Competition with return elements - Newspaper Kommersant No. 183 (7384) dated 10/04/2022

Competition with return elements - Newspaper Kommersant No. 183 (7384) dated 10/04/2022



On the eve of the expansion of fiscal stimulus “adaptation of the economy to new conditions” – the size of the stimulus in the draft budget for 2023-2025 is estimated at several trillion rubles – the Ministry of Finance intends to radically change the rules for companies to access this money. The government submitted amendments to the Budget Code to the State Duma, implementing a unified competitive model for the distribution of subsidies, under which they should be received by those companies that offer the best results of such state support from the government's point of view. The model has already been implemented by the White House on a smaller scale as part of the Export Support national project, but then it was de facto curtailed due to protectionism and complicating foreign trade. Now the business is not sure that now is the right time for innovations, and asks at least to postpone them.

The government submitted to the State Duma amendments of the Ministry of Finance to the Budget Code - they unify the procedure for distributing state support funds allocated by the government in the form of subsidies among market participants. If the document is adopted, a significant part of the funds, the allocation of which is now regulated by separate acts of the White House or ministries and departments, will be held on a competitive basis according to the principle “funds are received by a market entity that will offer the greatest effectiveness of their use.” To do this, a norm is introduced into the BC, according to which the distribution of subsidies will have to be carried out “in the manner established by the regulatory legal act of the government”, and decisions of state authorities and other main managers of budget funds will have to comply with this procedure. The same rule will apply to grants provided in the form of subsidies to legal entities and individuals and individual entrepreneurs, minus those whose distribution procedure is expressly described by presidential decrees.

The new approach is supposed to be distributed throughout the entire vertical of power - according to the project, at the federal level it should start working from 2023, from 2024 the procedure will be applied at the regional, and from 2025 - at the municipal level, profile regulations of subjects and municipalities at the same time, they must be brought into line with federal requirements. To select recipients of subsidies, it is proposed to use tenders and requests for proposals, which the GRBS will have to conduct electronically using the Electronic Budget system, reflecting in it both the selection process and its results (excluding those related to state secrets or restricted access information).

The selection procedure itself has not yet been determined - the press service of the Ministry of Finance confirmed yesterday that it and the unified rules describing "including the various features of the selections" have yet to be prepared - they will be enshrined in separate government regulations. We note, however, that the mechanism for the “competitive” allocation of subsidies for the government is not new - for the first time, a large-scale unification of the procedure for their distribution was then discussed by Deputy Prime Minister Dmitry Kozak when distributing industrial state support within the framework of the International Cooperation and Export national project in 2018 (see Kommersant ” dated November 29 and 30, 2018): then the Ministry of Industry and Trade consolidated most of the industry subsidies for tens of billions of rubles, tying their allocation to the increase in exports by companies as part of comprehensive efficiency improvement programs - agreements on the provision of subsidies assumed the obligations of companies to fulfill promises and the return of state funds with breach of obligations. However, with the rise of protectionism, promises of import substitution, and worsening export prospects under Deputy Prime Minister Yury Borisov, the de facto system was largely dismantled.

The RSPP yesterday told Kommersant that there are a lot of questions about the plans of the Ministry of Finance, representatives of Opora Rossii and Delovaya Rossiya also made separate comments (thus, they are worried that state support may become unavailable for companies that need it to survive , see Kommersant-Online). “In general, the adjustment of the system for providing subsidies in the current conditions is doubtful, it will require a long adjustment (it is necessary to reissue a large amount of regulations) and may create risks for the provision of support measures,” this is how the main problem is described in the RSPP, suggesting “at least” to postpone the application period new procedure for federal subsidies from January 1, 2023 to January 1, 2024. The Ministry of Finance, however, insists that the procedure will be truly unified, and "the adoption of separate legal acts for each subsidy is not provided." We also note that the trend to support efficient business, and not “zombie companies”, arose before (see “Kommersant” dated July 8, 2019), but became mainstream during the period of discussion of the post-COVID recovery around the world, including Russia (see. "Kommersant" dated October 7, 2020).

The government appointed Deputy Finance Minister Alexei Lavrov, who oversees public procurement, is responsible for the passage of the project in the State Duma - this is probably the reason for the appearance in the project of norms that are not directly related to the control of subsidies: for example, along the way, the amendment of paragraph 3 of Art. 166.1 of the BC, the Ministry of Finance is endowed with the “function of controlling (analyzing) financial and economic operations” of state-owned companies in the understanding of FZ-223 - so far only on direct instructions from the president, government and head of the Ministry of Finance. The amendments to the BC also take into account the recent (see “Kommersant” dated September 27) initiative of the Ministry of Finance to centralize accounting for budget obligations that go beyond the budget planning horizon - the requirement that long-term government contracts concluded by the GRBS comply with the new requirements is prescribed in the corresponding article of the BC.

Why businesses don't like competition

Representatives of business associations name several difficulties that may arise in the process of unifying the mechanism for distributing budget subsidies. So, according to Ivan Efremenkov, deputy executive director of Opora Rossii, it will be possible to assess the readiness of businesses for such an approach only after the preparation of by-laws. He also points to the risks that companies that “need subsidies to survive” will not be able to win in the competition. “Over the past two years, during the COVID-19 period and against the backdrop of the current economic situation associated with sanctions and disruption of supply chains, subsidies have become not an encouragement for the best, but a tool to support all affected businesses. On the other hand, Ivan Efremenkov adds, there are also risks that “support for the best” will result in some companies receiving regular support, while others do not.”

Alexey Mostovshchikov, a member of the General Council of Delovaya Rossiya, sees in the unification of receiving subsidies, grants and support measures both pluses (“the easier it is to get support measures, the more likely it is to have a positive effect”) and minuses (“in fact, only those who perform well financially and are able to hire specialists to fill out and submit applications, thereby reducing the chances of receiving subsidies for other entrepreneurs who are experiencing financial difficulties or are filling out applications themselves”).

“Somewhat wary” about the project of the Ministry of Finance in the RSPP, explaining this by “risks of abuse of information posted on the single portal of the budget system”, including about projects, products and R&D directions of companies, both competitors and “unfriendly jurisdictions”. RSPP insists on limiting the public disclosure of such data and discussing their “sensitivity” with companies, including the possibility of taking into account in the draft the need to limit the disclosure of “information that does not formally contain information constituting a state secret and is not information of restricted access.” The union also notes that with subsidies for certain categories of recipients (industrial companies, SMEs, etc.), it is more efficient and less costly to work on specialized portals already funded by business.

Evgenia Kryuchkova

Oleg Sapozhkov, Evgenia Kryuchkova



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