Tatarstan to 'work off' the state debt in 10 years

Ministry of finance of Russia and the authorities of Tatarstan have developed a scheme to repay the state debt for 73 billion rubles

Tatarstan to 'work off' the state debt in 10 years

The ministry of finance of Russia and the authorities of Tatarstan have developed a scheme to repay the state debt for 73 billion rubles, which guarantees the federal treasury the return of this huge amount within 10 years. The miracle did not happen: the dreams of a gratuitous write-off against the background of macroeconomic deterioration evaporated, but the federal authorities still made concessions to Tatarstan. The Russian ministry of finance agreed to give another delay to the payment of federal budget loans for 17 billion rubles, but in return, the republic must direct these funds to infrastructure projects and begin to repay the state debt at the expense of tax revenues from them. This option has a deadline — projects must be launched before the beginning of 2025.

Budget deficit covered with federal money

The terms of the state debt repayment of the Republic of Tatarstan, which has reached the maximum level since the beginning of the Universiade 2013, were presented to the deputies by Minister of Finance of the Republic of Tatarstan Radik Gayzatullin. He said this during the report on the implementation of the consolidated budget for the “coronavirus” 2020 year at a meeting of the Committee on Budget and Finance of the State Council of the Republic.

According to the head of the ministry of finance of the Republic of Tatarstan, during the pandemic, the Tatarstan treasury felt a strong financial shock, losing 40% of tax revenues. “If back in January-February, taxes were steadily going to the budget, even with an excess to the level of 2019, then since March, there has been a sharp collapse," said Radik Gayzatullin.

According to him, the losses amounted to more than 43,3 billion rubles, of which 42,6 billion rubles were lost by the republican budget. According to the volume of its own tax revenues, Tatarstan has fallen from the 4th-5th to the 8th position in the country, Gayzatullin said, answering questions from deputies. As a result, the consolidated budget was executed on income of 341,2 billion rubles (revenues of the republican budget — 293,4 billion), and on expenditures — by 363,2 billion rubles. For the first time, the deficit exceeded 17 billion rubles.

The gap in the treasury was closed by federal resources. According to Radik Gayzatullin, the republic received federal financial assistance in the form of gratuitous subsidies worth 22,4 billion rubles and another 2 billion rubles as budget loans. Later, the head of the budget committee, Leonid Yakunin, explained that a third of social spending in Tatarstan was provided by federal reserves.


Meanwhile, Tatarstan has not lost its motivation to repay the state debt, which the federal centre has become more insistent to demand from the subjects of the Russian Federation. Currently, the state debt of Tatarstan is 98,2 billion rubles, of which 86,9 billion rubles fall on federal budget loans, the minister of finance of the Republic of Tatarstan said, stressing that these loans are not commercial, but budgetary.

The head of the ministry of finance reminded that in December 2020, at the federal level, changes were made to the conditions for extending until 2029 the debt of the subjects of the Russian Federation on federal budget loans, which was restructured in December 2017. “The amendments provide for an expansion of the possibilities for allocating budget funds in 2021, released as a result of reducing the volume of repayment of debt on budget loans as part of the extension of repayment terms," he said.

According to Gayzatullin, Tatarstan agreed to postpone the repayment for another four years — until the beginning of 2025.

“Within the framework of the resolutions of the government of the Russian Federation, it is possible to get a deferral of 17 billion rubles in exchange for infrastructure projects for commercial projects. If they give an increase in taxes, then budget loans for 73 billion rubles will be written off," the minister of finance of the Republic of Tatarstan said.


How national debt will be repaid due to tax increase

After the meeting, the head of the ministry of finance of the Republic of Tatarstan explained to the correspondent of Realnoe Vremya that Tatarstan has already received a delay in the payment of debt for 17 billion rubles until 2025, but this amount will be required to launch investment projects with the participation of the state. According to this scheme, the state debt for 73 billion rubles will have to be repaid within 10 years at the expense of federal tax deductions coming from projects. According to the minister, a specific list of taxes has been established — VAT, profit tax of 3%, and others that go to offset the debt write-off. Besides, additional jobs should be created within the framework of the projects.

“We had to repay 17 billion rubles of the state debt in 2021-2024. In 2021-586 million, in 2022 — 1,5 billion rubles, and so on over the years," said Gayzatullin in a conversation with Realnoe Vremya. “But if we direct this money to infrastructure, open new jobs and generate taxes, then there is a write-off of budget loans for 73 billion rubles. However, the investment capacity of the projects should be more than 17 billion, but who will provide them has not yet been decided.

The snag arose in the federal rules for offsetting the national debt. “Government Resolutions No. 1704, 1705 oblige to create new enterprises. And there are no such things to generate taxes immediately. Now our president has managed to agree that new projects should be launched by existing enterprises. I think when everything settles down, we will inform you about everything.”

However, this option has a strict deadline — projects must be launched before the beginning of 2025, otherwise you will have to return 17 billion rubles, remaining forever with a heavy burden. “The changes also provide for liability in case of violation of the condition on the direction of the released budget funds by the end of 2020," the minister said.

Tatarstan ranked third in Russia and first in the Volga Federal District in terms of public debt — it is 93,2 billion rubles. The largest state debt in the Krasnodar Territory is 141,8 billion rubles (in 2014, the Winter Olympics were held in Sochi), the second — Krasnoyarsk Krai with 95,4 billion (in 2019, the XXIX World Winter Universiade was held in Krasnoyarsk). In October, the Russian Ministry of Finance signed documents on the restructuring of 12,2 billion rubles received by the republic during the preparation for the 2015 Aquatics Championships. This amount is restructured taking into account the deferred payment for 10 years, followed by payment for 10 years in equal shares.

By Luiza Ignatyeva
Analytics Tatarstan