What happens to regional debts?

The Ministry of Finance of Russia has named the regions that have accumulated more than the rest of the public debt lately.
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In March 2018, the national debt of the Yaroslavl Region reached a historic high of 41.1 billion rubles. Earlier this year, this figure stood at 39.3 billion rubles. In terms of public debt, the region ranks second in the Central Federal District after the Moscow region with a figure of 96.7 billion rubles, according to Izvestia. The sharpest jump was in the Tomsk Region, which in March increased the external debt by more than 5 billion rubles - from 28.46 to 33.58 billion rubles.
The state debt of the Saratov region increased by 2 billion rubles - up to 52.43 billion rubles. More state debt has increased Udmurtia (3 billion rubles) and the Penza region (2.5 billion). At the same time, Udmurtia managed to significantly lower the bar compared to last year: at the beginning of 2017, the national debt amounted to 95.6% of all republican revenues. In 2017, it fell for the first time in 8 years, now it is 48.8 billion rubles. The head of Udmurtia, Alexander Brechalov, commissioned by 2019 to reduce it by another 1.9 billion rubles, to 47 billion rubles.
In the Murmansk region, the state debt in March 2018 increased by 2.5 billion rubles. However, the authorities in the region fear that by the end of the year it will reach 30 billion rubles, which is 8 billion rubles more than planned. Roman Duryagin, vice-governor of the Murmansk region, said that the decision to reduce the rate of transfer of income tax to the regional budget from 18% to 17% affected the region’s revenues most significantly.
In some regions, despite the not very large absolute figures, government debt figures raise serious concerns. In particular, the national debt of Yakutia can be a quarter of the total budget - 50.7 billion rubles as of April against 188.7 billion rubles of the budget with a deficit of 1.5 billion. State Duma Deputy Fedot Tumusov noted that the national debt is growing by 1.5 years: at the beginning of 2017 it was 44.9 billion rubles. The state debt of the Primorsky Territory has also grown significantly: now it is 5.4 billion rubles, although two months ago it was only 1 billion rubles.
If the regions will not be able to cope independently with debt obligations, in accordance with the current Russian legislation, they will be transferred to treasury escort.This approach was first used in early 2018: the right to independently manage finances was lost by the Kostroma Region and Khakassia. Karelia, Transbaikalia and Mordovia can also join them (the latter has a national debt of 49.99 billion rubles - 220% of its own income).
In Russia, only two regions are not listed as debtors - this is the Sakhalin region and Sevastopol. In the ranking of constituent entities of the Russian Federation in terms of debt burden for the year 2017, the best indicators were demonstrated by the Tyumen and Leningrad regions, Moscow, and Altai and Primorsky Krai.
At the beginning of the year, the total volume of state debt of the regions was estimated by the Ministry of Finance at 2.315 trillion rubles, of which 1 trillion fell on budget loans. Compared with 2017, the figure fell by 1.6%.
In February 2018, Davydov.Indec reported that, for the first time in 10 years, the structure of the state debt of the Russian regions has changed: they have more bond issues and fewer bank loans. The amount of debt also became less.
At the end of 2017, 45 regions with a budget surplus were counted in Russia - for the first time since 2008. For comparison, in 2016 there were 27, and only a year earlier - only 9.The maximum number of surplus regions - 50 - was recorded in 2007.
Anatoly Akulov, Candidate of Economic Sciences, Associate Professor of the Management Department of Kemerovo State University, shares his assessment of the situation: “In the current environment, there are few hopes for resolving the debt crisis in the regions. the budget deficit of most regions. The reason is that the budgets of the subjects receive taxes that are highly dependent on the economic cycle, for example, a tax on personal income IC, income tax. More stable taxes such as value added tax, assigned to the federal government.
It is possible to stabilize the financial situation of the regions, or by redistributing taxes between budgets of different levels (federal and regional), which the federal center is now clearly not going to do, or by significantly increasing the rates of development of regional economies. It is very difficult to do. To date, a fundamental decision is not visible. "
Associate Professor of the Department of Regional Economics of the Altai StateVitaliy Purichi University is also quite skeptical about what is happening: “The tradition of shifting the load to the regions in case of difficulties has long been formed. After that, the system of manual redistribution of federal transfers, which gives good management results in maintaining political stability, is used. A good system for a federation with large the number of subjects. At all times, such a system has had a negative effect in the development of dependent attitudes among regions. <...>
There is a danger that the safety margin of such a system has dried up. Funds are exhausted at both the federal and regional levels. The fact that the regions agree on treasury escort indicates that there are no resources. <...>
Will the current financial system of the state sustain or not? Apparently, yes. The protracted economic crisis shows the need to increase the burden on the population by reducing the level of consumption. <...>
The stability of the situation creates the possibility of increasing the burden on the population. Cars will rise in price, tariffs will rise, prices will rise slightly. There are tools in which all of this will occur against the background of an increase in public sector wages. "
Well, something like this.
The full version of the material with detailed comments of experts can be read here.
Agenda, trends, opinions, exclusive. Informally on the Telegram-channel "Davydov.Indeks".

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