Subsidies to Russian regions in 2019

The excess of expenditures over regional incomes is covered by loans or subsidies from the federal budget. The distribution of these subsidies across the regions of Russia in 2019 (as in previous years) is an intricate and non-transparent process that is difficult to analyze even by specialists.

Grants to regions of Russia

What determines the size of subsidies

There are several indicators or standards that the Russian government focuses on when distributing financial assistance to regions. The main of these indicators are:

  • The level of gross regional product (GRP) per capita. He defines subsidies for “leveling”. The smaller the GRP, the more payments the subject receives.
  • The size of the regional budget deficit. Subsidies for “balance” depend on it.
  • The scale of the debt load, i.e. the size of the debt of the subject of the Russian Federation in absolute and relative numbers.
  • Status of the region. National republics within the Russian Federation can traditionally count on a greater amount of assistance from the central authorities than the “simple” territories and regions.

In addition to the above indicators, the distribution of payments to regions of Russia is influenced by many other factors. First of all, the political "weight" of the head of the subject and his personal relations with top federal officials matter. In addition to formal intergovernmental transfers (they are free and non-repayable), there are government loans in Russia, as well as “targeted” funds allocated to the territories under various federal development programs, etc.

The size of subsidies in 2019

The size of transfers between the federal and regional budgets is determined by the laws of the Russian Federation and is constantly adjusted by the government. The largest subsidies for “equalization” (the main part of all intergovernmental assistance) are received by subjects with low GRP per capita. In particular, in 2019 the following territories are represented among the “leaders” in terms of the volume of such subsidies.

The subject of the Russian FederationSize of subsidies for “leveling” in 2019, billion rublesTotal in Russia430.2
The Republic of Dagestan 50.2
Kamchatka Krai 34.4
Chechen Republic 22.3
The Republic of Sakha (Yakutia) 22.2
Altai region 16.5
The Republic of Buryatia 14.3
Tyva Republic 14.3
Republic of Crimea 14.1
Stavropol region 11.6
Altai Republic 9

Source: Ministry of Finance of the Russian Federation (preliminary data)

Do not have the right to subsidize "leveling" the subjects of the Russian Federation with a high GRP per capita. Among them are Moscow, St. Petersburg, the Republic of Tatarstan, Sakhalin, Sverdlovsk and Tyumen regions, the Yamalo-Nenets and Khanty-Mansi Autonomous Districts. However, all these regions may receive other financial transfers and assistance from the federal budget.

In addition to subsidies for “equalization” in Russia there are significant payments for “balance”. They depend on the estimated size of the regional budget deficit and other indicators that the authorities prefer not to decipher. The main recipients of this type of assistance have traditionally been Chechnya and the Crimea.

A number of Russian regions in an attempt to finance their expenses have resorted to loans, both state and commercial. State loans are also provided to subjects by the federal government, but unlike grants, they are paid and theoretically are subject to return after a certain period of time. According to the famous expert on regional policy in Russia, Professor of Moscow State University N.V.Zubarevich receiving preferential state loans by the authorities of the subjects has long been turned into “fights without rules”.

Russian rubles

If the region cannot pay its debts, it introduces a so-called. "Treasury observation." In fact, this means the external management of the finances of such bankrupt territories by the federal authorities. In 2018, “treasury observation” was introduced in Khakassia and the Kostroma region. Even earlier, in 2015, the authorities of the Novgorod region refused to return a large loan to a commercial bank, which required the intervention of the central government.

In 2018, Karelia, Kabardino-Balkaria, Mordovia, Khakassia and the Kostroma region had the largest debt burden. In all these regions, the total amount of debt exceeds their total income, taken without regard to federal assistance.

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