Operation of local budgets in recent years shows a number of problems and contradictions primarily due to limited financial resources, unclear assignment of expenditure responsibilities between different levels of government, inefficient use of budget means, and low investment capacity of local authorities. Under these conditions it is necessary to improve the system of planning and execution of budget expenditures in Ukraine. Characteristics of the national budget planning system and preconditions for preparing a well-balanced budget are summarized in the article. It is suggested the ways to improve the expenditure planning as a result of analysing the local budgets implementation in previous periods. Among them are the following: development of an effective methodology for assessing the impact of budget means’ using; implement budgeting taking into account the strategic objectives of socio-economic development and the outcomes of the central and local governments’ performance in the previous budget periods; increasing responsibility of budget process’ participants; improving fiscal sustainability, efficiency and transparency of budgetary funds by introducing advanced techniques of budgeting such as program target method and medium-term budget planning.