Study: how Russia really spends on its citizens

Approval by the state Duma of the law on the Federal budget on 9 December does not put an end to the question about the allocation of public funds in the coming year. In addition to Federal budget spending on social policy, security, health care, education and other areas of the budget classification provided for in the regional and municipal budgets and extra-budgetary funds. All together it is called the budget system and only its total review can give a full idea of the state financing of the Russian economy.

Total expenditure of the budget system to separate lines can at times differ from those laid down in the Federal budget (I read more about Federal spending in the first part of the study) . The cost structure trends in the budgets of different levels varies considerably. That is why, for example, is quite modest in the scale of the Federal budget the share of expenditures on education (3.7% of all expenditure items of the Federal budget for 2017) in considering the scale of the budget system increases to 10%.

In the second part of its study of the budgets of the current decade decided to perform five core areas of public expenditures of the Russian budget system.

Five views on the budget system of Russia

The most healthy article

From the funds planned consolidated budget 2017 on five key items of expenditure, health care will get more quarters: 3.5 trillion rubles or 11% of expenditure. Thus in the Federal budget for health the government has planned to spend a total of 363 billion.

This sharp difference is explained by the fact that the medical expenses have to Federal Fund of obligatory medical insurance (FFOMS — RUB 1.7 trillion in 2017). He updated regional contributions for non-working population and the insurance contributions of employers (5.1 per cent from the salaries of the employees). In recent years there has been a General increase of wages in the country, which allowed the budget FFOMS grow, says Director of the Institute of health Economics HSE Larisa Popovich. But most of all health care spending regions. Since the budget FFOMS more than a third is provided by their contributions in 2015 in the regional government has financed 47% of the total cost of the budget system of health care, estimated by experts of the HSE.

Meanwhile, Federal spending on health (in real terms, see the note “How we felt”) has been decelerating for five years from 2012. Then they adjusted for inflation was at the level of 874,3 billion roubles and in 2016 — already 465,5 billion. the strongest reduction effect on the financing of inpatient care (hospitals). Since 2012 for these purposes was spent 279,6 billion rubles., or 398 billion rubles. in prices in 2016, against 241 billion rubles in the current year. In 2017 appropriations will be cut to 146 billion rubles taking into account inflation, that is a little more than a third of the funding 2012.

Also decreased Federal spending on outpatient care (polyclinics): 215 billion rubles in 2012 to 73 billion rubles in 2016. In the following years the decrease continues in 2019 year in the polyclinic in the Federal budget are planned only 63 billion.

Overall, however, the budget system expenditure on health care in the next three years will only grow from 3.4 trillion rubles in 2017 to 3.9 trillion in 2019. For comparison, the national defence expenditures in these three years will remain at the same level — 2.8 trillion rubles. It allows to hope that the hospital and clinic at least will not worsen their situation.

The education and training

In the same way as medicine, education looks modest in the Federal budget, but impressive in the consolidated, with the account of regional budgets. The total amount of appropriations for the five core areas of the budget system expenditure on education will be in 2017 23.3 percent, or 3.1 trillion This is less than in health, but more than on defense. And this ratio is expected to continue until 2019.

However, in 2013 the expenditure on education has been steadily declining. This is due to the decline in oil prices and the increasing priority of spending on defense and pensions. At its peak in the year 2013, graduated from the budgets of all levels about 3.9 trillion rubles (in prices of 2016), or 4.3% of GDP. In 2016 the share of expenditure on education has declined to 3.7% of GDP by 2019-mu it will fall to 3.5% of GDP.

In the Federal budget reducing the funding of education significantly even more, from 897 billion RUB in 2013 to 515 billion rubles in 2019. traditionally, the Federal budget primarily funds higher education, giving vocational, General and pre-school education at the mercy of the regions that is most affected universities.

HSE economists note that the Federal center with the 2013 “consistently absent” from the funding of social spheres. If the regions will resume the pending projects for the construction and improvement of schools and hospitals will go by the wayside. In this case, warn the authors of the report, the HSE, the Russian health and education at risk “to come down to the levels of Asian and Latin American countries.”

The security forces tightened the belt

Compared to many other areas of budget expenditure military and security forces seem very confident, especially in recent years. Even in the consolidated budget allocations for defence and security have traditionally made up a third to a half of all funds. In 2017 on a “man with a gun” from the budgetary system is planned to spend 4.9 trillion rubles., which is 5.7% of GDP.

Costs who protect us

Military spending in recent years overtaken the budget for internal security. According to the Finance Ministry, the consolidated budget in 2011 spent $ 2.2 trillion on each of these two sections. However, in 2014, the defense spent 300 billion rubles more ($3 trillion RUB against 2.7 trillion). In subsequent years, the gap between spending on military and security forces has increased even more and now stands at about 1 trillion rubles This is due to the difference in the peaks: the cost of “authorities” was dramatically increased after the reform of the judicial system and the mass opposition protests in 2011 (from 1.9 to 2.6 trillion in 2012), followed by a gradual decline.

Defense spending increased from 2011 (2.3 trillion rubles) up to 2016 (3.9 trillion rubles). This increase is explained by the financing of the state program of rearmament and Russia’s participation in external conflicts. The traditional enemy of growth in military spending is the Ministry of Finance, the former whose head, Alexei Kudrin, was fired in 2011 by President Dmitry Medvedev because of a dispute about the need to increase defense spending. Under the current Minister Anton Siluanov military spending grew annually, reaching a peak in 2015-2016. But perhaps that his efforts contributed to the fact that the budget in 2017 and beyond will become more “civil”. Security “skinny” at 91 billion rubles., to 1.85 trillion and defense by 1 trillion to 2.7 trillion rubles.

Public servants still modest

National issues by title with a discreet section budgets. To the uninitiated it is not immediately clear what it is. But the importance of the national section is difficult to overestimate. Article is financial support for the activities of all authorities — the President, the government, the state Duma, the judiciary and the other branches of government. It is no coincidence that in the budget classification of expenses section first.

Of the five areas discussed on national issues in 2017 scheduled less money: 1.9 trillion rubles, or 2.2% of GDP. But this is the most stable from year to year, the cost difference rarely exceeds 5%. This is not surprising given that the declared reduction of the state apparatus is sometimes limited by sequestration of vacant staff positions. So, in 2013, the share of public expenditure on administration amounted to 2.1% of GDP (1.4 trillion roubles), and it was assumed that in 2016 they will be reduced to 1.8% of GDP. However, in 2016, officials spent 2.2% of GDP (1.8 trillion rubles), in 2017, as planned, the financing will grow even more, to 2.3% of GDP (2 trillion rubles).

Because is scheduled for 2018-2019 another reduction of expenses on the officialdom to 2% of GDP (2 trillion) it is hard to believe. In addition, scheduled for 2017, the increase under section assures that public administration in the next three years will suffer less than the rest of the economy.

As we thought

In a country where prices are rising on average by 9.5% per year (Rosstat data for the period of 2006-2015), nominal monetary indicators alone cannot give a complete picture. For example, if government spending on healthcare has grown in the nth year by 10% compared to the previous year, and inflation was 20%, it is obvious that real spending growth to speak of.

To ensure the comparability of budget data by year and track the “real” dynamics of revenues and expenditures of the state, we adjusted the data for average annual inflation by recalculating them to the 2016 prices. In other words, the revenues and expenditures of the budget, expected in 2016 (according to the October amendment of the Ministry of Finance in the budget), was taken as a starting point, and the actual figures of the previous years restated for inflation. Thus, the adjusted figures of the past years was higher than nominal, and rates of subsequent years. None of the methods of bringing the nominal numbers to real is perfect, but plus the use of the average rate of inflation that intuitively the price increase more understandable than, for example, special indexes-deflators calculated by Rosstat.

In addition, data for average annual inflation from 1990-ies, based on the statistics of Rosstat, in the database of the International monetary Fund (IMF), and the predicted values of the average rate of inflation for the years 2016-2019 are taken from the basic macroeconomic forecast of economic development, forms the basis of the budgetary projections. “In the current environment, I would have deploravel the consumer price index, because, first, it is more than common, and secondly, another deflator is now really not,” — confirmed the appropriateness of the calculations of the senior analyst, group research and forecasting ACRES Dmitry Kulikov.

With the participation of Polina Zvezdnoi