DescriptionEngaging citizens in the decision making process is the fundamental principle of democratic governance. Making budget decisions transparent and open for citizens strengthens social accountability and restores the public’s confidence in overall government (Tanaka, 2007). This dissertation explores the challenges in implementing a donor-driven driven participatory budgeting process in the transitional country - Kyrgyzstan. It also seeks to examine the sustainability of participatory budgeting and its effect on local budgets and politics. This study employs a qualitative dominant sequential mixed methods approach and is built on the implementation theoretical framework. The study covers 16 local governments using face-to-face interviews with local administrators, experts representing donor agencies, and citizens. In addition, over 33 local governments were surveyed across five regions in Kyrgyzstan. The data was collected in several stages. In-depth interviews were conducted using semi-structured interviews, which were followed by surveys. The qualitative analysis reveals that barriers hindering the implementation of successful participatory budgeting (P.B.) range from simple organizational issues - poor facilities and inadequate level of professional management skills - to complex problems, such as lack of trust and limited financial resources. This study revealed differences between challenges faced by urban and rural local governments. At the same time, the sustainability of budget hearings was found to be connected with local government capacity, local leadership, human capital, as well as the level of trust. Donor-driven budget hearings were found to be a sustainable practice. The interview analysis demonstrates some effect of budget hearings on improving efficiency of service delivery. Having budget hearings is perceived to empower not only citizens, but also local legislative council members. The quantitative analysis - which employed the probability of conducting budget hearings as a dependent variable - confirms that individual characteristics of local leaders, local economic development, and the history of budget hearing are statistically significant and influence the probability of having budget hearings. This study recommends the implementation of performance-based budgeting, citizen committees to oversee the inclusion of citizens’ recommendations into the budget, and using multiple participatory tools along with budget hearings to make the process effective.