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Liburkina L. M.

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Financial Capacity of Territorial Communities under Martial Law: The Role of the Budget System of Ukraine
Romanovska Y. A.

Romanovska, Yuliia A. (2026) “Financial Capacity of Territorial Communities under Martial Law: The Role of the Budget System of Ukraine.” Business Inform 5:740–740.

Section: Finance, Money Circulation and Credit

Article is written in Ukrainian
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UDC 336.14:352:355.01

Abstract:
The article examines the theoretical aspects of ensuring the financial capacity of territorial communities of Ukraine under martial law and determines the role of the budget system in maintaining the stability of local finances. It is substantiated that under conditions of martial law, territorial communities have become one of the key sources of ensuring social stability, continuity of public services, support for internally displaced persons, maintenance of critical infrastructure, and implementation of local recovery measures. The study analyzes the impact of wartime challenges on the structure of local budget revenues, the system of inter-budget relations and the level of financial autonomy of local communities in 2022-2025. The main trends in the transformation of the local government revenue base have been identified, including changes in the structure of tax revenues, interbudgetary transfers, non-tax revenues, and other sources of financial support. Special attention is paid to studying the consequences of redistributing the «military» personal income tax to the State budget and its impact on the financial stability of individual territorial communities. It has been found that martial law in the country has significantly increased the differentiation of communities’ financial capabilities depending on the security situation, the level of economic potential of the territories, the scale of infrastructure destruction, and demographic changes. The Ukrainian budget system under martial law performs not only a fiscal function but also serves as a tool for crisis regulation, financial equalization, and support of the territorial resilience of communities. It has been proved that through mechanisms such as interbudgetary transfers, subsidies, subventions, and State financial support, the stability of local budgets, the funding of critically important public services, and the maintenance of territorial livelihood under crisis conditions are ensured. At the same time, a tendency has been identified where some communities are becoming more dependent on centralized sources of funding, which highlights the need to strengthen the local government’s own revenue base and improve budget regulation mechanisms. It has been substantiated that in the context of postwar recovery, financially capable territorial communities will be the key foundation for ensuring sustainable socioeconomic development, increasing the competitiveness of regions, and strengthening Ukraine’s economic security.

Keywords: financial capacity; territorial communities; budget system of Ukraine; local finances.

Tabl.: 1. Bibl.: 19.

Romanovska Yuliia A. – Doctor of Sciences (Economics), Associate Professor, Professor, Department of Finance, Accounting and Taxation, Dmytro Motornyi Tavria State Agrotechnological University (66 Universytetska Str., Zaporizhzhia, 69063, Ukraine)
Email: [email protected]

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