Ukraine took 79th place (out of 125 countries) in the international ranking of budget transparency Open Budget Survey (OBS) - the world's only budget transparency rating, which analyzes the budgets of the central level of 125 countries according to the same methodology and is compiled by independent experts every 2 years. Methodology includes an assessment of 145 indicators in 8 key documents (published by December 31, 2022) and covers the activities of the Parliament, Treasury, Ministry of Finance and the Audit Chamber during the budget process. OBS sheds light on the completeness of information in budget documents, the mechanisms of citizens' participation in decision-making during the budget process, and the completeness of the Audit Chamber's control over the use of state budget funds.

As a result of the full-scale invasion of Russia in 2022, the President of Ukraine declared martial law that suspended standard budget procedures. These changes contributed to a decrease in the ranking of budget transparency, parliamentary control, and public participation in the budget process, which are evaluated in the OBS budget transparency rating. The war unleashed by Russia forced the Ministry of Finance in crisis mode to review all budget documents, both approved and under development, and adapt them to a high degree of uncertainty, due to Russia's occupation of a significant territory of Ukraine and the displacement of millions of citizens. Therefore, during 2022, the Budget Declaration, monthly reports on the implementation of the state budget, the annual report on the implementation of the state budget, and Accounting Chambers’ analysis of budget implementation were not publicly available. It led to a decrease in the rating of Ukraine from 65 points to 38. Before the full-scale Russian invasion, Ukraine had seen a steady improvement in budget transparency. In 2021, Ukraine reached 65 out of 100 possible points in the OBS rating.

In 2023 Verkhovna Rada published a Report on the implementation of the State Budget in 2021, and Accounting Chamber published an Analysis of the report on the implementation of the State Budget for 2021, but these documents were not taken into account in the 2023 evaluation, due to methodological limitations of the evaluation of documents published in 2022. Since the OBS methodology checks the country's budget process at the level of the state budget for compliance with international standards, it leaves practically no possibility to make exceptions in the assessment when the country is affected by emergencies such as the COVID pandemic or war.

The lack of access to key budget documents significantly reduced the public's ability to communicate with the legislature during budget approval and with the executive during budget implementation. Although these changes in practice are worrisome, the Ukrainian authorities have managed to preserve the tools of openness and accountability of public finances, which are

not fully (or not covered at all by OBS), including public procurement systems, and publication of non-military payments by the State Treasury Service. In addition, the Ministry of Finance continues to publish public versions of local-level budgets. Faced with economic losses in the hundreds of billions of dollars and infrastructure damage, the Ukrainian government, in cooperation with international partners, launched a pilot "Digital Ecosystem for Accountable Recovery Management" Dream at the end of 2023 - a platform for digital coordination of the accountable reconstruction of Ukraine.

OBS covers the area of budget accountability, opportunities for public participation in the budget process, and appropriate external control over the use of budget funds. In each of them, Ukraine faces a number of challenges:

In order to improve the level of accountability, it is necessary to restore the reporting of the executive branch of government in the parliament through the "hour of questions to the government", to return the publication of the monthly budget execution by the Treasury (with a delay in the publication for a legally defined period) and to ensure the use Digital Ecosystem for Accountable Recovery Management - DREAM for infrastructure investments at all levels of state administration.

In order to improve opportunities for public participation, it is necessary to restore media access to the parliament, actively interact with vulnerable and underrepresented communities, including veterans, and more actively involve representatives of think tanks in hearings on key budget documents.

To improve parliamentary control, it is necessary to ensure the independence of the Accounting Chamber and appoint all its members as required by law, update its strategy, and improve the process of professionalization of auditors of the accounting chamber by expanding the use of analytical tools. It is necessary to expand the powers of the Accounting Chamber in terms of the ability to analyze the use of funds from local budgets and state enterprises, as well as to create mechanisms for public participation in relevant audit investigations.

Restoring the practice of publishing key budget documents, improving the work of the senior audit institution, and involving the public in the budget process will help ensure accountable and effective use of funds and strengthen the trust of both Ukrainian taxpayers and international donors who help Ukraine survive the war.

 

Volodymyr Tarnay, independent expert