Questions and answers on what is to be done to receive funding from the state budget on time

Questions and answers on what is to be done to receive funding from the state budget on time
 

What are budget passports?

Budget passports are documents required by the budget law of Ukraine. After a budget is adopted providing financing for specific programs, budget passports are prepared for most of the respective budget programs. Budget passports are documents necessary as a precondition for the State Treasury to opening financing of a budget program for a year.

What do budget passports define?

A budget passport defines the objective, tasks, purpose of the use of funds, responsible entities and expected results of the respective budget program. A budget passport makes it possible to evaluate the effectiveness and results of the use of budget funds.

Who prepares budget passports?

Budget passports are prepared by the main entities entitled to manage the budget funds - profile ministries, public authorities and other institutions which are in charge for budget programs according to the law on the state budget.

Who approves budget passports?

The entity in charge for the use of the respective budget funds and the Ministry of Finance approve the budget passport with a joint executive order. 
 

When does the process of budget passport preparation and approval begin and how much time does it take?

Budget passports are to be approved within 45 days after the commencement of the law on the state budget (normally, January 1), i.e. before February 15. The entitled entity has 30 days (till January 30) to prepare its budget passport and to submit it to the Ministry of Finance.

What is the process of budget passport approval?

The elaborating entity sends its budget passport to the Ministry of Finance. The profile department of the Ministry of Finance analyzes the passport to assure its compliance with the budget law, budget schedule and spending procedures. After the Ministry of Finance has reviewed the budget passport, it is approved and sent to the State Treasury, where an account is opened for the approved budgetary program.

How many budget passports are to be approved?

The state budget for 2016 lists 509 budget programs, 456 of them require budget passports. However, as per March 1, the Ministry of Finance only received 395 passports, 288 of them were approved.

What kinds of issues could exist in a submitted budget passport that could cause a delay in the approval process?

For example:
• amendments to the spending procedure for budget funds (for instance, due to the change of the name of the respective budget-financed organization or budget program);
• violation of deadlines for the approval of the spending procedures for budget funds;
• the result indicators cited in the budgets passports do not demonstrate the execution of the budget program’s tasks and compliance with the spending areas set by the budget passport;
• the result indicators cited in the budgets passports do not make it possible to evaluate the effectiveness of the budget program.

How does the Ministry of Finance proceed in case, if mistakes are found in submitted passports? 

The Ministry of Finance returns such budget passports for corrections to the respective applicant.

Does the Ministry of Finance always decide on the approval of budget passports by itself?

No. If there is a change in the name of the budget passport or spending areas have been changed, the spending procedure for the budget funds should be approved. This procedure must be approved by the Ministry of Finance as well as by the Ministry of Justice and Ministry for Economic Development and Trade; afterwards it is to be approved by the Cabinet of Ministers. Thus, if the author of the budget passport knows about changes in the name of the passport or in the purpose of use of the budget funds, he need more time to finalize all above procedures.

What happens if budget passports are not submitted by profile ministries in correct form and in a timely manner for approval by the Ministry of Finance?

The State Treasury is not able to open budget accounts for the specific budget program in question and financing cannot begin, which can lead to non-payment of salaries, communal expenses or more.

How can budget organizations assure a smooth flow of funding in a new budget year and avoid delays in financing?

Budget organizations need to submit their budget passports as soon as possible after the approval of the new budget. Already in the beginning of January, the Ministry of Finance began sending requests to budget organizations reminding them to prepare budget passports and send them for approval to the Ministry before January 12. In order to avoid any questions about the timing and potential delays in financing, the Ministry of Finance will be posting a register of budget passports noting the date of receipt from the budgetary organization, and the date of approval by the Ministry of Finance, or, in the case of return for amendment, the date of return of the unapproved budget passport to the budget organization.

For information:

Order of the Ministry of Finance No. 1098 of December 29, 2002 «On the passports of budget programs»
Order of the Ministry of Finance No. 1536 of December 10, 2010 «On the result indicators of budget programs»