BUDGET CODE OF UKRAINE

of June 21, 2001 No. 2542-III

This Code determines bases of budget system of Ukraine, its structure, the principles, the legal beginnings of functioning, basis of budget process and the interbudget relations and responsibility for violation of the budget legislation.

GENERAL PART

Section I GENERAL PROVISIONS

Chapter 1 GENERAL PROVISIONS

Article 1. The relations regulated by the Budget code of Ukraine

1. The budget code of Ukraine governs the relations arising in the course of creation, consideration, approval, execution of budgets and consideration of reports on their execution, and also control of execution of the State Budget of Ukraine and local budgets.

Article 2. Determination of the main terms

1. In this Code the stated below terms are used in the following value:

1) the budget - the plan of forming and use of financial resources for providing the tasks and functions performed by public authorities, authorities of the Autonomous Republic of Crimea and local government bodies during the budget period;

2) budgets of local self-government - budgets of territorial bulks of villages, settlements, cities and their associations;

3) budget classification - the single systematized grouping of the income, expenses (including crediting less repayment) and financings of the budget for signs of economic essence, functional activities, the organizational device and to other signs according to the legislation of Ukraine and international standards;

4) the budget program - the systematized list died, directed to achievement of the single purpose and tasks which accomplishment offers and the manager of budgetary funds according to the functions assigned to it performs;

5) budget system of Ukraine - the set of the government budget and local budgets constructed taking into account the economic relations, state and administrative-territorial devices and settled by rules of law;

6) budgetary institution - body, organization or the organization determined by the Constitution of Ukraine and also organization or the organization created in accordance with the established procedure by public authorities, authorities of the Autonomous Republic of Crimea or local government bodies which completely contains at the expense of respectively government budget or local budgets. Budgetary institutions are non-profitable;

7) budget assignment - the power conferred to the manager of budgetary funds according to budget setting for adoption of the budget obligation and implementation of payments with specific purpose in the course of budget implementation;

8) the budget obligation - any order placement performed according to budget assignment, the conclusion of the agreement, purchase of goods, services or implementation of other similar transactions during the budget period according to which it is necessary to make payments during the same period or in the future;

9) budget setting - the power conferred to the main manager of budgetary funds by this Code, the law on the Government budget of Ukraine or the decision on the local budget which has quantitative and temporary restrictions and permits to provide budgetary appropriations;

10) budget request - the document prepared by the manager of budgetary funds, containing offers with the corresponding reasons on amount of the budgetary funds necessary for its activities for the next budget period;

11) budget process - the activities regulated by rules of law connected with creation, consideration, approval of budgets, their execution and control of their execution, consideration of performance reports of the budgets constituting budget system of Ukraine;

12) budget list - the document in which income distribution and financing of the budget, budgetary appropriations to the main managers of budgetary funds on certain periods of year according to budget classification is established;

13) budget expenses - funds which are allocated for implementation of the programs and measures provided by the relevant budget, except for funds for repayment of the main amount of debt and return of the amounts which are excessively paid to the budget;

14) budget expenses - expenses of the budget and funds for repayment of the main amount of debt;

15) the main managers of budgetary funds - budgetary institutions on behalf of their heads who according to Article 22 of this Code receive powers by establishment of budget settings;

16) public debt (debt of the Autonomous Republic of Crimea or debt of local self-government) - the total amount of debt of the state (The Autonomous Republic of Crimea or local self-government) consisting of all issued and outstanding debt obligations of the state (The Autonomous Republic of Crimea or local self-government), including the debt obligations of the state (The Autonomous Republic of Crimea or local councils) which are coming into effect as a result of guarantee issued on the credits or the obligations arising based on the legislation or the agreement;

17) budget deficit - excess of expenses of the budget over its income;

18) the grant of equalization - interbudget transfer on equalization of profitable capability of the budget which receives it;

19) budget receipts - all tax, non-tax and other revenues on irretrievable basis which collection is stipulated by the legislation Ukraine (including transfers, gifts, grants);

20) the law on the Government budget of Ukraine - the law approving powers to public authorities to perform execution of the State Budget of Ukraine during the budget period;

20-1) remaining balance of budgetary funds - amount of means on accounts of the relevant budget and managers of means of this budget for the end of day;

21) borrowings - the transactions connected with obtaining by the budget of means on terms of return, the paid nature and urgency from which obligations of the state, the Autonomous Republic of Crimea or local self-government to creditors result;

22) crediting less repayment - the transactions connected with provision of means from the budget on terms of return, the paid nature and urgency from which obligations to the budget, and the transactions connected with return of these means to the budget result;

23) basket of the income of budgets of local self-government - taxes and fees (obligatory payments) which are assigned by this Code on permanent basis to budgets of local self-government and are considered in case of determination of amounts of interbudget transfers;

24) equalization coefficient - the coefficient applied when calculating amount of grants of equalization and means which are transferred to the Government budget of Ukraine from local budgets, for the purpose of strengthening of profitable base of budgets of local self-government;

25) interbudget transfers - means which are gratuitously and irretrievable transferred from one budget to another;

26) local budgets - the budget of the Autonomous Republic of Crimea, regional, district budgets, budgets of areas in the cities and budgets of local self-government;

27) local financial body - organization which according to the legislation of Ukraine performs functions on creation, execution of local budgets, control of expenditure of means by managers of budgetary funds, and also other functions connected with management of means of the local budget. For the purposes of of this Code the Ministry of Finance of the Autonomous Republic of Crimea is carried to local financial bodies;

28) receipts in the budget - budget receipts and funds raised as a result of acceptance of debt obligations by public authorities, authorities of the Autonomous Republic of Crimea or local government bodies;

29) the financial standard rate budget obespechennostigarantirovanny the state within the available budget resources the level of financial provision of powers of Council of Ministers of the Autonomous Republic of Crimea, local public administrations and executive bodies of local self-government used for scoping of interbudget transfers;

30) bodies of collection - tax, customs and other state bodies which according to the law are granted the collection right in the budget of taxes, charges (obligatory payments) and other receipts;

31) payment - repayment of the obligation which arose in current or the previous budget periods;

32) powers on future budgetary obligations - powers on adoption of the budget obligation to make payments in budget period which comes after the end of the current budget period;

33) the budget statement - the draft of the plan of forming and use of financial resources for providing the tasks and functions performed by public authorities, authorities of the Autonomous Republic of Crimea and local government bodies during the budget period which is integral part of the bill on the government budget or the draft decision of the relevant council about the local budget;

34) budget surplus - excess of budget receipts over its expenses;

35) the decision on the local budget - the regulatory legal act of the Verkhovna Rada of the Autonomous Republic of Crimea or the relevant council published in the procedure established by the legislation of Ukraine which contains the approved powers according to Council of Ministers of the Autonomous Republic of Crimea, local public administration or executive body of local self-government to perform execution of the local budget during the budget period;

36) managers of budgetary funds - the budgetary institutions on behalf of their heads authorized on receipt of budgetary appropriations, budgetary commitments and implementation of expenses from the budget;

37) subventions - interbudget transfers for use on particular purpose according to the procedure, determined by body which made the decision on provision of subvention;

38) financing of the budget - receipts and expenses in connection with scope change of debt, and also change of balance in cash under the budget which are used for difference covering between the income and expenses of the budget.

Article 3. Budget period

1. The budget period for all budgets constituting budget system constitutes one calendar year which begins on January 1 every year and expires on December 31 the same year. Rejection by the Verkhovna Rada of Ukraine of the law on the Government budget of Ukraine till January 1 is not the basis for establishment of other budget period.

2. According to the Constitution of Ukraine the budget period for the Government budget of Ukraine in case of special circumstances can be other, than it is provided by part one of this Article.

3. Special circumstances in case of which the Government budget of Ukraine can be accepted on other, than provide by part one of this Article, budget period, are:

1) introduction of warlike situation;

2) the announcement of emergency state in Ukraine or in its certain areas;

3) announcement of certain areas zones of emergency ecological situation, need of elimination of natural or technogenic catastrophes.

4. In case of adoption of the Government budget of Ukraine on other, than it is provided by part one of this Article, budget period local budgets can be accepted for the same period.

Article 4. Structure of the budget legislation

1. The regulatory legal acts governing the budget relations in Ukraine are:

1) Constitution of Ukraine;

2) this Code;

3) law on the Government budget of Ukraine;

4) other laws regulating budget legal relationship, stipulated in Article 1 of this Code;

5) the regulatory legal acts of the Cabinet of Ministers of Ukraine adopted on the basis and in pursuance of of this Code and other laws of Ukraine provided by Items 3 and 4 of part one of this Article;

6) the regulatory legal acts of the central executive bodies adopted on the basis and in pursuance of of this Code, other laws of Ukraine and regulatory legal acts of the Cabinet of Ministers of Ukraine provided by Items 3, 4 and 5 parts one of this Article;

7) the decisions of bodies of the Autonomous Republic of Crimea, local public administrations, local government bodies accepted according to this Code, regulatory legal acts provided by Items 3, of 4, 5 and 6 parts one of this Article.

2. When implementing budget process in Ukraine provisions of regulatory legal acts are applied only in the part which is not contradicting provisions of the Constitution of Ukraine, of this Code and the law on the Government budget of Ukraine.

3. If the international treaty of Ukraine provided on ratification establishes other provisions, than in the relevant standards of the budget legislation of Ukraine, such provisions are accepted by the separate laws on introduction of amendments to the relevant laws and are considered by the Verkhovna Rada of Ukraine along with ratification of the international treaty of Ukraine by which such provisions are provided.

4. Consideration of the bills influencing profitable or account part of budgets is performed on the special procedure determined by article 27 of this Code.

Chapter 2 BUDGET SYSTEM of UKRAINE AND ITS PRINCIPLES

Article 5. Structure of budget system of Ukraine

1. The budget system of Ukraine consists of the government budget and local budgets.

2. Budgets of local self-government budgets of territorial bulks of villages, settlements, cities and their associations are recognized.

3. Local budgets the budget of the Autonomous Republic of Crimea, regional, district budgets, budgets of areas are recognized the cities and budgets of local self-government.

Article 6. Consolidated budget

1. The consolidated budget is set of indicators of the budgets used for the analysis and forecasting of economic and social development of the state.

2. The consolidated budget of Ukraine includes indicators of the Government budget of Ukraine, the consolidated budget of the Autonomous Republic of Crimea and consolidated budgets of areas and cities of Kiev and Sevastopol.

3. The consolidated budget of the Autonomous Republic of Crimea includes indicators of the budget of the Autonomous Republic of Crimea, consolidated budgets of its areas and budgets of the cities of republican value.

4. The consolidated budget of area includes indicators of the regional budget, consolidated budgets of areas and budgets of the cities of regional value of this area.

5. The consolidated budget of the area includes indicators of district budgets, budgets of the cities of district value, settlement and rural budgets of this area.

6. The consolidated budget of the city with district division includes indicators of the city budget and budgets of the areas which are its part. If other cities, settlements or villages are administratively subordinated to the city or the area in the city, the consolidated budget of the city or area in the city includes indicators of budgets of these cities, settlements and villages.

Article 7. Principles of budget system of Ukraine

1. The budget system of Ukraine is based on the following principles:

1) the principle of unity of budget system of Ukraine - the unity of budget system of Ukraine is provided with the single legal base, single cash system, single regulation of the budget relations, single budget classification, unity of procedure for execution of budgets and conducting financial accounting and the reporting;

2) the principle of balance - powers on implementation of expenses of the budget shall correspond to amount of receipts in the budget for the corresponding budget period;

3) principle of independence - The government budget of Ukraine and local budgets are independent. The state means of the government budget does not bear responsibility for budgetary obligations of authorities of the Autonomous Republic of Crimea and local government bodies. Authorities of the Autonomous Republic of Crimea and local government bodies means of the relevant budgets do not bear responsibility for budgetary obligations of each other, and also for budgetary obligations of the state. Independence of budgets is provided with fixing to them of appropriate sources of the income, the right of relevant organs of the government, authorities of the Autonomous Republic of Crimea and local government bodies on determination of the directions of use of means according to the legislation of Ukraine, the right of the Verkhovna Rada of the Autonomous Republic of Crimea and the relevant councils independently and independently from each other to consider and approve the relevant budgets;

4) the principle of completeness - in structure of budgets all receipts in the budgets and expenses of budgets performed according to regulatory legal acts of public authorities, authorities of the Autonomous Republic of Crimea, local government bodies are subject to inclusion;

5) the principle of justification - the budget is created on realistic macroindicators of economic and social development of the state and calculations of receipts in the budget and the expenses of the budget performed according to the approved techniques and rules;

6) the principle of efficiency - in case of creation and execution of budgets all participants of budget process shall aim at achievement of the planned purposes in case of attraction of the minimum amount of budgetary funds and to achievement of the maximum result when using of the amount of means determined by the budget;

7) the principle of subsidiarity - distribution of expense types between the government budget and local budgets, and also between local budgets shall be based on the greatest possible approach of rendering public services to their direct consumer;

8) the principle of target use of budgetary funds - budgetary funds are used only on the purposes determined by budget settings;

9) concept of justice and impartialities - the budget system of Ukraine is under construction on bases of equitable and impartial distribution of public wealth between citizens and territorial bulks;

10) principle of publicity and transparency - The government budget of Ukraine and local budgets affirm, and decisions according to the report on their execution are made respectively by the Verkhovna Rada of Ukraine, the Verkhovna Rada of the Autonomous Republic of Crimea and the relevant councils;

11) the principle of responsibility of participants budget the protsessakazhdy participant of budget process bears responsibility for the actions or failure to act at each stage of budget process.

Article 8. Budget classification

1. Budget classification of Ukraine is applied to control of financial activities of public authorities, authorities of the Autonomous Republic of Crimea, local government bodies, other managers of budgetary funds, carrying out the necessary analysis by the income, and also organizational, functional and economic expense categories, ensuring nation-wide and international comparability of budget indicators.

2. For the purpose of achievement of integrity of budget income groups and expenses and for ensuring interrelation between functional purposes and economic nature of expenses of the budget the Minister of Finance of Ukraine approves budget classification, and also changes to it and informs on it without fail the Verkhovna Rada of Ukraine.

3. Budget classification has the following components:

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