The fundamental changes in the areas of economic development and its strategic bases are the main feature of the global economy at the beginning of the XXI century. Emphasis on the movement of the accelerated innovation development, shift to a knowledge-based economy are particularly important for the national economy, where previously all innovation process was determined the entire decisions of higher authorities by budgeting and financing. Recently, there has been an increase of interest in budget management innovation activity in the national economy due to necessity of modernization the economy and, consequently, its organic inclusion in global economic processes and harmonization with existing in the European Economic Area standards. Innovative development, innovation activity and ways to increase its effectiveness have been extensively studied by domestic and foreign scholars. This paper focuses on founded theoretical principles of budget management innovation and practical aspects of the budget instruments of innovation stimulation in the modernization of the national economy. This article explores the theoretical bases of fiscal adjustment. The budgetary adjustment as a set of tools and levers by which the state creates conditions for the mobilization of financial resources and its effective use are considered, as well as balanced and coherent budgetary instruments impact on the adjusting objects including innovation activity. Budget management tool of innovation activity are exposed. Investment budget, budget loans, state guarantees, government subsidies as potential tools of innovation activity improvement are researched. The sources of innovation funding in Ukraine are estimated. Principles of financial support of innovation processes are defined. The influence of budget policy on the efficiency and effectiveness of the use of budget management tools of innovation stimulation is found out. The priorities of budget management of innovation activity in the conditions of the national economy modernization are outlined. Thus, fiscal policy aims to stimulate innovation development will strengthen the national economy competitiveness, modernization, rising the standard of well-being and quality of life. In this context, there is importance of increase the effectiveness of fiscal adjustment measures and revision of specific priorities in conjunction with the introduction of effective incentives within the public innovation policy. Thus, the effective use of budget management tools should promote the improvement of the national economy, its upward development on the basis of gradual modernization and permanent innovation activity. 

budget, budgeting, budget management, budget management tools, innovation, innovation activity