Central Executive Authorities: What, When, and Why?

Central Executive Authorities: What, When, and Why?

Photo: unsplash.com / Max @stratum
20 May 2024
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2018

From time to time, certain government agencies in Ukraine are created or dissolved. We consider this process over the past 20 years (2002-2024) and how it affects budget spending. We look at how state budget expenditures on central executive authorities were redistributed among various government agencies during this period, and whether merger and division of government agencies led to an increase or decrease in the share of spending received by specific government bodies. We also looked at “transfers” of government agencies from one ministry to another and mergers and separations of ministries.

Main conclusions

  1. During the considered period, the number of central government bodies in Ukraine with their “own” budget lines (i.e., relatively autonomous) ranged from 54 to 78. Today, there are 19 ministries, over 40 subordinate agencies and services, and over 40 other government agencies.
  2. Public expenditures on government agencies do not depend on their quantity, as the merger or separation of these bodies does not affect them.
  3. Some government bodies change their subordination many times, especially those that operate at the “intersection” of industries or functions. This may indicate insufficient coordination between ministries.
  4. In recent years, the number of government agencies gradually reduced because of integration of public services or agencies into relevant ministries.
  5. In 2019-2020, we observed experiments with the merger of some ministries; however, they did not last long.
  6. Discussion of significant restructuring of central government bodies is ongoing. Unfortunately, it is not based on a review of these bodies’ functions.
  7. In our view, enhancing government efficiency could be achieved by strengthening cooperation (coordination) between various government agencies and reviewing budget programs (e.g., whether their goals are SMART, how effectively they achieve defined objectives, etc.). At the same time, restructuring government bodies should remain “a measure of last resort” because of significant implicit cost.

The budget expenditures of Ukraine

Prior to the full-scale war, Ukraine allocated an average of 23% of its GDP from the general budget fund to central executive authorities (from 2022 onwards, these expenditures significantly increased due to defense spending – see Figure 2A). This is close to the Polish figure: in 2023, central budget expenditures in that country amounted to 25% of GDP. Overall, the share of budget expenditures in Ukraine’s GDP is similar to that of other European emerging markets (Figure 1).

Figure 1. General budget expenditures to GDP, %

Source: IMF 

Note: Total budget expenditures include spending from the central and local budgets, as well as extrabudgetary funds (such as the pension fund in Ukraine).

These expenditures cover both functioning of the state apparatus itself and various budget programs, from supporting natural reserves to digitizing government services. Government agencies administer these programs and regulate some markets and activities.

The executive authorities can be roughly divided into three groups:

  1. Ministries: develop policies in specific areas and may have subordinate services or agencies (e.g., the Ministry of Agrarian Policy and Food currently oversees the State Service of Ukraine for Geodesy, Cartography, and Cadastre as well as the State Agency for the Development of Melioration, Fisheries, and Food Programs). The minister is a political position, so they resign if, for example, the Verkhovna Rada holds a non-confidence vote for the government. In contrast, heads of state services and agencies do not automatically lose their positions. 
  2. State services (formerly committees) or agencies: perform relatively narrow functions. They may assist ministries in policy development, may be subordinate to a ministry or a separate entity (in 2011, the majority of committees were renamed as services to get rid of the Soviet heritage, and the remaining committees are independent regulators structured accordingly). For example, the State Regulatory Service was a separate entity for almost the entire period under review, except 2011, and the State Treasury Service has been subordinated to the Ministry of Finance since its creation.
  3. Independent regulators regulate specific markets, industries, or types of activities. In theory, these bodies should be insulated from political influence. Examples are the Antimonopoly Committee or the National Commission for the State Regulation of Energy and Public Utilities.

Besides executive authorities, the central government includes the legislative (Parliament) and judicial branches. Besides these, direct funding from the state budget goes to the National and sectoral academies of sciences (discussed below) and regional state administrations (we don’t consider them and other local authorities in this article).

Very few government agencies remain unchanged during the considered period. Occasionally, certain bodies emerge or disappear, functions are redistributed among them, ministries change names accordingly, and state services or agencies may "migrate" from one ministry to another or become independent. Below we look at these changes and how they have affected the budget shares received by each authority (we use shares rather than absolute amounts because, first, there was quite high inflation during this period, and second, to compare the relative importance of government bodies). 

Figure 2B shows that during the considered period the number of "independent" state government bodies (those with their own budget lines) ranged from 54 to 78. However, expenditures on them (as a share of GDP) do not depend on the number of government bodies (the trend line in Figure 2B is practically horizontal). This is an expected result because a larger portion of spending goes towards implementing budget programs (i.e., policy implementation) rather than their administration (apparatus of a ministry or a government agency).

NB: A government body may change its name, so we use their names (as well as abbreviated names) in a way that makes it clear which body is being referred to. However, the name used in the text may not be exactly the current formulation. For example, "Ministry of Transport" and "Ministry of Transport and Communications" will denote the same authority, abbreviated as "Mintrans."  Expenditures for the apparatus of a certain authority include spending not only on its operations (salary of employees, communal services, etc.), but also on the budget programs that it implements.

Figure 2A. Expenditures on central government bodies, % of GDP

Source (here and below): Treasury reports and appendices to the laws on state budget; State Statistics Service. Notes: The chart shows planned expenditures since detailed reports on actual spending have not been published since 2022. General fund includes expenditures on state programs financed from the "common pot," i.e., budget revenues received from various sources. Special fund includes revenues and expenditures with clearly defined sources and purposes. For example, a portion of revenues from fuel and vehicle excise taxes is allocated to road construction and repair.

Figure 2B. Number of central government bodies and expenditures on them as % of GDP, excluding the Ministry of Defense

The Verkhovna Rada, the President, and the Cabinet of Ministers

The share of expenditures allocated to the Verkhovna Rada and its associated institutions (the Accounting Chamber and the Ombudsman) has decreased significantly compared to the 2000s (Figure 3). Nevertheless, some employees of the Verkhovna Rada apparatus receive relatively high salaries. Hopefully, they are performing their duties effectively. At the same time, their role in filtering out low-quality draft laws could be enhanced.

Figure 3. Share of expenditures from the general fund of the state budget (%) received by Parliament and associated institutions

Note: The Accounting Chamber of Ukraine implements parliamentary oversight of budget execution. Ukraine's international partners suggest strengthening the Accounting Chamber so that it can more effectively oversee spending. This will be particularly important when large-scale reconstruction begins. Recently, we described the essence of the proposed reforms. At the first glance, the 0.45% that the Verkhovna Rada received in 2002 may seem small. However, in that year, direct budget financing was received by 54 entities, and if that was distributed equally, each would have received slightly less than 0.4%.

Figure 4 shows that the share of budget expenditures allocated to the president's support office mostly decreased during the period under review. Moreover, the National Security and Defense Council (NSDC) separated from the Presidential Administration, becoming an independent body subordinate to the President. The General Military Inspectorate, the State Healthcare Administration, the Local Government Support Fund, and the President's Mission in Crimea (which exists since 1991 but had separate budget lines only in 2002-2011 and 2014-2015) became departments of the President’s Administration (now Office).

A number of enterprises (including those depicted in Figure 4, such as the National Expocenter of Ukraine and the State Aviation Enterprise "Ukraine") remain subordinate to the president’s support office but do not have separate budget lines. Currently the only separate body subordinate to the President’s Office is the National Mediation and Reconciliation Service. 

Figure 4. Share of expenditures from the general fund of the state budget (%) on president’s support office and its subordinate bodies or enterprises

Note: Since 2004, the National Security and Defense Council (NSDC) has been a separate body.

Unlike the president’s office, which has divested almost all of its subordinate bodies (including via mergers), the Cabinet of Ministers Secretariat has gained some subordinated government bodies in recent years (Figure 5). The logic behind such "acquisitions" is not always clear. For example, the State Statistics Service was a separate government body until 2011. It was subordinated to the Ministry of Economy in 2012, and since 2020, it has been subordinated to the Cabinet's Secretariat. Perhaps this move was an attempt to make the State Statistics Service more independent, in line with the new law. However, it is unlikely to actually reduce political impact on Ukrstat.

In 2022, the Cabinet of Ministers subordinated the State Cinema Agency, which had been under the Ministry of Culture since establishment in 2006.

In 2023, the State Service on Food Safety and Consumer Protection, which had been under the Ministry of Economy (2012-2015) and later under the Ministry of Agriculture (2016-2022), came under the "umbrella" of the Cabinet of Ministers. In 2024, the same happened to the Service for Ethnopolitics and Freedom of Conscience, which until 2011 was a separate body (the Committee on Nationalities and Religions), later was subordinate to the Ministry of Culture and even for some period (2012-2019) "merged" into it (i.e., ceased to be a separate body). From 2020 to 2023, the newly created Service for Ethnopolitics and Freedom of Conscience was subordinate to the Ministry of Culture too. It is unclear why it moved directly under the Cabinet's jurisdiction, as theoretically, the specialized ministry should have better expertise in ethnic and ethical matters. 

Figure 5. Share of general fund expenditures (%) on the Cabinet of Ministers Secretariat and its subordinate government bodies as of 2024

Note: Here and below, expenditures for certain government bodies are shown for the entire period, even though some bodies were subordinated to different ministries during the period under consideration or were independent.

On the other hand, some government bodies during the considered period exited from subordination to the Cabinet of Ministers Secretariat. For example, the State Audit Service directly reported to the Cabinet of Ministers from 2017 to 2019 and then returned to the Ministry of Finance. The State Agency for e-Governance, formerly known as the Agency for Science, Technology, and Informatization, "traveled" from the Ministry of Education (2010-2014) to the Regional Development Ministry (2015-2016), then to the Cabinet of Ministers Secretariat (2017-2019), before becoming the separate Ministry of Digital Transformation (Figure 6).

The National Public Service Agency remained a separate government body during 2002-2024, although expenditures on it fluctuated considerably (see Figure 7). 

Figure 6. Share of expenditures from the general fund of the state budget (%) allocated to the Ministry of Digital Transformation

Note: General government expenditures refer to spending on specific budget programs, the volume of which is agreed upon during the adoption of the state budget law (i.e., Parliament needs to amend this law). For the Ministry of Digital Transformation, this includes expenditures on the national digitalization program and subsidies to local budgets for developing Administrative Service Centers (ASCs) and Internet networks.

Figure 7. Share of expenditures from the general budget fund (%) for the National Public Service Agency

The Ministry for Foreign Affairs has not had and does not have subordinate bodies, but Figure 8 shows a significant decrease in share of expenditures which it receives from the general budget fund compared to the early 2000s. Perhaps this happened because, until that time, the Foreign Ministry was still purchasing real estate for Ukrainian embassies.

Figure 8. Share of expenditures from the general fund of the state budget (%) on the Ministry for Foreign Affairs

The judiciary branch of power and the Ministry of Justice

Figure 9 illustrates that the major part of expenditures on justice (on average 0.9% of the general fund of the state budget) is allocated to "ordinary" courts (city, rayon, oblast), which is understandable as they handle most cases and employ the majority of judges. Figure 9 also reveals the disappearance of three higher specialized courts (their functions were transferred to the Supreme Court) and the appearance of two new ones in 2019: the High Anti-Corruption Court and the High Court on Intellectual Property (however, the funding for the latter is very small, it is not yet operational).

For comparison, the Prosecutor General's Office received on average 0.6% of the general fund spending from 2002 to 2024: from 0.43% in 2002 and 2004 to 0.9% in 2021. Since 2015, it includes the Specialized Anti-Corruption Prosecutor's Office. Other anti-corruption agencies that appeared in Ukraine after 2014 are shown in Figure 10. Note that spending on these agencies is relatively small (on average 0.3% of the general fund expenditures in 2020-2024), but lately they investigated quite a few large-scale corruption cases. 

Figure 9. Share of expenditures from the general fund of the state budget (%) on courts

State Court Administration of Ukraine / High Council of Justice/ Constitutional Court of Ukraine / Supreme Court of Ukraine / High Specialized Court of Ukraine for CiNote: Before the State Judicial Administration was established, rayon, city, and oblast courts were funded through the Ministry of Justice.

Figure 10. Share of expenditures from the general fund of the state budget (%) on anti-corruption bodies

Note: In 2020, there was the Bureau of Financial Investigations, which was subordinate to the Ministry of Finance, later reformatted into the Economic Security Bureau (ESB).

The number of government agencies subordinate to the Ministry of Justice gradually decreased (see Figure 11). This happened both through transferring certain functions to other ministries and through merging some agencies into the Ministry of Justice. For instance, the Committee on Nationalities and Migration (established in 2001) operated as a separate entity from 2003 to 2006. In 2007, it absorbed the Committee on Religions, previously under the Ministry of Justice. In 2011, this entity was split: the State Service on Nationalities and Religions came under the Ministry of Culture, and from 2024, under the Cabinet of Ministers, as described above. And migration issues were assigned (since 2011) to the State Migration Service, now under the Ministry of Internal Affairs. Functions of the State Service for Personal Data Protection (that operated under the Ministry of Justice from 2011 to 2015) were transferred to the Ombudsman Office.

Meanwhile, the penitentiary service, bailiffs, and registration services merged to the Ministry of Justice as departments. Reforms introducing private bailiffs and transferring registration functions to local authorities probably helped liquidate the bailiffs and registration service. However, as seen in Figure 11, this did not significantly reduce the share of budgetary expenditures received by the Ministry of Justice.

Figure 11. Share of expenditures from the general fund of the state budget (%) on the Ministry of Justice and its subordinate bodies

Law enforcement agencies

Figure 12 illustrates the significant impact of reforms on the structure of expenditures for the Ministry of Internal Affairs. Since 2015, the National Guard (formerly the internal troops) and the newly established National Police have received more funding.

In 2014, the Border Guard Service (which was a separate agency) was incorporated into the Ministry of Internal Affairs. However, perhaps the most significant addition to the Ministry of Internal Affairs is the State Emergency Service, which was a separate ministry until 2015 (formerly, with "protecting the population from the consequences of the Chornobyl disaster" in its name) and had several subordinate bodies (such as the exclusion zone administration, emergency rescue services, or hydrometeorological service — see Figure 13). However, these bodies gradually integrated into the State Emergency Service, and the service itself merged into the Ministry of Internal Affairs. Since 2014, the State Agency for Exclusion Zone Management mover under the Ministry of Ecology. 

Figure 12. Share of expenditures from the general fund of the state budget (%) allocated to the Ministry of Internal Affairs and its subordinate bodies

Note: This figure shows a change in expenditures on the Ministry of Internal Affairs when the National Police,  previously a part of it, was established. Expenditures on the National Guard increased from 2014, as it joined Ukraine’s defense forces.

Figure 13. Share of expenditures from the general budget fund (%) allocated to the State Emergency Service (formerly the Ministry of Emergency Situations)

Note: Since 2015, the State Emergency Service (SES) has been a part of the Ministry of Internal Affairs (MIA), so it is shown in Figure 12. It is present in this figure too to enable data comparison. The exclusion zone is the 30-kilometer zone around the Chornobyl NPP where limited activity is allowed and movement is controlled.

Energy and natural resources

Since 2003, the Ministry of Fuel and Energy integrated departments of coal, oil and gas, nuclear industry, and electric power, which were previously separate subordinate bodies. At the same time, 90% of the funding was received by the coal industry department (these funds were mostly used to support unprofitable coal mines). On a much lower scale, this support continues through the "Restructuring of the Coal Industry" budget program (a few years ago, we described why it is so difficult to cease budget financing for this industry).

From 2011 to 2018, the Ministry was called the "Ministry of Energy and Coal Industry" to underline the importance of the coal industry, which at the end of the 2000s even had its own separate Ministry (see Figure 14). In 2019, the Ministry of Energy was merged with the Ministry of Ecology into the Ministry of Energy and Environmental Protection (at the same time, the Forestry Committee subordinate to the Ministry of Ecology moved to the merged Ministry of Economy and Agriculture). This looked quite strange, considering that the goals of these ministries are often conflicting. However, since 2020, we have two separate ministries again: the Ministry of Energy and the Ministry of Environmental Protection and Natural Resources. 

The fate of the agency responsible for energy efficiency is quite complicated. Under various names, this entity has existed since 1995. From 2002 to 2005, it was under the Ministry of Economy, in 2007 under the Ministry of Finance. From 2008 to 2011, it became a separate government body. In 2012-2014, it came "under the umbrella" of the Ministry of Economy again; in 2015-2019, it was subordinated to the Regional Development Ministry, which was undergoing intensive changes at the time, as described below. From 2020 to 2023, the agency was subordinated to the Ministry of Energy. Since 2024, it has returned under the restructured Ministry for Communities, Territories, and Infrastructure Development, which today also oversees infrastructure (but its split into the Ministry of Regional Development and Ministry of Infrastructure is planned).

Indeed, energy efficiency has many aspects, such as insulation of buildings, introduction of energy-saving production technologies, reduction of losses in networks, and application of market tariffs (to encourage consumers to use energy more efficiently), among others. However, "footballing" of this agency from one authority to another indicates, in our opinion, not changes in priorities from one aspect of energy efficiency to another but rather insufficient coordination between ministries. As described below, several other agencies responsible for multifaceted sectors experienced similarly complicated movements. 

Figure 14. Share of expenditures from the general fund of the state budget (%) on the Ministry of Ecology and "energy" ministries

Note: In 2019, this was one Ministry.

The system of agencies subordinate to the Ministry of Environmental Protection and Natural Resources has remained fairly stable over the past 20 years (see Figure 15). Exceptions are the State Committee for Water Management (later the State Agency for Water Resources) and the State Committee for Land Resources (later the State Agency for Land Resources and the State GeoCadastre). The former existed as a separate structure during the 1990s and from 2003 to 2010. In 2000-2002 and since 2011, it was subordinated to the Ministry of Ecology. Since 2011, the State Committee for Land Resources has also been subordinate to the Ministry of Ecology. However, since most of the time it was under the umbrella of the Ministry of Agriculture, we discuss it below.

Figure 15. Expenditure share from the general fund of the state budget (%) on the Environmental Protection Ministry and its subordinate bodies

The economic block: Ministries of Economy, Agriculture, and Finance

For the Ministry of Economy, it is interesting to trace not only the evolution of its subordinate bodies but also of its name. At the beginning of the 2000s, it was called the "Ministry of Economy and EU integration," as it was involved in harmonizing Ukrainian legislation with European standards. In 2006, it became simply the Ministry of Economy, and in 2011, it became the Ministry of Economic Development and Trade (and absorbed the State Export Control Service). From 2019 to 2020, the Ministry of Agrarian Policy and Food merged with it, and the combined Ministry was responsible for developing the economy, trade, and agriculture. However, integration of these ministries was very challenging, so from 2021, we have the Ministry of Economy (and a separate Ministry of Agriculture) again.

In 2012-2014, the Ministry of Industrial Policy (which developed policies for machine-building, metallurgy, woodwork, and light industry) was reorganized into the State Agency of Ukraine for Management of State Corporate Rights and Property, later merged with the Ministry of Economy. In 2020, the Ministry of Strategic Industries emerged, responsible for policies for the defense and aerospace sectors (Figure 16).

Figure 16. Share of expenditures from the general fund of the state budget (%) on the Ministries of Economy, Industrial Policy, and Agriculture

Note: The Ministry of Economy's expenditures include state-level expenditures. In 2019 and 2020, the Ministry of Economy incorporated the Ministry of Agriculture.

Figure 17 shows that at different times the Ministry of Economy included a diverse set of subordinate bodies. Energy Efficiency Agency, the State Statistics Service, or the Tourism Service, which we discuss below, were subordinate to this ministry for a short time but are not shown in this figure. It seems that the presence or absence of these bodies did not significantly affect the share of the budget allocated to the Ministry. In recent years, this share has increased because the Ministry, through the Entrepreneurship Development Fund, provides grants to businesses and also funds humanitarian demining.

Figure 17. Share of expenditures from the general fund of the state budget (%) on the Ministry of Economy and its subordinate bodies

Note: The State Labor Service was created in 2014 by merger of the Department of Industrial Safety, Labor Protection, and Mining Supervision and the State Labor Inspectorate. The State Reserve Agency joined the Ministry of Economy in 2012 (prior to this, it was a separate body). The State Inspectorate for Price Control existed until 2015. In 2017, price regulation was finally abolished.

The significantly higher share of funding received by the Ministry of Agriculture in 2000s (see Figure 18), compared to the present, is explained by the high volume of various support programs for agricultural producers implemented by the Ministry, as well as by its financing of sectoral educational institutions (the transition of "sectoral" educational institutions to the Ministry of Education began after the higher education reform in 2014). 

The State GeoCadastre (formerly the Committee on Land Resources), which was subordinate to the Ministry of Ecology in 2002, operated as a separate body from 2003 to 2006. In 2007, by merging with the Geodesy and Cadastre Service, which was previously subordinate to the Ministry of Ecology, it became a part of the Ministry of Economy orbit. From 2011 to 2014, it was subordinate to the Ministry of Agriculture; in 2015-2016, it moved to the Regional Development Ministry and then returned to the Ministry of Agriculture. Like the energy efficiency agency, the State GeoCadastre's "life journey" has been complicated as it operates at the intersection of many interests and industries. 

Figure 18. Share of expenditures from the general fund of the state budget (%) on the Ministry of Agriculture and its subordinate bodies

Note: The National Joint-Stock Company "Ukragroleasing" had a separate budget line from 2010 to 2014; now, this enterprise is subordinate to the Cabinet of Ministers, but the company's previous management is suspected of abuse. The State Department of Food, which dealt with the food industry, was liquidated in 2006. The sports association "Kolos" received budget support through the Ministry of Agrarian Policy and Food until the end of 2015. However, it has not had the status of a separate institution since 2006. Since 2018, it has become a civil society organization.

The Ministry of Finance had a relatively stable structure during the considered period, except for the periodic inclusion and exclusion of the Tax and Customs Services from its jurisdiction (see Figure 19). The State Audit Service (formerly the State Financial Inspection, and before that the Main Control and Revision Office) was a separate body until 2011, was directly subordinate to the Secretariat of the Cabinet of Ministers from 2017 to 2019, and the rest of the time it “belonged” to the Ministry of Finance, as it is now. The State Financial Monitoring Service has been under the jurisdiction of the Ministry of Finance since 2011. The State Assay Service (the body responsible for overseeing the quality of precious metals, gemstones, and products made of them) transferred its functions to the Ministry of Finance in 2015. These changes are logical, as all of these bodies are, in one way or another, related to the efficiency of budget execution.

Before the full-scale invasion, Ukraine spent significant resources on servicing public debt, sometimes up to a third of the state budget (we do not know what will happen after the war, probably part of the debt will be written off). To manage public debt more effectively and transparently, the Public Debt Management Agency was established at the beginning of 2020, but has not been operating properly. Hopefully, this issue will be resolved by the beginning of large-scale reconstruction.

Figure 19. Share of expenditures from the general fund of the state budget (%) on the Ministry of Finance and its subordinate bodies

Note: Large expenditures on the Ministry's apparatus up to 2013 inclusive are explained by the fact that they include expenses for servicing the public debt. From 2014, these expenditures were classified as state-level expenditures administered by the Ministry of Finance (not shown in the Figure). State-level expenditures ranged from 14% to 50% of general fund spending in different years. In addition to servicing public debt, they include various subsidies (for example, to local budgets for providing privileges).

Figure 20 shows “twists and turns” of the tax and customs services over the past 20+ years. Logically, these services should be subordinate to the Ministry of Finance since it is responsible for budget execution. According to this logic, these independent bodies were placed under the Ministry of Finance in 2007. However, in 2013, they were merged into the Ministry of Revenues and Duties, which later became a separate State Fiscal Service (SFS). In 2016, the SFS was placed under the Ministry of Finance again. The Ministry of Finance divided it into the Tax and Customs services, while the tax militia was liquidated and replaced by the Economic Security Bureau. Hopefully, future changes in these agencies will be related to their internal processes rather than their status.

Figure 20. Share of expenditures from the general fund of the state budget (%) on the Customs and Tax Services

Note: In 2020 and 2021, the State Fiscal Service still implemented tax and customs policies, and it also included the tax police, which was liquidated due to the creation of the Economic Security Bureau.

Infrastructure

The sphere with perhaps the most frequent divisions, mergers, and renaming of ministries is infrastructure, including transportation, communication, construction of houses, and municipal services. Figure 21 shows that there were, at certain times, one to three ministries responsible for this sector, with their responsibilities sometimes including regional development and sometimes not. For instance, the Transport Ministry in 2005 became the Ministry of Transport and Communications, then in 2011 transformed into the Ministry of Infrastructure, and in 2022 merged with the Ministry of Regional Development to become the Ministry for Community, Territories, and Infrastructure Development (while this text was under production, the government announced that this Ministry will be split again into infrastructure and regional policy ministries, although the rationale for this decision is not clear).

On the other hand, housing policy and construction were overseen by the State Committee of Ukraine for Construction, Architecture, and Housing Policy, which in 2003 departed from the Ministry of Economy and in 2005 gained the status of the Ministry of Construction, Architecture, and Communal Services. From 2007 to 2010, the Ministry of Housing and Communal Services and the Ministry of Regional Development merged with the Ministry of Construction to form the Ministry of Regional Development, Construction, Housing, and Communal Services. This Ministry became the Ministry of Communities and Territories Development in 2019 and merged with the Ministry of Infrastructure in 2022, as mentioned above. 

Figure 21. Share of general fund expenditures (%) on ministries responsible for regional development and infrastructure

Note: The share of expenditures on the Ministries is shown together with the state-level expenditures (in this case, these expenditures include subsidies to municipalities to support architectural heritage or improve infrastructure). In 2024, the Ministry of Transport became the Ministry of Community, Territories, and Infrastructure Development of Ukraine, merging with two other ministries. "Spikes" in 2006, 2007, and 2012 expenditures are associated with increased funding of state housing programs. In different years, these programs either provided housing to certain categories of people or subsidized mortgages or the Youth Construction Fund.

The Ministry of Transport/Infrastructure had a fairly stable structure (see Figure 22). It included state services (agencies) responsible for safety in major transportation sectors (road, rail, maritime, aviation). These services sometimes operated independently (e.g., Ukravtodor in 2002-2003 or the State Aviation Administration (formerly the Department of Aviation) in 2005-2007).

Figure 22. Share expenditures from the state budget's general fund (%) on the Ministry of Transport (later Infrastructure and Regional Development).

Note: In 2023, a separate State Agency for Infrastructure Reconstruction and Development was created on the basis of Ukravtodor. The agency which prepared the country for Euro-2012 became the State Agency for Infrastructure Projects in 2017. Ukravtodor's significant expenditures in 2015 and 2016 reflect the recognition of previously issued public guarantees (state committed to repay loans issued for the construction of infrastructure for Euro-2012) and in 2021 it includes funding for road construction, including the "Kyiv-Sumy-Kharkiv" project.

Compared to the Ministry of Infrastructure, the Ministry of Construction, Housing, and Communal Services (under various names) had significantly fewer subordinate bodies (see Figure 23). Perhaps the most well-known among them is the State Architectural and Construction Inspection, which, until recently, was a symbol of corruption. Instead of the State Architectural and Construction Inspection and merging the State Service of Urban Development, which was established and liquidated in 2020 and never actually operated, the State Inspectorate for Architecture and Urban Development was formed in 2020. At the moment, the State Inspectorate for Architecture and Urban Development has not been involved in corruption scandals.

Figure 23. Share of expenditures from the general fund of the state budget (%) on the Ministry of Architecture, Housing, and Communal Services

Note: In 2007 and 2012, significant sums were allocated for renovation of utilities and for provision of housing to certain categories of citizens. In 2012, these funds went to a subsidized mortgage program rather than outright provision of housing to citizens. Since 2023, the State Inspectorate for Architecture and Urban Development (SIAUD) has been subordinated to the Infrastructure Ministry. It is included in this figure for comparison.

Healthcare and social protection

Unlike the state authorities mentioned above, the Ministry of Health (MOH) has had a fairly stable structure. Only the State Drugs and Medications Control Service was split into two between 2013-2015: one for medicines control and one for narcotics control. Later, these services were merged again. Figure 24 shows that the most significant changes were caused by a substantial increase in medical subsidies ("hidden" within state-level expenditures) and the introduction of the National Health Service, which pays for medical services, within the healthcare reform. Figure 24 shows that relative healthcare spending has grown considerably upon implementation of the healthcare reform.

Figure 24. Share of expenditures from the general fund of the state budget (%) on the Ministry of Health and its subordinate bodies

During the considered period, the Ministry of Social Policy lost several subordinate bodies: the Employment Service and the Labor Inspectorate were transferred to the Ministry of Economy, while the Committee for Veterans Affairs became a separate ministry (Figure 25). After nine years of operation, the National Social Partnership Council was dissolved in 2002. This council brought together representatives of trade unions and entrepreneurs and resembled the current council of entrepreneurs under the president.

In 2021, the National Social Service was established under the Ministry of Social Policy (however, the State Social Service for Family, Children, and Youth, formerly the State Center for Social Services for Youth, has existed since the early 1990s). Today, this service is a tool for implementation of a new model of social support: replacement of categorical payments by provision of social services tailored to the needs of each family. In 2023, a separate child welfare service was established, also under the Ministry of Social Policy (previously, several departments of the Ministry of Social Policy and until 2010, the Department of Adoption and Child Rights Protection under the Ministry of Family, Youth, and Sports cared for children). 

Figure 25. Share of expenditures from the general fund of the state budget (%) on the Ministry of Social Policy and its subordinate bodies

Note: Significant state-level expenditures in 2006-2008 are explained by the fact that during these years, the Ministry administered subsidies to local authorities for provision of privileges on utility payments and support for the disadvantaged groups. Later, administration of these expenditures returned to the Ministry of Finance. The figure does not show transfers from the state budget to the Pension Fund, which in recent years amounted to about 10% of expenditures and from 2010 to 2021 averaged 19% of spending of the state budget general fund. However, the reduction of the share does not mean a decrease in the sum transferred to the Pension Fund (in nominal terms, it has even slightly increased). This reduction is due to the increased share of defense spending. Since 2019, the Ministry's budget has increased significantly, as the number of people who need assistance has grown (especially during the pandemic), and the Ministry has started administering utility subsidies. 

In 2016, Ukraine established the Ministry for IDPs and Temporarily Occupied Territories, including the Agency for the Restoration of Donbas, which was created in 2014 but was never operational. It is now called the Ministry for Reintegration of Temporarily Occupied Territories to emphasize the government's determination for victory. In 2019, the Ministry was additionally tasked with caring for veterans, but the following year a separate ministry was created to implement state policy towards veterans (Figure 26).

Figure 26. Share of expenditures from the general fund of the state budget (%) on the Ministries for Reintegration of Temporarily Occupied Territories and Veterans Affairs

Education and science

Compared to other ministries, the Ministry of Education and Science underwent fewer reforms. Only in 2011-2012 it assumed responsibility for youth and sports. However, like in other ministries, the number of its subordinate bodies gradually decreased (Figure 27). For instance, the State Service for Intellectual Property was liquidated in 2016, with its functions transferred to the Ministry of Economy. The National Awards Committee now reports to the President of Ukraine, and the functions of the Higher Attestation Commission, abolished in 2010 (awarding academic titles), are now implemented by the Attestation Board of the Ministry of Education and Science.

In 2019, the National Commission on State Language Standards was established within the Ministry of Education and Science. 

Figure 27. Share of expenditures from the general fund of the state budget (%) on the Ministry of Education and Science

Note: Similar to the Ministry of Health, this graph reflects a significant increase in state-level expenditures. This is the educational subsidy introduced in 2015. The State Inspectorate for Educational Institutions now operates as the Education Quality Service.

Starting from 2003, sectoral academies of sciences were no longer subordinate to the respective ministries and received their "own" budget lines (Figure 28).

Figure 28. Share of expenditures from the general fund of the state budget (%) on the National Academy of Sciences and sectoral academies of sciences

Culture and sports

Distribution of responsibilities is in the spheres of culture, family, youth, and sports was probably the most complicated (Figure 29). At the beginning of the 2000s, culture, tourism, family affairs, and sports were managed by separate government bodies (ministries and state committees). In 2005, the Ministry of Family and Youth also took responsibility for sports; in 2006, the Ministry of Culture became the Ministry of Culture and Tourism.

The State Tourism and Resorts Service can also be considered a "wandering" agency. Until 2006, it was a separate State Tourism Administration, then it was subordinated to the Ministry of Culture. In 2012-2014, it was under the Ministry of Infrastructure and then under the Ministry of Economy. Since 2021, it has been under the Ministry of Infrastructure again. Certainly, tourism has many aspects: preservation of cultural and natural heritage, business, and infrastructure development. Therefore, perhaps it is worth making this service a separate body that would organize cooperation between various ministries according to their areas of responsibility.

In 2011-2012, youth and sports were under the jurisdiction of the Ministry of Education (hence it became the Ministry of Education, Science, Youth and Sports). In 2013, they split again into the Ministry of Youth and Sports and the Ministry of Education and Science. In 2019, there were even three ministries: (1) of culture, (2) of youth and sports, and (3) of culture, youth and sports. Since 2020, the Ministry of Culture has been entrusted with information policy and “acquired” the Committee on Television and Radio Broadcasting (the Ministry of Information Policy, which existed in 2015-2018, was dissolved).

Figure 29. Share of expenditures from the general fund of the state budget (%) on government authorities responsible for culture, youth, sports, and information policy

The Institute of National Memory in 2006-2007 was subordinated to the State Archival Service, which until 2011 was an independent body and then  was placed under the Ministry of Justice. From 2008-2010, the Institute existed independently, and in 2015, it was included into the structure of the Ministry of Culture (Figure 30). The State Service for Control over Cross-Border Movement of Cultural Artifacts was liquidated in 2011, with the Ministry of Culture and the State Customs Service performing its functions.

Figure 30. Figure 30. Share of expenditures from the general fund of the state budget (%) on the Ministry of Culture

Note: The Language Ombudsman is not subordinate to the Ministry of Culture but is shown on this graph for expenditure comparison. The State Committee for Information Policy, Television, and Radio Broadcasting became the State Committee for Television and Radio Broadcasting in 2003; however, in 2020, it merged with the Ministry, which consequently became the Ministry of Culture and Information Policy.

Figure 31 illustrates the consolidation of functions in the youth and sports sphere. Since 2005, the State Committee for Family and Youth Affairs and the State Committee for Physical Culture and Sports merged into the Ministry of Youth and Sports. In 2011-2012, the Ministry became the State Youth and Sports Service within the Ministry of Education, Science, Youth, and Sports. However, in 2013, this service became a separate ministry again. "Ukrsporzabezpechennia" (sports provision agency), sports organizations for persons with disabilities, and sports associations are financed within respective budget programs and currently do not have their own budget lines. The Youth Housing Construction Support Fund now receives funding from the Regional Development Ministry. The State Adoption Department was integrated into the Ministry of Social Policy in 2011; it became a separate service in 2023, as described above.

Figure 31. Share of expenditures from the general fund of the state budget (%) on the Ministry of Youth and Sports

Independent regulators

The Antitrust Committee has to become the key agency for limiting the power of existing oligarchs and preventing the emergence of new ones. However, for this to happen, it needs to be independent and professional. Several draft laws proposing to reform the Antitrust Committee are currently in the Parliament. No progress has been made so far (details of the reform can be found in our articles: part 1, part 2).

Figure 32. Economic regulators (share of expenditures from the general fund of the state budget, %)

Note: The National Commission for Regulation of Financial Services Markets was liquidated, its functions are performed by the National Bank of Ukraine after the adoption of the law on "split" in 2019.

Natural monopolies, such as electricity, water, or telecommunications suppliers, exist in sectors where emergence of competing companies only leads to unnecessary expenditures (e.g., it is wasteful to lay parallel water pipelines). States regulate their activities to ensure natural monopolies do not set tariffs at their discretion. However, for such regulation to be independent of politics and guided solely by economic efficiency and public interest, these regulators must be independent. Typically, independence is ensured through special procedures for appointing and dismissing regulators' heads (and sometimes other employees). However, when a regulator is "captured" by some political force, its independence can be used against the best interest of the society.

Figure 33. Regulators of natural monopolies (share of expenditures from the general fund of the state budget, %)

Note: Since 2015, the Commission on Electric Power Industry and the Commission on Public Utilities merged into the National Commission for State Regulation of Energy and Utilities (NCSREU). Since 2018, NCSREU is  funded from the special fund of the budget, i.e. its operations are financed by a fraction of the utility tariff. Since the figure shows only the general fund, this commission is not included in it from 2018 onwards.

Figure 34. Other regulators (share of expenditures from the general fund of the state budget, %)

Note: The National Council on Television and Radio Broadcasting monitors law compliance in this industry, analyzes its state, and participates in developing relevant state policies. As the name suggests, the State  Inspectorate on Nuclear Regulation is responsible for the safe use of nuclear energy.

Figure 35. Other bodies (share of expenditures from the general fund of the state budget, %)

Note: Funding for the Central Election Commission (CEC) includes state-level expenditures, typically these are expenditures for organization of elections.

The three main functions of the State Property Fund include privatization, leasing out state property, and managing the state's corporate rights. The National Space Agency supports Ukraine's status as a space nation. In 2020 we joined the Artemis Accords for lunar exploration.

Conclusions and recommendations

The number of ministries and other government agencies has changed quite significantly over the past 20 years. However, this has practically not affected financing provided to these organizations from the state budget's general fund, as the major share of expenditures is used for implementation of budget programs rather than to finance the state apparatus. Therefore, one should not expect significant savings from the merger of ministries, even if such savings are advertised to the public. On the contrary, restructuring of government agencies can lead to implicit cost and losses. Liquidation, consolidation, or division of government agencies requires much time, during which these agencies will be preoccupied with internal processes rather than development and implementation of policies. Moreover, employees dismissed due to reorganization may possess institutional knowledge that the team of a reorganized agency will have to rebuild from scratch.

Therefore, before restructuring government agencies, one should carefully review the functions performed by the state, as well as budget programs: Are these functions and programs really necessary? Are their goals clearly defined, and are programs designed in such a way as to achieve these goals?

The intensive "migration" of some government agencies from one ministry to another suggests that cooperation between ministries is weak. Theoretically, merging ministries could strengthen this cooperation. On the other hand, it could reduce the manageability of ministries, as larger structures are more difficult to manage. Thus, in our opinion, a better solution would be to establish ad hoc cooperation between ministries — for example, by creating committees or working groups. "Refreshing" the civil service, for example, by involving people who used to work in horizontal rather than vertical structures, could naturally contribute to the development of such cooperation. 

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