Journal section "Public finances"

Problems and Specific Features of Sub-Federal Budgets Execution in 2015

Povarova A.I.

4 (46), 2016

Povarova A.I. Problems and Specific Features of Sub-Federal Budgets Execution in 2015. Economic and Social Changes: Facts, Trends, Forecast, 2016, no. 4 (46), pp. 144-164. DOI: 10.15838/esc.2016.4.46.8

DOI: 10.15838/esc.2016.4.46.8

Abstract   |   Authors   |   References
Last year has been marked by worrying trends in the development of a budgetary crisis in Russian regions; the crisis became apparent in 2013, when regional authorities had to get into huge debts in order to provide finances for the social obligations in the framework of the presidential decrees of May 7, 2012. The budget process in 2015 was characterized by expanding negative trends in those regions that had previously been the engines of economic growth and budget donors, which contradicts the regional development strategy. The crisis response measures consist in a large-scale optimization of expenses. Despite an attempt undertaken by the Government to replace commercial borrowings with budget loans, there are still no prospects for solving the debt issue. On the contrary, expert forecasts predict a doubling of the debt stock in regions by the end of 2017. Cuts in the expenditures on human capital development should be considered as a new negative trend, naturally resulting in the deterioration of material well-being of Russians, which was expressed in the decline in their real incomes and raising poverty level. It seems that on the eve of the RF State Duma elections the social policy of the authorities ceases to be socially oriented. Under the circumstances of an aggravating budget crisis, the Government is not increasing unrepayable financial aid (it did increase it in 2009); instead, it is pursuing the opposite policy and estranges itself from providing support to regions. Moreover, the Cabinet of Ministers does not openly wish to carry out a just division of powers and obligations of governmental units, but turns it into a mechanism for financing federal budget deficit by shifting state obligations onto the regions. The paper presents the results of the analysis of sub-federal budgets execution in 2015. The main goal was to identify the features of budget process and trends in the dynamics of budget parameters. The main conclusion is that the real causes of regional budgets destabilization lie not only in the growing social burden due to need to implement Vladimir Putin’s “May decrees”, but also in the ineffectiveness of fiscal policy pursued by the federal center. The author offers measures to change the paradigm of this policy. The study is based on the official data of the Ministry of Finance of the Russian Federation [7], Federal Treasury [8] Federal Tax Service [9], and the Federal State Statistics Service [10]


region, public debt, budget, deficit, loans, adjustment of fiscal policy

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