USE OF LOCAL LOAN MECHANISMS AND GUARANTEES TO ENSURE LOCAL DEVELOPMENT

Abstract

Abstract. One of the main tasks of local authorities and bodies of local self-government is the implementation of projects aimed at improving the quality of life of the local population, developing infrastructure, social services, cultural, and economic initiatives. The implementation of any initiatives requires the search for sources of funding, which are limited in conditions of martial law. The use of mechanisms of local borrowing and guarantees can become one of the significant sources of financing for the needs of local development, which in turn will be an additional incentive for the development of local business and attracting investments. In recent years, there has been a regulatory increase in the capabilities of local self-government bodies to attract funds through the use of relevant borrowing instruments. In particular, amendments have been made to the Budget Code of Ukraine, which since 2018 have provided opportunities for local borrowing for regional councils, and since 2023 - for rural, settlement, and urban territorial communities (previously such opportunities were only available in cities of regional significance). Thus, all local councils (except district ones) have obtained the right to use local borrowings and guarantees. However, in practice, these powers as of the beginning of 2024 are practically not used by the relevant entities, which, in our opinion, is associated with certain organizational and financial factors. In the territorial community of Lutsk city, the main ultimate beneficiaries who used credit funds from local borrowings and guarantees are mainly municipal enterprises whose activities are aimed at meeting the needs of residents in heating, water supply, sanitation, and public transport. Regional councils have been granted powers to provide guarantees and obtain loans, but in conditions of martial law, the management of the local budget is carried out by regional military administrations. Further implementation of the powers granted by local councils regarding guarantees and borrowings will provide an opportunity for better quality of life for residents of communities and territories, which in turn will stimulate the processes of local and, accordingly, state development.