On the brink of default

Why external management will not save Khakassia, the Kostroma region and other regions of the Russian Federation.
Origin source
For the first time in the history of Russia, the regions have lost even formal independence from the federal center. While it is a question of two subjects - the Kostroma region and the Republic of Khakassia. In the elective year, such regions may become larger, but external management is unlikely to put them on the path of development.

The governments of Khakassia and the Kostroma region can no longer independently manage their budgets. Both regions are transferred to cash services in the Federal Treasury. Now, local officials are required to coordinate all expenses with Moscow, and it concerns even salaries of doctors and teachers, as well as payment of housing and communal services for schools and hospitals. The reason is the huge debts of both regions. According to the Ministry of Finance, by the beginning of the winter, the national debt
Khakassia has come close to 25 billion rubles, which is almost one and a half times higher than the annual income of the republic. The state debt of the Kostroma region reached 22 billion rubles and amounted to almost 170% of the annual income.

Happens worse

It can not be said that these are the two most heavily accredited regions in the country. For example, Mordovia's debts are twice as high as the revenues of the republic's budget for one year. In total, according to the Ministry of Finance, at the end of November last year, debts exceeded annual income in seven regions of the Russian Federation, while in 16 other regions, debts accounted for 85-100% of revenues. External financial management in Khakassia and the Kostroma region was introduced due to the fact that the volume of budget loans in the structure of their debts exceeded 80%.

It is believed that the Russian regions began to get into loans in 2012 for the sake of fulfilling the May decrees of President Vladimir Putin. This period is marked by a slowdown in the domestic economy, so it was not possible to execute decrees due to revenue growth. The subjects of the federation began to solve the problem by borrowing in private banks, that is, at the expense of expensive and fairly "short" money. Even then it was obvious that all this could end badly, and therefore the RF government began refinancing commercial loans of the regions. The Republic, the region and the region began to receive funds from the budget at 0.1% per annum.

Freebie will no longer be

The federal budget is not rubber, but governors quickly became accustomed to a stream of virtually non-interest-bearing loans, which are provided on demand. A significant increase in tax revenues, which would have allowed regions to reduce arrears to banks and the federal center, has not occurred in the country. For this reason, the government launched a restructuring program for already issued budget loans. The program is designed for seven years and will cost the state 55 billion rubles.

During the first two years, the regions will be able to pay annually 5% of their debt, and spend the freed funds for the development and repayment of loans to commercial banks. However, it will be problematic to get new loans from the budget to the governors. The rules of the game have changed: in 2017-2019, regions will get less budgetary credits than in one 2016 - 250 billion rubles. against 338 billion rubles. Experts fear that in this situation, regional governments will have to cut costs.

Most regions have exhausted opportunities to further reduce their costs. S & P Global Ratings analysts note that in 2017, the entities' expenditures in real terms amounted to 83% of the 2012 level. It is clear that this is the "average temperature for the hospital," in reality, the financial indicators of the regions vary significantly. However, as indicated in the S & P report, about ten of them annually violate the limits set by the federal authorities on the amount of debt and budget deficit.

In such a situation, it seems likely that the regions will increase their expensive commercial loans, which will be spent not on development, but on "maintaining their pants". The debt hole may turn out to be bottomless, and when the crisis escalates, the heads of regions will again turn to the president for help in the hope that they will be forgiven again for debts. The governors have reason to think so, because, as the head of the Accounts Chamber, Tatyana Golikova, recently said, "[federal] authorities will never allow the regions to default." This means that there will be more regions and republics that will lose the right to independently manage their budgets. The word "Federation" from the official name of our state can be removed.

The current situation could have been foreseen 10 years ago, when, according to the initiatives of Alexei Kudrin and Dmitry Kozak, the revenues and powers of the regions were redistributed in favor of the federal center. Today the former Minister of Finance recognizes that the subjects of the federation need to give more budgetary freedom, but are modern governors ready to accept it?

The essence of modern monetary relations between the federal center and the regions visually demonstrates the opposition of the government of Tatarstan and the DIA around the uneasy inheritance of Tatfondbank. The credit institution, the main owner of which was Tatarstan, lost its license after the bank's balance went to minus 97 billion rubles. Further investigation revealed the management of Tatfondbank of off-balance-sheet deposits, the money from which could be assigned by large enterprises of the republic. Despite this, the head of Tatarstan Rustem Minnikhanov asked the DIA and the Central Bank to help settle accounts with defrauded depositors. According to him, "Tatarstan will not be able to completely take this issue on itself."