“Part of the money for road works gets to the regions only in October. This can’t be allowed!”
Regions will get the first intergovernmental transfers till the end of the year, at the same time their publicly funded loans will be reduced
Regions will receive almost a trillion rubles of intergovernmental transfers till the end of the year to invite tenders during the first months and “start construction from March”. At the same time, regions’ publicly funded loan rate was lowered twice allowing them to invest the released money in the construction of infrastructure and factories and use them to pay them off with the help of taxes from built enterprises. In addition, 99% of help to 10 regions with the lowest fiscal capacity will come from the federal centre to implement different programmes. Two Volga Federal Okrug regions are among them. Deputies of the State Duma adopted these and other amendments during the second reading of the budget for 2020-2022 on 19 November. Realnoe Vremya newspaper learnt the details of the big regional reform.
The sum of intergovernmental transfers in 2020 will be a trillion rubles
Deputies of the State Duma of the Russian Federation considered the project of the federal law on budget for 2020, 2021, 2022 during the second reading. Over 600 amendments, including the amendments to the issues for which there had been given instructions when considering the budget during the first reading, had been considered in specialised committees by the second reading. Distribution of intergovernmental transfers till the beginning of the next year became the main difference of the new project of the budget. Usually, they were distributed next year, until 15 February, while money from the federal budget got to the regions only by October. Nowadays there has been distributed over a trillion rubles in 2020, 926 billion rubles in 2021 and another 926 billion in 2022.
Such practice, in Vice Speaker Aleksandr Zhukov’s opinion, will already allow Russian regions to form their regional budgets fully, and invite the first tenders for some works (from the construction of infrastructure to road repairs) from the first working days next year sending the money to municipalities.
A different change was in publicly funded loans, which are a heavy burden for many regions. Now the latter can allocate 5% of the money they have to give in 2020 to pay off the publicly funded loan for existing investment projects. If the projects aren’t implemented, the regions will have to compensate for this money. So in case investment projects are implemented, the regions will get the right to consider those taxes generated from the operation of built enterprises and going to the federal budget as payoff of debt in publicly funded loans. The amendments are aimed to increase GRP and GDP of the country.
“The government consciously doesn’t want an economic rise!”
There were 431 deputies at the hours-long meeting. They had to hurry up to consider almost 30 bills except the budget. However, the deputies already spent the first hour to “discuss topical problems”, which caused discontent of speaker Vyacheslav Volodin like “you could have delivered a speech in the evening or dedicate the whole day to these speeches, those had wanted would have listened to you”.
The people’s representatives traditionally discussed the Ukrainian issue and “their nationalists”, the protests in Moscow having blamed opposition leaders, including “young Russophobes” of working for western grants and constructing a “fifth column”.
Only several deputies mentioned the budget — before its discussion. So Communist Nikolay Arefyev claimed that social problems were solved badly and “nothing different could be expected”. He put an example of Hungary that doesn’t have minerals, while the country lives on exports of agricultural produce. And this doesn’t impede, the deputy noted, from providing everybody with free education and health care.
Aleksandr Sherin from the LDPR criticised the forgiveness of some African countries’ debt equal to 1,3 trillion rubles by Russian authorities: he thinks that this money could have been used for sudden pension indexation. Communist Valentin Shurchanov thinks that it was possible to use the surplus for decent pension indexation, in 2020 it can amount to almost a trillion rubles: “What should we do with it? We will send it abroad again and cite that we have no money! The government consciously doesn’t want an economic rise!”
99% of help to Mari El and Chuvashia when implementing national projects will come from federal centre
Andrey Makarov, chairman from the Committee on Budget and Taxes, from United Russia presented the project of the budget with amendments. Over 600 amendments of which 440 his committee recommended to support will allow redistributing over 750 billion rubles, of which 94 billion will be in 2020, 112 billion in 2021 and 98 billion rubles in 2022. Makarov mainly talked about four novelties.
Firstly, the federal deputies are ready to pay up 90% of all programmes (including national projects) for 10 Russian regions with the lowest fiscal capacity. According to same Minister of Finance Anton Siluanov’s data, who was a bit late for the budget reading, the federal agencies will pay 99% of all programmes. Two Volga Federal Okrug regions — Mari El and Chuvashia (as well as Adygeya, the Republic of Altai, Kalmykia, Karelia, Tuva, Altai Krai, Kurgan and Pskov Oblasts) — are among the lucky regions. Siluanov thinks that some of these regions will fall out of the ten next year due to the additional money from the federal budget — it is 2 billion rubles. And in 2021-2022, the Ministry of Finance will redistribute subsidies to build houses for orphans in needy regions: “So that more resources will be sent to the regions that need help”.
Regions will receive most of the transfers for the first time till the beginning of the next year
Distribution of 94% of all intergovernmental transfers (203) among regions, except for subsidies given on a competitive basis, became the second key change. According to the Russian finance minister, his ministry has already adopted a road map for work of all the executive agencies to carry out the State Duma’s instructions to sign all agreements on transfers with the regions.
“Earlier it was necessary to sign the agreements until 15 February, some of them didn’t have a deadline,” Siluanov claimed.
“In this case, the regions will receive the money early next year, did I understand you correctly? And can the regions already invite tenders?” Volodin specified.
“Exactly. We will make the limits of subsidies public late this year already, and the regions will already have the money on the first working day in 2020. We agreed that the regions must distribute the money at the local level within a month so that the money will get to the end addressee.”
Volodin called the programme a new norm of “effective spending of the budget money”, according to which the regions could have all tender-related processes in January-February and start construction in March:
“Today part of the money for road works gets to the regions only in October. This can’t be allowed!”
How authorities offer to help regions return publicly funded loans
It can be considered that the new budget was clearly designed for regions. So there is an amendment to support the Russian regions, especially which don’t have a chance to allocate extra money for investments. It is eyed to reduce the interest rate of publicly funded loans next year twice, from 10 to 5%, which, Makarov says, will give the regions another 440 billion rubles. However, according to the government’s rules, this money can be invested. Unlike some other programmes aimed to support the regions, the amendment doesn’t include any restrictions to joining the programme and relevant for all regions.
Secondly, the additional money the federal budget will get from investment programmes — for instance, an oil refinery was built there, it began to generate taxes — will automatically reduce the debt of regional budgets. Of course, 5% isn’t much, but deputies think that it will be possible to permit use them in investments projects and bigger resources while the budget is spent.
“While developing entrepreneurship and investment activity, the new rule makes loan restructuring for the regions easier,” Siluanov agreed with a proviso. “As additional income from investments made of the released money in new infrastructural projects (which became taxes in the federal budget in the end) we will reduce loan debts. The rule will come in force in 2020 already.”
“Somebody will have to go on the New Year holiday after the clock rings 12 pm”
A rise in volumes of financing in the development of rural territories will become another important change — money for this is ought to be found in other programmes. According to Volodin, this will allow increasing the volume of additional income of rural territories to 60 billion rubles. The Russian Ministry of Agriculture will implement this programme by controlling subsidies. Vice Premier of Russia in Agroindustrial Complex Aleksey Gordeyev will supervise it, while the financing will come from additional income of the non-oil and gas industry.
Aleksandr Zhukov “who chaired the budget committee at the most difficult time”, Vyacheslav Volodin noted at the end of the presentation of amendments, “has seen such a dialogue with the government for the first time, over 400 amendments have been adopted unanimously”. The speaker named the adoption of amendments and the approval of the Russian government “serious progress”, whose implementation, however, will make many functionaries work hard:
“Thanks for hearing and making such a decision, the specialised ministries at the same are obliged to do many things now, and their responsibility has increased. Somebody will have to go on the New Year holiday after the clock rings at 12 pm,” Volodin warned.