Executive Summary
As part of the study, the Center for Fiscal Policy Research (hereinafter – Fiscal Center) collected and verified data on local budget expenditures allocated to the implementation of recovery projects for educational, healthcare, and social institutions, housing stock, housing and коммунal services, and other municipally owned assets. This study is the result of a detailed analysis of the collected information and serves as an equivalent of a financial audit conducted by an independent analytical center.
The state budget and intergovernmental transfers play an important role in financing recovery, but it is equally important to attract international assistance, investments, and resources from private companies. Such synergy will contribute to the efficient use of funds and accelerate community recovery.
The analysis of relevant local budget expenditures (using Kyiv region as an example) showed that expenditures under the program classification codes 7372–7377 were mainly directed toward capital repairs of damaged facilities. In contrast, expenditures under other budget programs were used for current repairs (such as window replacement, roof repairs, facade restoration, and financial compensation to affected residents).
Based on the consolidation of information on local budget expenditures for recovery projects under the specified budget programs, a verified database was compiled covering 481 projects with a total amount of UAH 404 million (including 11 transactions involving fund returns totaling nearly UAH 6 million across 9 projects).
The largest share of local budget funds was allocated to:
educational institutions — UAH 191 million (47%), and housing stock — UAH 157 million (39%);
southern and eastern regions most affected by hostilities (with the largest amount spent on the reconstruction of 141 projects in Donetsk region — UAH 133 million or 33%).
Financing of projects began in May 2023 with the reconstruction of 13 housing facilities in Sumy region totaling UAH 1.2 million. In June, the lowest amount of funds was used (UAH 0.5 million) for 14 housing projects in Sumy region. December became the peak month, with UAH 261 million spent (65% of the total). The majority of payments were made on December 27—the last payment day: 479 transactions for 240 projects totaling UAH 163 million (62% of monthly expenditures). More than 48% of Treasury transfers dated December 27 were executed at the request of the Housing and Communal Services Department of the Sloviansk City Military Administration (UAH 40.5 million), the Capital Construction Department of Kramatorsk City Council (UAH 20.3 million), and the Department of Capital Construction of the Odesa Regional State Administration (UAH 18.3 million).
Payment orders were identified that are atypical and fall outside the intended use of funds—namely, tax payments made by the Municipal Enterprise “City Department of Housing and Communal Services” of Chornomorsk City Council. The respective institution did not provide any explanation regarding the grounds for such payments.
After clarifying the use of funds for recovery within the defined budget programs, communities began обращаться to territorial Treasury bodies with requests to re-register executed cash expenditures. This led to discrepancies between the source of financing for recovery projects indicated in payment orders and the information reflected in Treasury budget reports, and resulted in retroactive changes to the program classification codes for expenditures and lending of local budgets for already executed payments.