Proposals to the draft law - Budget-2010
22 January 2010
MinFin Supports IBSER Proposals for Budget Code
At the end of January 2010, as part of implementation of the MFSI Project component devoted to the development and introduction of innovative financial mechanisms for implementation of energy conservation projects, IBSER experts prepared their proposals to the Draft Law of Ukraine “On the State Budget of Ukraine for the Year 2010".
In its letter of 27 February 2010, the Ministry of Finance of Ukraine informed the Budget Institute that the majority of proposals submitted by IBSER experts would be taken into account when preparing the 2010 State budget.
In particular, the proposals provide for expanding the local government opportunities in obtaining credits from international financial organizations and financial institutions of foreign governments, and also involve the restriction to borrow by municipal councils of cities with the population size over 500,000. This provision is included in the draft amendments to the Budget Code.
The IBSER experts have concluded that in the financial crisis environment, limited access of Ukrainian banks to the resources of world financial markets, and scarcity of local governments’ own resources, the role of external borrowing is increasing significantly, and primarily, borrowing from the official creditors, as having the capacity and willingness to finance local development projects, and being a reliable source for municipal infrastructure improvements.
In view of the fact that unlike commercial lenders, the cost of borrowing from official creditors is significantly lower and repayment periods longer, if the said proposals are approved, the municipalities would enjoy significantly enhanced opportunities for implementing their energy-saving projects.
The proposals have been forwarded to the Prime Minister of Ukraine Yu.V. Tymoshenko, Ministry of Finance of Ukraine, Ministry of Economy of Ukraine, Ministry of Housing and Communal Services of Ukraine, Verkhovna Rada Committee on Building, Urban Development, and Housing and Communal Services, and Regional Policy, as well as the Association of Ukrainian Cities.
In its letter of 27 February 2010, the Ministry of Finance of Ukraine informed the Budget Institute that the majority of proposals submitted by IBSER experts would be taken into account when preparing the 2010 State budget.
In particular, the proposals provide for expanding the local government opportunities in obtaining credits from international financial organizations and financial institutions of foreign governments, and also involve the restriction to borrow by municipal councils of cities with the population size over 500,000. This provision is included in the draft amendments to the Budget Code.
The IBSER experts have concluded that in the financial crisis environment, limited access of Ukrainian banks to the resources of world financial markets, and scarcity of local governments’ own resources, the role of external borrowing is increasing significantly, and primarily, borrowing from the official creditors, as having the capacity and willingness to finance local development projects, and being a reliable source for municipal infrastructure improvements.
In view of the fact that unlike commercial lenders, the cost of borrowing from official creditors is significantly lower and repayment periods longer, if the said proposals are approved, the municipalities would enjoy significantly enhanced opportunities for implementing their energy-saving projects.
The proposals have been forwarded to the Prime Minister of Ukraine Yu.V. Tymoshenko, Ministry of Finance of Ukraine, Ministry of Economy of Ukraine, Ministry of Housing and Communal Services of Ukraine, Verkhovna Rada Committee on Building, Urban Development, and Housing and Communal Services, and Regional Policy, as well as the Association of Ukrainian Cities.
Glyanec