budgets. The local budgets are the budget of the Autonomous Republic of Crimea, regional budgets, district budgets and budgets of the local self-government.

Article 6 of the Code determines that the consolidated budget is a summary of budget parameters used to analyze and forecast the economic and social development of the state.

According to Article 13 of the Code, the budget can consist of the general and the special fund.
The components of the general budget fund are:
  • all budget incomes, except for those intended for allocation to the special budget fund;
  • all budget expenditures at the expense of allocations to the general budget fund;
  • budget crediting (repayment of loans to the budget without determining a specific designated purpose, and providing loans from the budget, at the expense of allocations to the general budget fund);
  • financing of the general budget fund.

The components of the special budget fund are:
  • budget incomes (including own incomes of budget institutions) with specific designated purposes;
  • budget expenditures at the expense of specifically defined allocations of the special budget fund (including own allocations of budget institutions);
  • budget crediting (repayment of loans to the budget with a determined specific designated purpose, and providing loans from the budget, at the expense of specifically defined allocations to the special budget fund);
  • financing of the special budget fund.

Article 15 of the Code determines that the sources of the budget financing are:
  • funds from the state (local) domestic and foreign borrowings;
  • funds from privatization of state property (including other allocations directly related to the privatization process) – in respect of the state budget;
  • return of budget funds from deposits, proceeds from sale/production of securities;
  • free balance of budget funds, subject to conditions determined by the Code.

The marginal limit of the state (local) debt and the marginal limit of provided state (local) guarantees are determined for each budget period, by the Law on the State Budget of Ukraine (resolution on the local budget). The total amount of state debt and state-guaranteed debt at the end of the budget period shall not exceed 60 percent of the annual nominal gross domestic product of Ukraine (Article 18 of the Code).

Article 19 of the Code envisages that the following are recognized as steps of the budget process:
  • preparing draft budgets;
  • reviewing the draft and adopting the Law on the State Budget of Ukraine (resolution on the local budget);
  • executing the budget, including introduction of amendments to the Law on the State Budget of Ukraine (resolution on the local budget);
  • preparing and reviewing the budget execution report and reaching a decision in respect of it.

Any budget liabilities and payments from the budgets are carried out only provided the availability of appropriate budget allocations. Budget allocations are established by the Law on the State Budget of Ukraine (resolution on the local budget) (Article 23 of the Code).

Article 26 of the Code states that the use of the funds of the State Budget of Ukraine is monitored by the Accounting Chamber on behalf of the Verkhovna Rada of Ukraine. The administrators of budget funds, in the persons of their heads, organize for the internal control and internal audit, and provide for their implementation in their institutions and subordinated budget institutions.

According to Article 28 of the Code, information on the budget is promulgated according to the requirements determined by the Code.

The Ministry of Finances of Ukraine provides for promulgation of the following:
  • draft of the Law on the State Budget of Ukraine;
  • the Law on the State Budget of Ukraine, with the appendices that are an integral part of it;
  • information on the execution of the State Budget of Ukraine based on the monthly, quarterly and yearly results;
  • information on the execution of the consolidated budget of Ukraine;
  • other information on execution of the State Budget of Ukraine.

The draft of the Law on the State Budget of Ukraine is subject to mandatory publication in the Uryadoviy Kurier newspaper no later than seven days after being submitted to the Verkhovna Rada of Ukraine.

Article 29 of the Code establishes a list of incomes of the State Budget of Ukraine.

Article 30 envisages the composition of the expenditures of the State Budget of Ukraine.

The Ministry of Finances of Ukraine submits a draft of the Law on the State Budget of Ukraine to the Cabinet of Ministers for review, and introduces suggestions on the terms and procedure for the review of this draft by the Cabinet of Ministers of Ukraine.

Article 40 of the Code envisages that the Law on the State Budget of Ukraine determines:
  • the total amount of incomes, expenditures and crediting of the state budget (divided into the general and special funds);
  • the marginal limit of the annual deficit (surplus) of the state budget in the appropriate budget period, and of the state debt as of the end of the appropriate budget period, the marginal limit of state guarantees and the authority in respect of such guarantees;
  • incomes of the state budget, by budget classification (in the appendix to the law);
  • financing of the state budget, by budget classification (in the appendix to the law);
  • budget allocations to the main state budget fund administrators, by budget classification, with mandatory specification of consumer expenditures (including labor remuneration, payment for municipal services and energy carriers) and development expenditures, including the distribution of expenditures for centralized measures between administrative and territorial units (in appendices to the law);
  • budget allocation of inter-budget transfers (in appendices to the law);
  • the turnover balance of the state budget funds;
  • the minimum wage for the appropriate budget period;
  • the minimum subsistence level for the appropriate budget period, calculated per person per months, and separately for the main social and demographic population groups, and the level of provision of the minimum subsistence for the appropriate budget period;
  • list of credits (loans) taken out by the state from foreign states, banks and international financial organizations to implement investment programs (projects), specifying the creditors, total credit (loan) amounts and the amounts of the borrowings in the appropriate budget period as divided between budget programs (in the appendix to the law);
  • additional provisions regulating the budget execution procedure.

Article 42 of the Law envisages that the Cabinet of Ministers of Ukraine ensures the execution of the State Budget of Ukraine. The Ministry of Finances of Ukraine carries out general organization and manages the execution of the State Budget of Ukraine, as well as coordinates the work of the budget process participants in the issues of budget execution.

Article 55 of the Code states that the protected budget expenditures are expenditures of the general budget fund, the amount of which cannot be changed in case of a decrease in the approved budget allocations. The protected expenditures of the State Budget of Ukraine are expenditures of the general fund for:
  • remuneration of labor for budget institution employees;
  • accruals on salaries;
  • purchase of medicines and dressing materials;
  • supply of food products;
  • payment for municipal services and energy carriers;
  • servicing of the state debt;
  • current transfers to the population;
  • current transfers to local budgets;
  • training of staff by higher education institutions of I-IV accreditation levels;
  • supplying disabled people with technical and other rehabilitation means, as well as medical products for individual use;
  • fundamental research, applied scientific and technical research;
  • work and measures carried out to implement the On the National Program for Putting out of Operation the Chornobyl Atomic Energy Station and Transforming the Object “Ukryttia” (Shelter) into an Environmentally Safe System.

The annual report on the implementation of the Law on the State Budget of Ukraine is submitted by the Cabinet of Ministers of Ukraine to the Verkhovna Rada of Ukraine, the President of Ukraine and the Accounting Chamber no later than the 1st of April of the year following the reporting year (Article 61 of the Code).

Article 64 of the Code establishes the composition of incomes assigned to the budgets of local self-government and taken into consideration when determining the amount of inter-budget transfers.

Article 75 of the Code states that the Ministry of Finances of Ukraine informs the Council of Ministers of the Autonomous Republic of Crimea, local state administrations and executive bodies of appropriate local councils of the specifics of preparing calculations for draft budgets for the next budget period.

Article 83 of the Code envisages that inter-budget relations are relations between the state, the Autonomous Republic of Crimea and the territorial communities aimed at providing appropriate budgets with the financial resources necessary to implement the functions provided for by the Constitution and the Laws of Ukraine.

Section 14 of the Code regulates the procedure for distributing the expenditures between budgets.

Article 96 of the Code determines that inter-budget transfers are divided into:
  • equalization transfers;
  • subventions;
  • funds transferred to the state budget and local budgets from other state budgets;
  • additional subsidies.

Inter-budget transfers from the state budget to the local budgets are transferred from the state budget accounts by the bodies of the State Treasury Service of Ukraine to the budget of the Autonomous Republic of Crimea, regional budgets, budgets of the cities of Kyiv and Sevastopol, budgets of cities of republican subordinance in the Autonomous Republic of Crimea and of cities of regional subordinance, district budgets, and other budgets of local self-government for which inter-budget transfers are determined in the state budget.

Section 17 of the Code determines the monitoring of adherence to the budget legislation.

According to Article 109 of the Code, the Verkhovna Rada of Ukraine controls adherence to the budget legislation in the process of:
  • determining the budget policy for the next budget period;
  • reviewing the draft and adopting the Law on the State Budget of Ukraine;
  • introducing amendments to the Law on the State Budget of Ukraine;
  • implementing the Law on the State Budget of Ukraine, including through hearing of reports on the execution of the State Budget of Ukraine (including reports of the main administrators of state budget funds on their use of budget funds, and the results of implementation of appropriate budget programs);
  • reviewing the annual report on the implementation of the Law on the State Budget of Ukraine;
  • using the credits (loans) borrowed by the state from foreign states, banks and international financial organizations.

Article 116 of the Code states that violation of the budget legislation means violation of the norms for drafting, reviewing, approving, amending or executing the budget, as well as for reporting on its execution, as established by the Code or other budget legislation, that has been committed by a participant of the budget process.

According to Article 117 of the Code, the following sanctions may be applied to participants of the budget process as a result of violation of the budget legislation:
  • warning of inappropriate implementation of the budget legislation, including a demand to eliminate the violation of the budget legislation – applied in all cases of violation of the budget legislation. The discovered violations of the budget legislation must be eliminated within 30 calendar days;
  • stopping operations with budget funds;
  • suspending budget allocations;
  • decreasing budget allocations;
  • returning budget funds to the appropriate budget;
  • terminating the effect of a resolution on local budget;
  • unconditional withdrawal of funds from local budgets;
  • other measures of influence that may be determined by the Law on the State Budget of Ukraine.

Officials through whose fault the violation of the budget legislation took place bear civil, disciplinary, administrative or criminal liability according to the law (Article 121 of the Code).

Article 123 of the Code envisages that the bodies of the State Treasury Service of Ukraine are liable for:
  • failing to fulfill the requirements on accounting and preparing reports on budget execution;
  • failing to submit timely reporting on budget execution;
  • incurring expenses that exceed the parameters established by the budget plan;
  • violations in the process of controlling the budget authority during booking of budget incomes and making payments on budget liabilities of the administrators of budget funds according to budgetary allocations;
  • failing to observe the procedure for treasury servicing of the state and local budgets.

Article 124 of the Code establishes that a decision to apply a sanction for violation of the budget legislation can be contested according to the procedure established by the law. The decision can be contested in the body that had made it, or in court, during 10 days from the making of such decision, unless otherwise provided for by the law.
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