The author analyzes problems and suggests ways regarding development of financial management system at the local level in the context of adequate requirements toward formation of modern local budget revenue system and increase of the expenditures efficiency in Ukraine. It also overviews the European experience in development of regional (local) development strategies in terms of their possible implementation in Ukraine and provides the recommendations of international financial institutions for their implementation.

Keywords: Fiscal decentralization, revenue and expenditures of local budgets, regional disparities, inter-governmental transfers, tax potential areas.