It contains key documents prepared by experts of EWI's project on "Reforming Municipal Finance of the Kaliningrad Oblast through Performance Budgeting" in 2005-2006, which shed light on the challenges in managing budgeting processes at the local government level in the Kaliningrad Oblast. Tendencies towards modernizing these processes through administrative and budgetary reforms in the Russian Federation and the policy of the oblast authorities are also explored. The authors devote particular attention to the relationship between performance-based budget management and strategic regional development planning.