The Ministry of Finance wants to force the heads of Chechnya, Ingushetia, Dagestan, Tuva and new regions to be responsible for the budget deficit
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The Russian government intends to directly assign responsibility for the budget deficit to some governors. We are talking about the heads of four “old” subjects – Chechnya, Ingushetia, Dagestan and Tuva, as well as four “new” ones – Donetsk and Lugansk people’s republics, Kherson and Zaporozhye regions. They will have to undertake obligations to reduce the gap between regional incomes and expenses, and for failure to fulfill these obligations, the federal center threatens to leave the regions without subsidies. However, experts are not sure that such “heavyweights” as the heads of Chechnya and Dagestan can be easily forced to comply with these demands.
Last week, the Ministry of Finance published on the regulation.gov.ru portal a draft government decree linking the transfer of federal subsidies to the constituent entities of the Russian Federation to equalize budgetary security with their efforts to increase revenues and reduce regional budget expenses. Let us explain: with a significant difference in the population and financial condition of the constituent entities of the Russian Federation, three quarters of them receive such subsidies in order to equalize the amount of funds spent per citizen, regardless of his place of residence.
For eight regions – Dagestan, Ingushetia, Chechnya, Tuva and four new territories annexed to the Russian Federation – the standard form of agreement on the provision of such subsidies in 2024 will be expanded: according to the draft of the Ministry of Finance, the document directly assigns responsibility for the work of regional authorities to reduce the gap between their income and expenses personally for their managers. In particular, standard agreements on subsidies for them will be expanded through additional obligations – governors are asked to sign promises of targeted spending of federal money on social programs, increasing the efficiency of budgetary institutions, refusing to expand the number of state employees and officials and raising their salaries above inflation – as well as increasing revenue collection and agreeing with the Ministry of Finance on the draft budget for 2025 and regional laws that affect the final volume of subsidies.
Governors will also be required to apply “disciplinary measures… to government officials whose actions (inaction) led to a violation of these obligations,” and if the Ministry of Finance is not provided with a signed agreement or data on its implementation, the regions will be excluded from the subsidy list and federal money will not be will receive. All governors receiving them must sign agreements or refuse subsidies by December 18.
As the Ministry of Finance explained to Kommersant, the reason for the tightening of requirements for eight constituent entities of the Russian Federation is the high share of federal subsidies in their budgets. “During two of the last three reporting financial years, it exceeded 40% of its own income,” the department’s press service clarified. And if in the annexed territories the intention of the Ministry of Finance to strengthen budgetary control is explained by the need to harmonize their finances with Russian rules, then the four “old” republics account for 20%, or 164 billion rubles. of the total volume of subsidies of 822 billion rubles. (Tuva – 20.5 billion rubles, Dagestan – 86 billion, Ingushetia – 14.4 billion, Chechnya – 43 billion rubles). In 2024, this share will increase to 22.4%, or RUB 134.8 billion. (Tuva – 19.3 billion rubles, Dagestan – 69.2 billion, Ingushetia – 11.6 billion, Chechnya – 34.7 billion rubles) from the so far approved volume of 600 billion rubles. subsidies for 67 regions of the Russian Federation.
Kommersant asked several regions named in the Ministry of Finance project for comment. The government of Tuva did not promptly respond to Kommersant’s request. The government of Dagestan promised to comment on the initiative this week.
Natalya Zubarevich, professor of the Department of Economic and Social Geography of Russia, Faculty of Geography, Moscow State University, suggests treating this initiative philosophically. “The Ministry of Finance is trying to restore at least some order. This is another attempt, but they cannot cancel the personal subsidy to Chechnya, which in different years reached from 13 billion to 15 billion rubles.” According to the expert, “anything can be signed, but the final decisions will not be made entirely by the Ministry of Finance.” “In any case, in Chechnya and, with a very high probability, in Dagestan. I can’t guarantee the rest, because the weight of their leadership is clearly not so great,” explains Ms. Zubarevich. As for the new entities, “there’s not even anything to comment on,” the professor states. According to its data, the level of subsidies in the Zaporozhye and Kherson regions reaches 93–95%, in the Donetsk and Lugansk People’s Republics – 85–88%. “They’ll tell you to give more, and the Ministry of Finance won’t go anywhere,” Natalya Zubarevich is sure.
Political scientist Ilya Grashchenkov believes that the initiative of the Ministry of Finance is connected with cutting the expenditure parts of the budgets of the most subsidized regions, which traditionally include the North Caucasus: “For many years, Chechnya, Ingushetia and Dagestan were almost completely subsidized, while multi-billion dollar projects were financed there. Each head has always promised to increase the amount of federal money coming in.” The new approach “will certainly have an effect,” since, for example, governors will have to “reduce the apparatus or at least not bloat it,” the expert argues. But it is possible, in his opinion, that there may be dissatisfaction on the part of the republics themselves: for example, “Chechnya, whose subsidies have always been growing, may be perceived negatively.” Tuva will find itself in a very difficult situation, most of whose expenses are related to its difficult geographical location: many of the officials whose layoffs are discussed in the project receive their salaries from subsidies, and they have no other sources. Well, new regions are a completely different story: they require the restoration of most infrastructure facilities, while there is a large shortage of professional personnel, Mr. Grashchenkov reminds: “The elites perceive work there as an opportunity to both earn money and gain career growth in quieter places. Therefore, critics of the Ministry of Finance may not support this approach for being too average in its attitude towards new regions. There are still hostilities going on there, and they must sign an agreement that they will cut some costs.”
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