LEGAL AND REGULATORY FRAMEWORK FOR THE REGIONAL BUDGET MECHANISM IN THE CONTEXT OF DIGITALIZATION

Abstract

The article analyzes the legal and regulatory framework of the regional budget mechanism in the context of digital transformation. Historically, the formation of Ukraine’s budget system encountered a transformational crisis, stemming from the ineffective application of neoclassical approaches, particularly the Washington Consensus. This led to an institutional vacuum and undermined trust in public finance. The aim of the article is to study the current state of legal support for the regional budget mechanism and develop recommendations for its improvement through digitalization. The research methodology based on the application of methods of theoretical generalization and systematization for analyzing the legal and regulatory framework, as well as methods of comparative legal analysis of international and national standards for the transparency of the regional budget mechanism. The scientific novelty lies in substantiating the necessity of creating a comprehensive legislative environment that supports digital changes and ensures data protection and cybersecurity within the state’s financial system. The analysis shows that digitalization opens the way to enhancing the transparency and publicity of the budget process, aligning with OECD international standards and contributing to the fight against corruption. The legal foundations for this are established in the Constitution of Ukraine (Article 95) and the Budget Code (Articles 7, 28). The Law “On the Openness of the Use of Public Funds” plays a crucial role, having ensured the functioning of the key transparency tool – the “E-data” web portal. This portal, along with the “Open Budget” system and projects like “Public Budgets from A to Z”, provides public oversight and expenditure monitoring. It is established that the key principles for an effective budget mechanism are information openness, public participation, and government accountability. Further development requires a focus on the automation of budget processes and improving the quality of reporting in accordance with international standards (IMF, IBP, OECD). Conclusions. Compliance with international standards, including information openness, public participation, and government accountability, is a necessary condition for the effective functioning of the regional budget mechanism. The main contemporary development trend is the digitalization of budget management and the implementation of open data, which is a key element for ensuring the transparency and efficiency of public resource use. Future development should focus on automating budget processes, improving reporting quality, and expanding public control over public finance, while considering the need to improve the regulatory framework concerning data protection and cybersecurity.