Implementation of the Principle of Efficiency and Effectiveness in Public Finance: The Ukrainian Experience and International Standards

This article analyses the legislative framework for defining and implementing the principle of efficiency and effectiveness of Ukraine’s budgetary system, explores avenues for improving its application, and examines international standards and European Union law with the aim of identifying the most suitable model for formulating this principle. To assess the proper implementation of the principle of efficiency and effectiveness, the study reviews strategic policy documents in the budgetary sphere and evaluates their actual enforcement in Ukraine. It identifies key challenges impeding the effective realisation of this principle. Based on the findings, the paper outlines priority areas for reform or improvement that could enhance the implementation of the efficiency and effectiveness principle of the budgetary system. Drawing on the analysis of the Budget Code of Ukraine, international experience, and relevant European standards, the authors propose renaming the principle of efficiency and effectiveness of the Ukrainian budgetary system to the “principle of efficient use of budget funds” and defining it through the concepts of economy, productivity, and effectiveness. The following authors’ definition is proposed: “The principle of efficient use of budget funds includes: the principle of economy (resources used by a budget funds manager to perform activities must be available on time, in the appropriate quantity and quality, and at the best price); the principle of productivity (the optimal relationship between the resources used, the activities carried out, and the achievement of objectives); and the principle of effectiveness (effectiveness is measured by the degree to which set objectives are achieved through the relevant activities)”.