THE ROLE OF ADDITIONAL FUNDING SOURCES IN ENSURING THE STABILITY OF LOCAL BUDGETS: CHALLENGES AND PERSPECTIVES IN THE POST-WAR RECONSTRUCTION CONTEXT

Abstract

The war in Ukraine has caused significant destruction to infrastructure, housing stock, and the economy. The country's reconstruction will require substantial financial resources. In this situation, utilizing additional sources of funding beyond traditional transfers from the state budget becomes critically important. Research focuses on the importance of utilizing additional sources of funding to meet the needs of local and public authorities during post-war reconstruction. In the context of decentralization reform and expanding the financial capabilities of local communities in Ukraine, there are challenges regarding the socio-economic development of territories, especially considering the insufficient development of the loan financing institution. Main sources of local financing, such as local loans and issuance of local bonds, are regulated according to the Budget Code of Ukraine and relevant resolutions. This creates certain limitations and regulations regarding the attraction of financial resources at the local level. Research also indicates that local budgets in Ukraine, although showing a tendency of increasing local debt, predominantly rely on official transfers from the state level. However, the necessity of developing local finances and effectively managing them becomes crucial for ensuring sustainable development of local communities in the post-war period. Analysis shows that local authorities in Ukraine have limited opportunities for borrowing financial resources, which complicates their ability to meet the infrastructure and social development needs. Moreover, the ongoing conflict has disrupted normal economic activities and hindered the growth prospects of various regions. The uncertainty caused by the war has led to a decrease in investment and business confidence, further exacerbating the economic challenges faced by local communities. Addressing these issues requires not only financial resources but also effective governance mechanisms to ensure transparency, accountability, and proper utilization of funds. Additionally, the reconstruction process presents an opportunity to implement sustainable development practices and modernize infrastructure to withstand future challenges. By investing in renewable energy, improving transportation networks, and enhancing healthcare and education facilities, Ukraine can build a more resilient and prosperous society. Collaboration between government agencies, international organizations, and local stakeholders is essential to formulate comprehensive strategies and mobilize resources effectively.