The Russian Federation debtors: the regions have promised to forgive 748 billion debt

Speaking in the Duma, Deputy Prime Minister Dmitry Kozak drew a scenic picture of what in Russia is called “fiscal federalism”: 97% of the costs of the regions are regulated by Federal laws, and in 59 regions, these costs amount to more than 100% of the proceeds even with the subsidies from the center. Mr. Kozak suggested to “look to the governors of these subjects of the apostles, who with five loaves can feed five thousand consumers”…

photo: Alex geldings

Responsible in the government for regional policy Deputy Prime Minister said that since 2015 was conducted “meticulous work” on the development of updated regulations for financial and budget relations between the center and the constituent entities of the Russian Federation — “not in words, but in fact they were based on the principles of justice, maximum transparency, predictability and mutual accountability.” As evident from his report, it is up to these principles — almost as the moon, and “updated rules” to implement quickly fails.

Of the 9.6 trillion of the total regional expenditure 9.2 trillion predefined Federal laws, the official said. 59 republics and regions like those required for performance of the obligation is more than 100% of income even with subsidies and subventions from the center. In these regions, Mr. Kozak suggested the “search of the apostles” capable of miracles. The situation, in his words, “a tough and rather offensive”: to the mere mortal to governors “the Prosecutor comes and says that it is necessary to implement such a law and such a statement, but no money”.

To ease the burden of excessive obligations, it is necessary to spend their inventory, said Mr. Kozak.

For 2012-2016, dramatically increased the imbalance of regional budgets and, consequently, their debt, confirmed the head of audit chamber Tatyana Golikova: according to her, it really is “largely due to the adopted on the Federal level solutions.” As a result, some powers, despite the presence of established at the Federal level, financial regulations are not based on these standards, and the actual expenditures of last year. It looked different in 2016 with the financing of health care: regional standards of medical care are below the average Federal has installed 65 regions, but also to ensure money is not enough, which led to the growth of paid services by 11%.

In the education system of mandatory financial regulations of the centre no. But here, according to Ms. Golikova, 64,4% of funds goes to salaries, and to ensure schools do not have enough money even with the subsidies from the Federal budget.

Work on inventory “of accumulated unexecuted powers”, referred to earlier by Mr. Kozak, “is in a very early stage, and without her subjects are unable to balance their budgets,” said Ms. Golikova.

The case is “in its infancy, because the agencies are resisting, wanting more to take with regions and municipalities to Finance the industry,” — said Deputy Prime Minister. “I’m afraid if we had proposed to the state Duma all the laws that are driving the regions in exorbitant costs, to cancel, there would be too many differences,” he said. As a very heavy obligations were mentioned, in particular, the provision of housing for children-orphans and payments from regional budgets to insurance funds for the unemployed.

“Often the laws that provide regional or municipal concessions are made to the state Duma by the government and from the Federal budget shortfall are not kompensiruet. The right hand does not know what the left is doing?” — asked Sergey Natarov (LDPR).

Yeah, I recognized Mr. Kozak: “right hand mounted federalism, like independence, and the left trying to get into the pocket regions and municipalities and to be good uncles, wishing to encourage certain individuals or legal entities”. Benefits specified in Federal laws that reduce the income of the regions or municipalities, 73 billion rubles. A bill that would prohibit doing it without “direct compensation from the Federal budget”, but when it will become law is unknown.

2.2 trillion rubles — this is now the total debt of regional budgets: the debt on budgetary credits and debts to commercial banks. Mr. Kozak spoke about the solution to the problem, which the government has forged on behalf of the President: we are talking about restructuring 748 billion rubles of budgetary debts for 7 years. If the regions that have concluded with the government restructuring agreement, increase their income level above the level of inflation, by the end of 2018-2019 they can to delay the payment until 2029. “Essentially, this is debt forgiveness” — said Mr. Kozak.

Later, Deputy Prime Minister told reporters that “the evaluation of new governors and those governors who continue to work will be made in accordance with the restructuring agreements that will be signed with them”. “Special issue” called Mr. Kozak sneaky accounts payable, talked about, and the head JV Tatyana Golikova: regions do not show it in their reporting, and up to inspections by the Ministry of Finance knows nothing about it.

His contribution to the deplorable state of Finance contributes to the increasing ineffectiveness of administration in the regions. Audit of the accounting chamber for the first 9 months of 2017 showed that the value of the “unit of violation” has grown in comparison with the year 2016 1.8 times…

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