The problems of financial provision of rural territories development, sources of formation and distribution of financial resources in the different government levels, as well as approaches to formation a development financial system of rural areas in production terms, social and environmental contents on the base of budget improvement, innovation and credit mechanizms of its functioning have been considered in the article.

The issue of public funding of rural development is quite problematic, because of the scarcity of funds and the imperfect mechanism of financial support that is shown in the article:

At first, solution of the social and environmental problems in rural areas is mainly funded from the regional budget, the revenue of which is formed mainly by transfers from the state budget. Its transfers often arrive late or incomplete. Filling the regional budgets through taxes usually occurs with similar problems, due to the almost annual changes in tax laws and the lack of a clear relationship between the amount of taxes collected by local and regional government revenue.

Secondly, there is no division of expenditure on rural and urban in the budgets of other ministries, partly financed investment in rural development, resulting in reduced funding for social programs in the country, as the cost per unit of service are much higher than in the city.

Thirdly, there is an inadequate financing of regional development and socio-economic development of rural areas, due to the lack of modern science-based standards of rural social services and objective causes of disparity needs. A significant disadvantage of the rural development budget is also a lack of statutory statistically measurable indicators to assess its effectiveness and level of achievement.

To settle this question in the public sector is essential to overcome the current total dependence of local budgets from central, both during their formation, and during execution. We should strengthen and increase the resources of local budgets by expanding revenue sources in order to execute delegated and own responsibilities, to keep revenues (taxes) on long term basis at each level of local government, to expand the list and the amount of local taxes and fees.

The methods which help to increase the revenues of local budgets are as following: transfer of certain state taxes from the state to local budgets, increasing contributions from state taxes, increasing revenues from local taxes, finding new objects of taxation, to review tax privileges.

Local governments should have the right to impose on its own territory taxes and fees, and the overall level of taxation should be controlled by central government. This will provide the flexibility of local government as on local level it is easier to trace changes in the tax base. The proposals of Ukrainian scientists to introduce their own budget- revenue on the principle of territorial development, for example taking into account those special objects of taxation that are specific to certain areas, which may significantly increase revenues to local budgets, are worthy of notice.

In the process of reform of intergovernmental relations is appropriate expansion of the list of local taxes and duties by the introduction of taxes with targeted usage of received funds, for example, charges for cleaning and illuminating streets, for garbage collection, landscaping parks, streets and others. Ukraine will benefit environmental taxes which should be charged as fines for air pollution, water, streets, forests, waste disposal under such condition of difficult ecologic situation.

One of the financial support sources for investment is loans provided by banks and non-bank financial institutions. Promising area of credit resources are co-operatives, whose share in the financing of rural development in Ukraine is insignificant due to the aggregate of objective and subjective reasons.

The fiscal deficit , volatility of domestic and international financial markets combined with low investment attractiveness of rural areas determine the feasibility mobilizing domestic sources of investment resources, which include funds from local businesses and organizations as well as rural communities. It is important to note that the low profitability and poor amortization policy, limiting their ability to finance the process of solving social and environmental problems. Therefore, one of the most promising but the least effective in Ukraine is a source of investment on the base of involvement of funds of community members.

Funds of the community as a potential source of investment are generated from external and internal sources. Recent represent income from different types of work and ownership of certain property, mainly is turned into savings. However mechanism of transformation of savings into investment is practically not developed due to the mistrust in the financial and credit system in Ukraine.

Thus, the purpose of rural development in Ukraine is gradually improving living conditions in rural areas. A prerequisite for this is to create a financial system that meets the needs not only of agriculture, but also all rural businesses and its people. Therefore, this financial system should not only be focused on mobilizing loans for one sector. It has to perform a number of functions, ranging from mobilizing all possible resources and the provision of loan capital for all enterprises in rural areas.

Key words: Financial resources of rural territories, financial system of rural territories development, local budjets, provision of financial resources of rural territories, sources of formation of local budgets.