Implementing the decentralization reform in Ukraine

von Moritz Junginger

More local funds, more effective use, but still low visibility

The decentralization reform has been among the top reform priorities of Ukraine since 2014. It is among the most ambitious, cross-sectoral reform projects that should bring direct benefits to the everyday life of Ukrainians. But what is the state of implementation of the decentralization reform? To answer this question, more than 50 experts, practitioners and local deputies attended the Reform Review Meeting on November 30 at the Kyiv School of Economics, jointly organized by the Konrad-Adenauer-Stiftung, the Carnegie Endowment for International Peace and the Institute for Political Education.


The decentralization reform is based on the government’s concept of reforming local self-governance, several new laws and amendments. It is cross-sectoral and covers not only the political, administrative and fiscal dimensions but a large number of policy fields, ranging from anti-corruption to healthcare. This makes it a particularly difficult reform to monitor and understand, in particular for stakeholders not involved in the reform process on a daily basis and for decision-makers in the EU or the US.

For this reason, the Carnegie Endowment for International Peace and the Konrad-Adenauer-Stiftung will be preparing a sectoral analysis of the concept and state of the decentralization reform. Based on the expert input from the review meeting and desk-research, a concise analysis and recommendations for the next steps in the implementation will be prepared and presented in Kyiv, Brussels and Berlin next year. This sectoral analysis is part of the Carnegie Endowment’s Monitoring Ukraine Reform project, an initiative to provide objective, rigorous assessments of the Ukrainian reform effort via a series of regular workshops, publications, and briefings prepared by a team of scholars based inside Ukraine.

The Ukrainian and international experts discussed the conceptual and legislative status of the decentralization reform in the first panel. It focused on conceptual issues, competences of central and local governments, the legislative status and public perception of the reform. The second panel looked at the implementation of the reform, with specific attention to the amalgamation of communities, the relations between administrations of different levels, fiscal decentralization, public services and the political implications and challenges of the decentralization reform.

In particular, the pending amendments to the constitution sparked a discussion. The constitutional amendments were approved in a first reading in August 2015 but have not been put to a second reading yet, where 300 votes are required. One expert stressed that the amendments are a necessary precondition to develop the basic legislation for decentralization, among others the new law on local governance and the new law on local prefects. Others stressed that waiting for the constitutional changes is not necessary. At the level of communities, more than 90% of the decentralization reform can be done without constitutional changes. Regarding the overall implementation, it was advocated to not “let the best be the enemy of the good” and to move ahead with the reform instead of being held back by the search for the, theoretically, perfect concept. Even though the decentralization process meets obstacles, such as the limit for communities to amalgamate across rayon border, many can be resolved throughout the implementation process (e.g. a draft law in the Verkhovna Rada should soon allow for mergers across rayon borders).

From the point of view of fiscal decentralization, first successes are visible. After the adoption of changes to the tax code at the end of 2015, the local budgets increased by 42.1% or over 30 billion UAH. In October 2016, the increase in budgets even reached 36 billion UAH. On the level of communities, the increase varies between 6% to 900%. Also the more efficient use of resources at the local level was highlighted.

Despite the increase of local funds and more efficient use, the decentralization reform remains largely “invisible for citizens”. This makes it different from the police or anti-corruption reform where successes are more visible in the public eye. In contrast, Ukrainians hardly notice the ongoing amalgamations of communities and administrative changes. Therefore, only when the decentralization reform starts to improve the every life of Ukrainians it will receive greater support and approval within society.

The Reform Review Meeting was jointly organized by the Carnegie Endowment for International Peace, the Institute for Political Education, the Kyiv School of Economics and the Konrad-Adenauer-Stiftung. The sectoral analysis on the decentralization reform will be published in March 2017.

Find the speakers and agenda of the Sectoral Review Workshop here.