FISCAL DOMINANTS OF INTER-MUNICIPAL COOPERATION OF TERRITORIAL COMMUNITIES UNDER DECENTRALIZATION AND WARTIME TRANSFORMATION

Abstract

The article explores the theoretical and applied aspects of the fiscal dominants of inter-municipal cooperation of territorial communities in the context of decentralization and wartime transformation. It is argued that, despite the growth of local budget revenues, significant asymmetry in fiscal capacity persists, which necessitates the use of horizontal cooperation mechanisms to reduce territorial disparities and mitigate dependence on central transfers and donor funding. The legal framework for inter-municipal cooperation in Ukraine is systematized, and the impact of fiscal decentralization on the formation of institutional and budgetary capacity for joint action is assessed. The study identifies key fiscal mechanisms underpinning cooperation between territorial communities, namely joint financing of institutions and projects, pooling of investment resources, internal financial equalization, optimization of budgetary expenditures, and enhanced access to external financial resources. These mechanisms are analyzed in conjunction with the emerging roles of fiscal security and inclusive development priorities as strategic dimensions of inter-municipal interaction under wartime conditions. A matrix-based framework is proposed to classify international, national, regional, and local factors affecting the functioning of fiscal mechanisms of cooperation and to evaluate their relative strength of influence on the effectiveness of inter-municipal projects. The findings demonstrate that international financial support and national incentive schemes act as powerful catalysts for joint investment initiatives, while local and regional factors determine the practical configuration and inclusiveness of cooperation. It is substantiated that, under the pressures of full-scale war and post-war recovery, inter-municipal cooperation evolves from a narrow cost-saving tool into a mechanism of fiscal resilience, territorial cohesion, and sustainable regional development by enhancing the stability of local public finance, ensuring continuity of critical public services, and supporting the reconstruction of damaged infrastructure. The study concludes that the further development of fiscally oriented forms of inter-municipal cooperation is a key precondition for strengthening the financial sustainability of local self-government and building a new architecture of territorial governance in Ukraine.