Modernization of the budget process

01 Strengthening macroeconomic forecasting capacity by improving macroeconomic forecasting models and underlying assumptions:

introduce a medium-term budget declaration as a means of aligning national strategic priorities with budgetary resources;
creating a reliable medium-term fiscal framework;
strengthening the role of the main spending units in the budget process.

02 Strengthening the capacity to introduce and implement medium-term budget planning through support:

introduce a medium-term budget declaration as a means of aligning national strategic priorities with budgetary resources;
creating a reliable medium-term fiscal framework;
strengthening the role of the main spending units in the budget process.

03 Strengthening capacity in program-based budgeting through support:

Improving budget programs to ensure that they are closely aligned with strategic goals;
improving the efficiency of monitoring the implementation of budget programs.

04 Strengthening the capacity to organize expenditure reviews in the Ministry of Finance and other ministries by facilitating the following:

creating a framework for organizing regular expenditure audits in the Ministry of Finance to ensure savings and free up resources for new priorities;
conducting expenditure audits in selected ministries.

05 Strengthen the capacity to improve the fiscal sustainability of legislative initiatives through support:

improve the methodology of fiscal impact assessment and promote its use in the government and legislative sphere, including relevant trainings.

06 Promote the growth of automation in the budget planning process by supporting:

analysis of relevant business processes and preparation of functional requirements related to expert recommendations and further reforms of the budget process;
ensuring the quality of the purchased budget planning information system;
developing a system deployment plan and conducting a training and change management program in cooperation with the system developer.

07 Strengthening fiscal risk monitoring, reporting and management capacity in the Ministry of Finance and other ministries through support:

introducing a comprehensive fiscal risk assessment system, including methodologies for assessing risks related to the macroeconomic situation, state-owned enterprises, extra-budgetary funds, state guarantees, public-private partnerships, etc;
Strengthening safeguards for the issuance of state guarantees, including improving the assessment of the borrower’s creditworthiness and introducing a fee for providing guarantees.

08 Supporting increased automation of fiscal risk monitoring, reporting and management through facilitation:

analysis of relevant business processes, preparation of functional requirements and quality assurance in the procurement and development of an information and analytical system for fiscal risks.

09 Strengthening the capacity of the Ministry of Finance, the SFS and the State Treasury Service of Ukraine to manage liquidity and service budget execution through support:

improving cash forecasting;
development of effective cash management mechanisms in coordination with the debt management function;
further modernization of the State Treasury Service of Ukraine in strengthening its budget execution function.

10 Strengthened capacity to further harmonize the Ukrainian public accounting system with international standards by supporting the implementation of the Strategy for Modernization of the Public Sector Accounting and Financial Reporting System by 2025, including but not limited to the following:

development of national public sector accounting standards based on IPSAS (International Public Sector Accounting Standards);
analysis of the possibilities for accounting for budget execution operations on an accrual basis;
determination of the structure of consolidation of financial statements;
development and implementation of a new model of accounting services, evaluation of the work of chief accountants;
development of a training program, creation and operation of an e-learning platform for public sector accountants.

11 Support for an increased level of automation of accounting and financial reporting:

analysis of relevant business processes, preparation of functional requirements, and quality assurance of the development of an integrated IT platform for accounting and financial reporting in the public sector.

12 Strengthen the capacity of the state internal financial control (SIFC) through support:

development and implementation of appropriate tools to strengthen capacity and enhance automation at the SIFC, including analysis of relevant business processes, preparation of functional requirements and quality assurance of IT procurement, and development of an interactive portal dedicated to the SIFC.

13 Strengthen the capacity of state financial control by supporting

improving the institutional framework of state financial control;
improving the methodology of existing types of state financial audit and introducing new ones.

14 Support for increased automation of risk-based control selection through support:

analysis of relevant business processes, preparation of functional requirements and quality assurance of the procurement of an information and analytical system for selecting risk-based controls for state financial control.

15 Strengthen the external audit capacity in accordance with international standards through support:

adaptation of legislation on external audit in accordance with INTOSAI standards (levels I-III) and improvement of internal regulations of the Accounting Chamber of Ukraine;
development and implementation of the ACU institutional development strategy;
improving approaches and wider use of performance audit and further improvement of financial audit;
strengthening the mechanism of follow-up on the ACU audit reports.

Component 1: Modernization of the budget process