The level of fiscal decentralization in Ukraine is rather low. Local governments do not have a sufficient volume of own financial resources while the state investments into the local developments are limited. Therefore, the local borrowings may be a considerable resource for financial support of the local development projects. However, a system of local borrowings is not developed in Ukraine nowadays. This paper gives an overview of the system of local borrowings in Ukraine in the context of the budget reform. Modern status of the local borrowings in Ukraine and its place in the system of local finances are considered. Conceptual framework for development of a system of local borrowings and its linkage to reforms in other sectors is proposed.