Odessa Owes the Most Among Southern Cities for Past-Due Loans

The budgets of Mykolaiv, Odesa, and Kherson still include debts from medium-term loans that the cities received before the start of decentralization. The total amount of debt in the three regional centers is 353.1 million hryvnias.

This is reported in an article by the Center for Public Investigations.

As of today, the regional centers in southern Ukraine have the following outstanding debts on medium-term loans funded by the Single Treasury Account:

• Mykolaiv — 81.6 million hryvnias;
• Odesa – 205.4 million hryvnias;
• Kherson – 66.1 million hryvnias.

Cities received these loans to fund the public sector, particularly education, healthcare, and social protection. Until 2014, the state set social standards that were to be met at the local level.

According to the report, the government’s calculations were not always accurate, which is why some local budgets had to secure additional funding.

Infographic by the Center for Policy and Reform

At the end of 2014, following the start of the decentralization process, the provision of the Budget Code governing the granting of medium-term loans was repealed. A resolution of the Cabinet of Ministers of Ukraine that defined the procedure for granting such loans also ceased to be in effect.

At the same time, paragraph 21 was added to the final provisions of the Budget Code, stipulating that this debt would not be repaid until the issue was resolved through legislation.

Since 2015, attempts have been ongoing to determine the legal status of the 9 billion hryvnia debt. The Cabinet of Ministers has tried several times to resolve the issue by drafting resolutions to collect funds from local budgets, treating the debt as a loan. However, these draft resolutions were rejected because a government resolution has less legal force than a law.

At the same time, Article 44 of the Law on the State Budget of Ukraine for 2024 required the Cabinet of Ministers to draft a bill to write off this debt. As noted in the article, this provision was not implemented.

Thus, the issue of repayment and the legal status of old medium-term loans has remained unresolved for many years.

Ірина Глухова