Financial capacity of territorial communities of the Volyn region during the period of martial law

Анотація

The article presents a comprehensive study of the financial capacity of territorial communities (hereinafter – TCs) of Volyn Oblast under martial law and analyzes the dynamics of key budget indicators of their functioning in 2023–2025. The relevance of the study is conditioned y the transformation of Ukraine’s budgetary system, the strengthening of intergovernmental fiscal relations, the reallocation of financial resources to defense, social protection, and critical infrastructure, and the need to develop adaptive models of local public finance management under wartime conditions. The purpose of the article is to assess the financial capacity of TCs in Volyn Oblast during martial law and to identify the factors influencing its level, particularly the dependence of financial capacity on territorial, demographic, and resource-related characteristics, as well as to determine effective budgeting practices in communities of different size and economic potential. The methodological framework is based on systemic, institutional, and structural-functional approaches, combined with statistical analysis, comparison, grouping, ranking, and elements of correlation analysis to determine the relationship between financial capacity and community potential. The assessment relies on an integrated system of indicators, including general fund revenues per capita, the share of own-source revenues, the level of grant dependency, budgetary self-sufficiency, expenditure structure, and the proportion of development expenditures. Financial capacity was classified into five levels: high, optimal, satisfactory, low, and critical. The study confirms an increasing role of intergovernmental transfers and a reallocation of resources toward defense, social protection, support for internally displaced persons, and maintenance of critical infrastructure. At the same time, a reduction in capital expenditures and investment activity has negatively affected long-term development prospects. Significant inter-community disparities were identified, particularly widening gaps in revenue indicators and budgetary self-sufficiency. Special attention is paid to communities that, despite possessing economic potential, demonstrate low or critical financial capacity due to managerial shortcomings, inadequate budget planning, and limited revenue diversification. It is substantiated that financial capacity depends primarily on the quality of municipal governance and strategic budgeting rather than solely on resource availability. Effective tax administration, revenue diversification, and expenditure rationalization are key determinants of financial sustainability during wartime and the post-war recovery period.

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