ACRA: Ministry of Finance reduced transfers to 18 regions of Russia

In the nine months of 2022, payments from the federal budget to the regions, thanks to targeted subsidies, increased to 300 billion rubles. (by 12%) compared to the same period in 2021. However, in 18 regions in 2022, the Ministry of Finance reduced transfers. This is stated in analytical commentary rating agency ACRA, based on data from the Unified Portal of the Russian Budgetary System.

Payouts decreased the most in the Kaliningrad Region (by 36% to RUB 18 billion), the Magadan Region (by 35% to RUB 4.8 billion), in Moscow (by 32% to RUB 30.2 billion), St. Petersburg (by 18% – 5.7 billion rubles).

However, as noted in the commentary, the reduction in payments from the federal budget will not affect the Kaliningrad region, as this happened due to a decrease in support for manufacturers using imported components. “Such support, which in form was considered a different intergovernmental transfer, in fact, was more of a subvention that reflects obligations to support local businesses, does not involve the regional budget and does not directly affect social spending or the ability of the entity to fulfill its obligations,” says in agency material. For Moscow and St. Petersburg, the impact of the reduction in payments is also insignificant, since these regions “do not depend to any significant extent” on the transfer.

“For the Magadan region, a comparable drop in transfers, along with a decrease in NNI and an increase in spending, may complicate budget execution at the end of the year,” the commentary says.

As stated in the commentary, the Ministry of Finance has reduced income tax payments to regions where there is no metallurgical sector. This happened despite a 22 percent cumulative tax increase for 2022. Receipts fell in Lipetsk (by 46%), Belgorod (by 40%), Kursk regions (37%), Karelia (by 21%).

In several regions, due to income from the coal mining, oil and gas production, and oil refining industries, revenues increased. These are Khakassia (175%), Kemerovo region (144%), St. Petersburg (134%), Astrakhan region (73%), Republic of Tatarstan (78%).

In September, the government promised to allocate an additional 5.5 billion rubles. to support investment projects and create new jobs in the Kaliningrad region. Mikhail Mishustin also said that the government will continue to stimulate the development of the Far Eastern regions.

Read about measures to support the economy in the material “Kommersant” “Anti-crisis without loans and a moratorium”.