The Ministry of Finance for the first time in a few years will drastically reduce budget loans to regions


Replace cheap free

The government plans in the next three years to dramatically reduce the amount of cheap budget loans to regions, but to increase the amount of grants for equalization of regional budgets, follows from the draft Federal budget for 2017-2019 and materials to him.

For three years the regions will receive budget loans less than one year of 2016, 250 billion roubles (100 billion in 2017-2018 and 50 billion in 2019) against 338 billion rubles in 2016. Rate on these loans is minimal 0,1% per annum, but they count in the duty and be refunded.

The reduction of budget loans to compensate for additional grant listings. The volume of grants for leveling the budget supply will increase relative to 2016 100 billion rubles to 614,6 billion in 2017 — and leave it at that level in 2018 and 2019.

“Given that provide loans are debt obligations, although requiring minimal servicing costs, increase volume of grants for leveling the budget supply of constituent entities of the Russian Federation have a positive impact on balance of regional budgets and debt dynamics of regions”, — is spoken in the comment of the press service of the Ministry of Finance on request .

In recent years, the Federal government first deputized the commercial debt of regions budgetary credits, and now have to replace and budgetary lending. In 2014, the Federal budget was initially planned to give the regions a RUB 80 billion in loans, but in the end gave almost 250 billion, and in 2015 the amount of the granted budgetary loans increased to 342 billion roubles (data of the Federal Treasury). In 2016 the Federal center plans to provide regions loans 338 billion rubles, follows from the governmental amendments in the current budget. In the end, if the beginning of 2015 to market the region’s debt (Bank loans and bonds) accounted for 64 vs 31% at budget loans now, on October 1, the share of debt on budget loans took the lead with 48% (1.1 trillion rubles) and the share of market commitments fell to 47%. Total public debt of regions is 2,264 trillion rubles.

At the end of September 2016, Deputy Prime Minister Dmitry Kozak responding in the government for regional policy, spoke about plans to build 200 billion rubles to the budget in 2017 for loans to the regions. The government has identified 33 regions with a high debt load — at these regions even after the subsidy equalization fiscal capacities cannot sustain at the national level is vested in the regional authorities functions. “For these regions decided as a priority to provide them with additional financial assistance in the form of budget loans for the restructuring of commercial debt,” — said Kozak (quoted by TASS).

But in the end, during the governmental meeting the amount of budget credits for 2017 was cut in half. The representative of Kozak said it would not comment on the issue until the adoption of the budget.

Budgetary credits — cheap, and the “subsidies in General are worth nothing,” says the official of the Ministry of Finance decision to reduce the amount of budget loans and increase the amount of subsidies. “In addition, subsidies [are considered] as the income of the entity, and loans — is loans,” — says the source .

Agreement in exchange for subsidies

The reduction of budget loans will not lead to the fact that the regions will begin to climb expensive commercial loans, says the official. The regions will be able to get free money from the center only after providing assurances on the adoption of measures to improve the regional financial system. The Ministry of Finance will sign with the subsidized regions of the corresponding agreements providing for “measures for the economic development [of the region] and the stabilization of public finances”, follows from the explanatory note to the draft Federal budget. The provision of subsidies will also take into account the results of the inventory expenditure commitments of the regions.

The amount of subsidies that can receive a specific region, limited the growth of the subsidies may not be higher than 20% of the net revenues of the consolidated budget of the region for 2015. “The agreements will allow, and debt parameters. Already existing agreements regions limit the ability of borrowing,” — said the source in the Ministry of Finance.

At risk — 14 regions, which on 1 January 2016, the national debt exceeded 100% of their tax and non-tax revenues. In Ingushetia, Karelia, Mari El, Mordovia, North Ossetia-Alania, Khakassia, Zabaykalsky Krai, Astrakhan, Kostroma, Pskov, Saratov, Smolensk oblast, Jewish Autonomous oblast, Chukotka Autonomous Okrug, said Deputy Finance Minister Leonid Gornin in October TASS. According to him, 14 regions with the highest level of debt after consultations with the Ministry of Finance and FNS had approved their program of recovery.

For non-compliance, the Ministry of Finance threatens to prepare proposals for the initiation of the resignation of the governors stated in the explanatory Memorandum. Ultimate staffing solutions for governors made by the President.

Plan of distribution of grants by region yet, the volume is calculated by a special formula. In 2016 the leaders in approved grants for leveling the budget supply was Dagestan (46.7 billion rubles), Yakutia (more than 43 billion rubles), Kamchatka (37.5 billion RUB), Crimea (22.3 billion rubles), Chechnya (22.2 billion rubles). In years 2017-2019, the Ministry of Finance plans to apply the technique of distribution of grants, which will be “more focused on bringing the estimated budget provision to a minimum level due to the concentration of the amount of subsidies in the poorest regions”, the draft Main directions of budget policy for the upcoming three years.

“Additional money, the state finds”

The amount of grants for equalization does not fully compensate for the funds that could be obtained within the budget lending, the head of Kalmykia Alexei Orlov. But the Federal government offer additional sources of income for the region — in particular, the transfer of funds from increased excise taxes on fuel in regional road funds (40 billion rubles) and the ability to keep the growth of revenues from profit tax, as mentioned by Prime Minister Dmitry Medvedev in October.

“Additional funds the state finds, and to redistribute efficiently and effectively that is, in order to support regional budgets, is the ideal solution,” says Orlov. Additional sources of income can partially cover the shortfalls, he says.

Perhaps the reduction of budget loans by increasing subsidies and improve the financial system of the regions, but municipalities will still need to borrow from banks, said the Deputy head of administration of Kostroma Yekaterina Chizhova. According to her, the decision to increase the subsidies “would be very true, but the city is not concerned directly”. “The subject compensates for the difference in interest rates between commercial and fiscal credits that we could obtain. The region receives an additional opportunity for budget loans, but they do not reach, because of the region’s many problems,” she says. The following year, the city is not planning to increase fiscal loans will be to borrow on the commercial market, said Chizhov. Now the average rate on the Bank loan for Kostroma — 13,5%.

Featuring Alexei Mitrakova

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