Journal section "Public finances"

Regional Budget–2016: Priorities do not Change

Povarova A.I.

2 (44), 2016

Povarova A.I. Regional Budget–2016: Priorities do not Change. Economic and Social Changes: Facts, Trends, Forecast, 2016, no. 2 (44), pp. 133-152. DOI: 10.15838/esc.2016.2.44.8

DOI: 10.15838/esc.2016.2.44.8

Abstract   |   Authors   |   References
The budgets of all levels of the Russian Federation for 2016 were drawn up in conditions of the systemic social and economic crisis in the country, the worsened foreign situation, connected with the instability of commodity markets and the strengthening of anti-Russian sanctions. These factors prompted the Russian Government to abandon the practice of three-year budget planning and return to a one-year budget. The results of the budget process show that the pressure on sub-federal budgets continues to grow. According to the ISEDT RAS calculations, 76 of the 85 regions had a deficit budget in 2015, in 60 regions the real income tax payments decreased and the debt burden exceeded 50% of their own revenues. Unfortunately, the Russian Government did not propose any measures to address the budget crisis of regions observed since 2012. On the contrary, the primacy of inter-budgetary cooperation was to shift social obligations from the state to the RF subjects and replace grant financial support of these commitments by budgetary loans. The article presents the results of analysis of the law on the Vologda Oblast regional budget for 2016 [5]. The main objective of the analysis was to identify how the main financial law is aimed at solving the tasks of socio-economic development of the region. The main conclusion of the study is that the budget for 2016 saves the construction of latter budgets and is focused not on creating the conditions for economic growth, but on achieving the balance set by the Ministry of Finance of the Russian Federation by reducing all expenditures. The social result of such policy in 2016 will be the following: a sharp decline in consumer demand and living standards of the population. Despite the Vologda Oblast Government’s efforts to replace commercial loans by credits from the federal budget, the debt structure is still dominated by credits in commercial banks, indicating the ostensible effectiveness of the RF Ministry of Finance’s policy of debt financing of RF subjects in stead of allocation of adequate financial aid in the form of transfers. In our opinion, to change the situation with the regional finance crisis is only possible by radical amendment of fiscal legislation. The article proposes the primary measures in this direction


regional budget, deficit, loans, debt load, budget planning, amendment of tax and budget legislation

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