State debt of the regions. The RIA Rating agency compared the regions of the Russian Federation in terms of debt burden
RIA Rating - March 2. According to the Ministry of Finance of the Russian Federation, the total volume of public debt of all constituent entities of the Russian Federation at the end of 2016 increased by 1.5% and as of January 1, 2017 amounted to 2.353 trillion rubles. This is the smallest increase in government debt over the past few years. For comparison, in 2015 the state debt of the regions of the Russian Federation increased by 11%, in 2014 - by 20%, in 2013 - by 28.6%. The decrease in the growth rate of regional borrowing can be explained by the more conservative approach of regional authorities to increasing the debt burden on the budgets of the constituent entities of the Russian Federation, which is justified in the context of the continued unstable economic situation. In addition, according to experts from the Rating Agency "RIA Rating" of the media group MIA "Russia Today", a reduction of Moscow's public debt by 78.6 billion rubles, mainly due to the repayment of external debt, had a certain impact on the overall result. Just a year ago, Moscow was one of the leaders in terms of the absolute value of public debt among all Russian regions. At the beginning of 2017, the capital’s public debt amounted to 61.9 billion rubles.
The volume of municipal public debt at the end of 2016 increased by 6.7% and amounted to 364.3 billion rubles. The total volume of public debt of all constituent entities of the Russian Federation and the debt of municipalities that are part of the constituent entities of the Russian Federation as of January 1, 2017 amounted to 2.72 trillion rubles, which is 2.2% more than a year earlier.
A moderate increase in public debt took place against the backdrop of growing budget revenues of the constituent entities of the Russian Federation. At the end of 2016, the total volume of tax and non-tax revenues of all constituent entities of the Russian Federation increased by 9.6%, while a decrease was recorded only in seven regions. Against this background, the volume of total expenditures of the budgets of all constituent entities of the Russian Federation increased by 5.6%.
More and more budget loans
In the structure of regional public debt, an increasing share falls on budget loans. In 2016, Russian regions actively replaced commercial debt with cheap budget loans. Due to this, the share of budget loans in the total public debt as of January 1, 2017 amounted to 42.1%, and the share of commercial loans accounted for 34.9%. At the end of 2015, the ratio was diametrically opposite. The activation of the debt market led to an increase in regional borrowing, which could not but affect the increase in the share of government securities in the debt structure from 18.7% at the end of 2015 to 19.4% at the end of 2016. The share of government guarantees decreased from 4.4% to 3.8% in 2016. Information on the structure of regional public debt is given in the table >>
In 14 regions there is no debt to commercial banks. With the exception of Moscow, the Tyumen region and Khanty-Mansi Autonomous Okrug-Yugra, the main components of public debt in these regions are budget loans. Regions such as Moscow, Primorsky Krai and Kamchatka Krai have completely repaid their commercial debts over the past year. At the same time, in a number of regions there is a significant bias in the debt structure towards commercial loans, which may cause concern, especially if the region’s position in the debt burden rating is close to the bottom ten.
To determine the level of debt burden, experts from the Rating Agency "RIA Rating" of the MIA Rossiya Segodnya media group compiled a rating of constituent entities of the Russian Federation by the level of debt burden, which reflects the distribution of regional debts and their dynamics in 2016. The rating used data from the Federal Treasury and the Ministry of Finance of the Russian Federation on debt obligations and revenues of regional budgets. As a measure of debt burden, the rating used the ratio of the public debt of a constituent entity of the Russian Federation as of January 1, 2017 to tax and non-tax revenues of the regional budget (own income) for 2016.
The debt burden on the budgets of Russian regions has decreased
The overall level of regional debt burden has decreased over the past year. The ratio of the total public debt of all regions as of January 1, 2017 to the total volume of tax and non-tax revenues for 2016 was 33.8%, which is 2.7 percentage points lower than a year earlier. But at the same time, the range of values in the regional context remains quite wide. The level of debt burden varied from 0% in the Sakhalin region and Sevastopol to 176% in the Republic of Mordovia. Compared to the results of last year, the leading and trailing regions in the ranking have not changed.
The Republic of Mordovia has been at the bottom of the ranking in terms of debt burden of Russian regions for several years now, but it is worth noting that positive changes are being observed here too. At the end of 2016, the level of debt burden decreased by 6.5 percentage points, which was due to a 15.7% increase in tax and non-tax revenues in the region. The public debt of the Republic of Mordovia itself increased by 11.6% due to budget loans and a bond issue worth 5 billion rubles, placed in September 2016.
The number of regions whose public debt exceeds their own income has decreased
In addition to the Republic of Mordovia, in seven more Russian regions the amount of public debt exceeds their own budget revenues, but, in comparison with 2015, their number has almost halved. As of January 1, 2016, there were 14 such regions. In addition, there are positive trends in this part of the rating: in five out of eight regions, the debt burden decreased over the past year, and in all cases this was due to the faster growth of tax and non-tax revenues compared to increase in government debt.
Judging by the debt structure, not everyone in the bottom group of regions took advantage of the opportunity to replace more expensive commercial loans with lending from the Ministry of Finance of the Russian Federation. If budget loans occupy more than half of the debt structure of the Smolensk region and the Republic of Karelia, and their share in 2016 increased to 58.8% and 51.7%, respectively, then in a number of regions there are structural distortions towards commercial loans. Thus, in the Astrakhan region the share of commercial loans is 50.5%, in the Kostroma region - 52.6%, in the Jewish Autonomous Region - 61%, in the Republic of Mari El - 67.7%. In addition, in the Republic of Khakassia, almost half of the government debt (49.8%) is accounted for by bond issues and another 37.3% by commercial loans. The debt burden in Khakassia in 2016 increased by 28.7 percentage points and amounted to 145.5%. If the debt policy in the republic does not undergo any fundamental changes, then in the near future the Republic of Khakassia may displace the Republic of Mordovia from the position of the bottom region in the rating.
As of January 1, 2017, in 54 regions of the Russian Federation, public debt exceeded 50% of the volume of tax and non-tax budget revenues, of which in 36 constituent entities of the Russian Federation, public debt exceeded 70% of their own revenues. Compared to the previous year, the number of regions in this group decreased slightly - as of January 1, 2016, in 57 regions of the Russian Federation, public debt exceeded 50% of tax and non-tax budget revenues, of which the ratio of public debt to tax and non-tax revenues was more than 70% in 44 regions.
New regions emerged in the group of leaders
A low level of debt burden is still observed in nine Russian regions, but their composition has changed slightly compared to last year. Less than 10% of the volume of tax and non-tax budget revenues is public debt in the Tyumen region, St. Petersburg, Moscow, Altai Territory and Khanty-Mansiysk Autonomous Okrug-Ugra. The places that left the leading group of the Nenets Autonomous Okrug and the Republic of Crimea were taken by the Leningrad Region and Primorsky Territory. There is no public debt in the Sakhalin region and Sevastopol. Five regions in the group managed to reduce their debt burden. In the Khanty-Mansiysk Autonomous Okrug - Ugra and the Tyumen Region, the debt burden has increased.
In most regions of the Russian Federation, the debt burden has decreased
In 2016, the level of debt burden decreased in 63 constituent entities of the Russian Federation. Positive trends are mainly associated with an increase in tax and non-tax revenues, but in some regions there is also a reduction in public debt. The leader in positive dynamics was the Republic of Ingushetia, whose debt burden decreased by 36.8 percentage points due to both a decrease in public debt by 26% and an increase in its own income by 9.4%. In addition, the debt burden decreased by more than 20 percentage points in the Republic of North Ossetia-Alania, the Vologda Region, the Chukotka Autonomous Okrug and the Altai Republic. In thirteen Russian regions, the debt burden decreased by 10-20%.
In 20 constituent entities of the Russian Federation, the level of debt burden has increased, of which in six - by more than 10%. The Republic of Khakassia once again showed the most significant increase, increasing the debt burden by 28.7 percentage points. In addition, in the Nenets Autonomous Okrug the debt burden increased by 25.2 percentage points and in the Astrakhan region - by 24.1 percentage points.
The volume of public debt increased in 49 regions of the Russian Federation
According to experts from the Rating Agency RIA Rating, in 2016 the absolute volume of public debt increased in 49 regions, remained unchanged in the Vladimir region, and decreased in 33 regions. In Sevastopol and the Sakhalin region there is still no public debt.
The leader in positive dynamics was Moscow, whose public debt, including due to the full repayment of commercial loans, decreased by 56%. In addition, the volume of public debt in the Leningrad Region and Kamchatka Territory decreased by more than 30%. The Republic of Crimea, where until recently there was almost no public debt, increased the volume of public debt 13 times in 2016. In the Nenets Autonomous Okrug, the volume of public debt increased 3 times, and in the Tyumen region - by 83%. But the ratio of public debt to the volume of tax and non-tax revenues in these regions is far from risky levels.
The Krasnodar Territory is still the leader in the absolute value of public debt and over the past 2016 its volume increased by 3.3%, reaching 150 billion rubles. But due to an increase in tax and non-tax revenues by 15.4%, the level of the region’s debt burden decreased by 10.3 percentage points, and at the end of 2016 it amounted to 88.2%. In three more regions - the Republic of Tatarstan, the Krasnoyarsk Territory and the Moscow Region - the volume of public debt exceeds 90 billion rubles, but the situation with the debt burden on regional budgets remains at an acceptable level.
In 2017, the growth rate of public debt will be low
Recently, the Ministry of Finance of the Russian Federation has increasingly heard calls for regions to more actively use bond loans, the servicing of which will cost the regions less than loans from commercial banks, and it is also said that budget loans are rather a temporary, anti-crisis measure that cannot exist permanently. basis. As confirmation of this, in the Federal Budget for 2017, only 200 billion rubles were reserved for budget lending compared to 338 billion rubles issued in 2016, and a further reduction can be expected. In addition, budget loans were issued for a period of 3 years, and this year the deadline for repayment of those loans that were received by the regions in 2014 in the amount of 230 billion rubles comes. Even taking into account the fact that the volume of subsidies intended in 2017 to equalize regional budgets has been increased by 100 billion rubles, the Ministry of Finance will not have enough money for everyone. At best, the current debt to the Ministry of Finance of the Russian Federation is refinanced using the budget reserve. Probably, due to the stabilization of financial markets, we can expect a surge in regional activity in the debt market and an increase in the share of government securities in the regional debt structure. Speaking about the absolute volume of debt, we can assume that in the context of expected weak economic growth, the conservative policy of regional authorities regarding borrowing will continue, and the overall situation with regional debts will continue to improve.
Experts from the Rating Agency "RIA Rating" expect an increase in the volume of public debt by 5-7% at the end of 2017, and tax and non-tax revenues of regional budgets within 10%. In this case, the debt burden will be 32-33%, and will not change significantly compared to the 2016 result.
RIA Rating is a universal rating agency of the media group MIA "Russia Today", specializing in assessing the socio-economic situation of regions of the Russian Federation, the economic condition of companies, banks, economic sectors, countries. The main activities of the agency are: creating ratings of regions of the Russian Federation, banks, enterprises, municipalities, insurance companies, securities, and other economic entities; comprehensive economic research in the financial, corporate and government sectors.
MIA "Russia Today" - an international media group whose mission is prompt, balanced and objective coverage of events in the world, informing the audience about different views on key events. RIA Rating, as part of MIA Rossiya Segodnya, is part of the agency’s line of information resources, which also includes: RIA News , R-Sport , RIA Real Estate , Prime , InoSMI. MIA "Russia Today" is the leader in citation among Russian media and is increasing the citation of its brands abroad. The agency also occupies a leading position in terms of citations in Russian social networks and the blogosphere.
The number of Russian regions with a high level of debt burden has decreased to five, according to the NRA report. Mordovia set the record for the amount of debt in Russia
Photo: Alexey Filippov / RIA Novosti
The number of Russian regions located in the so-called red zone (the excess of public debt over the regional budget’s own revenues) decreased from eight to five over the year, according to a study by the National Rating Agency (available from RBC). Based on the results of 2017, this list of the most heavily indebted regions includes Mordovia, Khakassia, Kostroma region, Karelia and Kabardino-Balkaria.
Mordovia retains its status as the largest debtor. Over the past year, the region’s debt problem has not only come no closer to being resolved, but has also become more complex, the NRA study notes. If at the end of 2016 the republic’s debt amounted to 176% of tax and non-tax revenues of the regional budget, then on January 1, 2018 it exceeded 200%, which is an absolute record for the regions of Russia.
In two other problem regions with a high debt burden - Kostroma region (111.07%) and Khakassia (122.55%) - for the first time in recent history. This means that due to the large volume of accumulated debts, they will be able to spend money only under the control of the Federal Treasury. “In fact, this means the introduction of external management of the regional budget and public debt. In the coming year, this practice may be extended to other regions with high public debt,” notes the NRA.
The Ministry of Finance’s plans to use a special tool for regions whose debt will exceed the established parameters became known at the end of last year. Speaking in December in the State Duma, regions whose total debt obligations on budget loans provided since the beginning of the year amounted to over 80% of their own budget revenues will be transferred to treasury support.
Also, on January 1, a program for restructuring budget loans to the regions was launched. It will last seven years, during which time the budget will receive 55 billion rubles. In the first two years, the regions will need to pay only 5% of their debt each year, which, according to the president, will allow the regions to “rescue” 438 billion rubles.
At the same time, in 2017, the number of regions located in the “green zone” (public debt in the amount of less than 10% of the regional budget’s own revenues) increased from nine to eleven. Now they include the Khanty-Mansiysk Autonomous Okrug, Vladimir Region, the Republic of Crimea, St. Petersburg, Primorsky Territory, Leningrad Region, Altai Territory, Moscow, Tyumen Region, as well as Sevastopol and Sakhalin Region (in the last two regions there is no public debt at all).
Regions refuse help from banks
The total volume of public debt of Russian regions last year decreased slightly (by 1.6%) and amounted to 2.315 trillion rubles, according to data from the Ministry of Finance. In the structure of the total public debt of the regions, as of January 1, 2018, budget loans accounted for 43.64% of the total. A year earlier, this figure was 42.09%, according to the NRA study.
“The federal center continues its policy of providing regions with cheap budget loans, however, the volume of such financing is gradually decreasing and mainly weak regions can apply for it, while strong ones have to look for alternative sources of debt financing,” the agency writes.
As for bank loans (almost 667 billion rubles as of January 1), their share in the structure of regional public debt continues to decline (from 34.36 to 28.81% in 2017). The share of government debt securities, on the contrary, is growing (from 19.44 to 23.69%). According to the authors of the study, this trend indicates that issuing bonds rather than obtaining bank loans is becoming a more attractive option for the regions.
“Debt securities of Russian regions are in demand among investors (most of the bonds of Russian regions are traded above par value), and current market conditions make their placement more profitable compared to attracting loans from commercial banks,” the report says.
At the end of 2017, 52 entities reduced their public debt, as follows from the operational report of the Accounts Chamber on budget execution. The largest reduction in public debt was noted in the Chelyabinsk region and Moscow - by 1.8 times, the Leningrad region - by 1.6 times, Primorye - by 29.8%, and the Yamalo-Nenets Autonomous Okrug - by 25%.
An increase in public debt, according to the Accounts Chamber, was recorded in 31 regions. Among the “distinguished” regions, auditors name St. Petersburg - by 2.5 times, Kamchatka Territory - by 37.9%, Mordovia - by 24.3%, the Republic of Adygea - by 21.7%, Tula Region - by 18.7 %.
At the same time, as the department notes, the regions remain dependent on financial assistance from the federal budget. “The income of eight entities as of January 1, 2018 was more than 60% generated from gratuitous receipts from other budgets of the budget system of the Russian Federation,” follows from the report. We are talking about Ingushetia, Chechnya, Tyva, Dagestan, the Altai Republic, Crimea, Karachay-Cherkessia and the Kaliningrad region.
Moreover, growing debts call into question the implementation of presidential decrees to increase salaries for public sector employees. After all, this increase should mainly be provided by the regional treasuries. Therefore, the Ministry of Finance, along with calls to increase financial discipline and the efficiency of regional spending, will in any case have to find ways to ease the debt burden of the regions.
According to the rating of regions by level of debt burden calculated by RIA-Rating using data from the Ministry of Finance, as of January 1, 2013, the ratio of the total debt of the regions to the volume of their own income (excluding gratuitous federal assistance) for 2011 was 26.1%. In absolute figures, it amounted to 1.355 trillion rubles, having increased by 15.6% in 2012. In 2011, debt growth was more modest - 7%.
The lowest ratio of regional debt to own income is in the Nenets Autonomous Okrug - 0%, the highest is in Mordovia: 179%. In the group of outsiders are the Republic of North Ossetia-Alania (108%), Vologda region (92%), Ryazan region - 91%. Ten more regions are higher in the ranking with debt amounting to more than 70% of their income. There are 19 regions with debts ranging from 50 to 70% of their income. High levels of debt in the regions could have accumulated for years. The Ministry of Finance has repeatedly accused some regions of irresponsible financial policies. Regions indicate their specificity. Thus, the former head of Mordovia, and now the head of the Samara region, Nikolai Merkushkin, explains the huge amount of debt by the need to develop agriculture in the absence of subsidies. According to him, the volume of agricultural production in the republic has increased eightfold in recent years.
Only 11 regions have a low debt burden - less than 10% of their own income. These include all the main oil and gas regions of the country: Tyumen region, Yamal-Nenets Autonomous Okrug, Khanty-Mansiysk Autonomous Okrug - Yugra, Nenets Autonomous Okrug, Sakhalin region. According to RIA-Rating experts, this is generally quite understandable - the powerful revenue bases of the budgets of these constituent entities of the Russian Federation make it possible not only to meet their own needs, but also to significantly feed the country’s budget.
The dynamics of debt in individual regions in 2012 varied significantly. As the analysis showed, 63 subjects increased its volume, 19 decreased it. The debt has more than doubled in seven regions. Among them, the leader is the Republic of Ingushetia with an increase of more than 15 times, mainly due to an increase in the volume of state guarantees. The leaders in reducing public debt in 2012 are the Khanty-Mansiysk Autonomous Okrug - Yugra, Irkutsk Region and Perm Territory. In 2012, they reduced their debts by 60.4, 42.3 and 40.1%, respectively. In three more constituent entities of the Russian Federation, debt decreased by more than 30%.
RIA-Rating experts predict that in 2013 the volume of total regional debt may grow from 26 to 28-29% of their income. The reason is the increase in social obligations of the regions since 2013 (presidential decrees to increase salaries, etc.) in the absence of opportunities to increase tax revenues.
Due to the increased social obligations of the regions, the government abandoned plans to stop providing them with budget loans in 2014. Therefore, in 2013, the structure of the regions’ debt portfolio is unlikely to change significantly towards an increase in the share of securities and commercial loans, as experts previously believed. The main source of funding will continue to be the federal budget. But further, as budget loans are reduced, securities will play an increasingly important role. However, as noted by Valery Tretyakov, director of RIA-Rating, for many regions the use of debt securities may not solve the problem - placement rates can be quite high due to the large volume of debt and weak budgetary and economic indicators. He also points out that a high level of debt in itself is not clear evidence of a region's pre-bankruptcy state. The key role is played not only by the absolute value of the debt, but also by its time structure, as well as the ratio of current payments and budget capabilities. According to the Ministry of Finance, in 2013 Russian regions will have to repay about a third of their total debt to the federal budget, or 420.6 billion rubles, which is 8% of the level of income excluding gratuitous receipts in 2012.
Experts explained who is to blame for the increase in regional debts and what to do about it
The debt of Russian regions grew by 16% last year and reached 1.36 trillion rubles, and this year the rate of growth will not decrease, according to a study prepared by RIA-Rating experts. Some regions increased their debt particularly actively; as a result, it grew several times and exceeded their own income several times. The leaders in increasing debt were Ingushetia (an increase of almost 16 times) and Tuva (an increase of 3.4 times).
The experts we interviewed differ in their assessment of how serious the regions' debt problem is and how long governors will be able to rely on the federal center, which is ready to lend a helping hand to the debtor.
Depardieu is no help to Mordovia
According to the rating of regions prepared by RIA-Rating, Mordovia has the highest debt burden - in this republic the debt is almost twice as high as its budget revenues. It is followed, albeit by a small margin, by North Ossetia, the Vologda and Ryazan regions, whose debts are almost equal to their income. In Russia as a whole, 14 regions have debts exceeding 70% of their budget revenues.
The situation in these regions is not simple: on the one hand, the Ministry of Finance forces (according to the Budget Code) “malicious” debtors to sign agreements on financial discipline and systematically reduce debt, and on the other hand, they also do not have sources to obtain funds and independently fulfill all obligations .
The only exception could be Mordovia, which managed to register millionaire Depardieu in Saransk. But experts in tax law disappointed: before removing the 13% Russian tax from his multimillion-dollar income, the actor must be forced to live in Russia 183 days a year or hired to work in the Mordovian theater.
“Of course, in the case of an actor filming in a Russian film or entering the service, for example, in the State Russian Drama Theater of Mordovia, taxes on his fees will go to the budget of this constituent entity of the Russian Federation,” notes the lawyer, head of the tax and customs law practice of the YUST law firm » Maxim Rovinsky.
Unfortunately, Depardieu has not yet expressed such desires. And it is unlikely that his potential earnings on the Mordovian stage would come close to the fees of this actor in Europe and Hollywood. But you won’t see them in Mordovia. “Neither Russian citizenship nor the fact of registration in Saransk makes Mr. Depardieu a resident of Russia, that is, they do not oblige him to pay tax on all his income received throughout the world, specifically in Mordovia,” explains Rovinsky.
Big debts - low salaries
Expert opinions about the dangers associated with the regional debt problem are divided. For example, the head of the laboratory of fiscal federalism at the Institute of Economic Policy. Yegor Gaidar Vladimir Nazarov believes that nothing terrible is happening yet and is unlikely to happen. “Only in the event of a crisis, the regions may have some problems, but then the whole country will have them, and they will be associated not only with the debts of the regions. And 1.3 trillion rubles. in absolute terms, it’s not that big a value,” he says.
Nazarov recalls that regional debt is distributed unevenly across Russia. Thus, Moscow has the largest debt - 188.3 billion rubles, followed by the Moscow region and Tatarstan. And these regions, according to the expert, are rich enough to cope with their debts.
On the other hand, the trend towards a constant increase in debt is cause for concern. “The situation is not critical yet, but what is important here is not the absolute number, but the dynamics. And this dynamics is unpleasant, especially if you compare it with what is happening in the economy,” says Igor Nikolaev, head of the FBK department. Growth rates are slowing down, investments are below forecasts, and inflation, on the contrary, is higher. “The situation in the economy is deteriorating, debts are increasing, but at the same time we must remember that budget obligations of an irreducible nature, especially social ones, have been raised to a high level,” he notes.
According to his forecast, regions standing on the edge of a debt hole can balance for another year or two. But in the next three years, debt problems will also be felt by residents of debtor regions. “At first the rate of indexation of social obligations will decrease, and then they will decide to freeze them altogether. This is exactly the prospect, this is not a matter of this year, but within three years it will already appear,” the expert believes.
Oksana Dmitrieva, deputy leader of the A Just Russia faction and first deputy chairman of the State Duma Committee on Budget and Taxes, is even more pessimistic. “The situation in the regions with debts has long been critical. The debt is associated with objective underfinancing of the subjects. In terms of primary income, the constituent entities of the Russian Federation receive 35% of the plan; in 2013, financial assistance to the regions is reduced, and the tasks are increased,” she notes.
Dmitrieva believes that if the regions fully fulfill all their social obligations, they will have to do this by cutting other expenses - investment programs and housing and communal services expenses will be reduced.
The Accounts Chamber was also among the pessimists. The agency has been warning regions for years that they cannot endlessly increase debt. The head of the Accounts Chamber, Sergei Stepashin, said in February that more than half of Russian regions may not be able to pay off their debts to the federal budget. And then it is questioned whether the regions will be able to fulfill the president’s May instructions - to increase salaries for teachers and doctors, create millions of modernized jobs, and increase the share of high-tech products.
Budget needle
It has long been a common expression that the Russian budget is sitting on an oil needle, while the regions have long been hooked on the budget needle: most of the regions’ debts are budget loans that they take from the federal center.
The opportunity to receive federal funds at a small percentage appeared for the regions after the 2008 crisis, when in 2010 the federal center generously allocated budget loans for a period of three years to cover deficits. It was assumed that by 2013 the situation in the regions would improve so much that they would be able to repay their debts. However, hopes did not come true, just as it was not possible to abandon the system of issuing loans.
Alexey Kudrin, who at that time held the post of Minister of Finance of the Russian Federation, reported at the beginning of July 2011 that budget loans from 2012 would be provided to regions only in connection with emergency situations. Kudrin stopped being a minister, but the loans remained, and now the regions are asking with all their might for extension and restructuring.
Which they do quite successfully. The cry for help from the “big brother” was heard - already in 2012, the Ministry of Finance restructured budget loans for 36 regions for 123 billion rubles.
“Regions are increasingly hooked on the budget needle. Moreover, they need doping in order to fulfill those very social obligations. And the budget is not unlimited, its prospects are directly related to what is happening in the economy,” Nikolaev notes.
The head of the Neokon expert consulting company, Mikhail Khazin, warns that every year the debt will become an increasingly heavy burden, and blames the Ministry of Finance for this. “The policy of the Ministry of Finance has led to the fact that the regions have increased their borrowing. I think that the federal center will not always cover them, it may also not have enough money. Regions should develop independently, but the current policy of the Ministry of Finance does not allow them to do this,” he says.
Most experts shrug their shoulders when trying to answer the question of how to get the regions out of this vicious debt circle: there are no quick solutions acceptable to everyone. Of all the options listed by analysts, only two have more or less a real chance of being implemented - changes in taxes and tightening the screws on financial discipline.
The region's debt is a taxpayer's problem
“We may be talking about increasing the tax burden. We will reform the property tax on individuals, then we will switch to a real estate tax, which in most countries is the basis of local finance,” notes Andrey Chernyavsky, leading researcher at the HSE Development Institute.
Deputy Head of the Ministry of Economic Development Andrei Klepach previously expressed his personal opinion that the regions will have to change the tax system in order to reduce imbalances in their budget system. In particular, we are talking about the rates of property tax, land tax, and planned real estate tax. In addition, some time ago the option of introducing a turnover tax on retail sales for the regions was actively discussed.
True, Vladimir Nazarov doubts the effectiveness of increasing the rates of existing regional taxes. “I think that if this changes the situation, it will be to a very small extent. In addition, the powers of the regions in this area are small, especially since it will not be possible to quickly change anything in the taxation system within the framework of the current powers, and if it succeeds, the negative social effect will offset this small influx of finances,” says the expert.
There is no particular hope for regional taxes because their revenues will disappear in the event of another wave of crisis, as happened in 2008. “The condition of donor regions in a crisis will deteriorate even faster than that of poor regions. Those who are supported by the budget, who have a small tax base due to the underdevelopment of their economic potential, will continue to receive their share from the budget. It’s somewhat paradoxical, but strong regions will feel the problems more painfully and acutely,” Nikolaev is sure.
Dmitrieva sees the sources not in changing existing rates, but in the redistribution of revenues and expanding the tax base of the regions. “There are a lot of opportunities for income redistribution, in particular the introduction of a progressive income tax or a luxury tax if it is introduced correctly. Now the tax base for the regions is not actually being expanded; they are being asked to cancel benefits and increase the rates on those taxes that they have, and these are property and land taxes. Which increases the burden primarily on small businesses,” she says.
However, the Ministry of Finance believes that talk about the redistribution of taxes most often hides the reluctance or inability of subjects to create conditions for investment. And where regional authorities actually do this, the ratio of tax revenues changes precisely in favor of the constituent entities of the Russian Federation. “This is the main incentive for the region - if we increase the revenue base and attract investors, then most of the (revenues) will go to the region’s budget,” noted the head of the ministry Anton Siluanov at a meeting of the State Council at the end of last year. As an example, he cited Kaluga (distribution 70 to 30%), Tula (95 to 5%) and Ulyanovsk (72 to 28%) regions.
Punish the undisciplined
At the same time, Siluanov has repeatedly called for tougher financial discipline. So, last year, the Ministry of Finance entered into agreements with five problem regions of Russia to limit the level of their debt obligations - over the next three years, these regions will reduce their debts, not increase them.
Another measure that the minister announced at a meeting of the State Council is that decisions on additional financial assistance from the federal center to a constituent entity of the Russian Federation should be made only if the regional economic growth has reached 5%.
“To have such an incentive. Otherwise, it turns out that it’s easier to get an order (about subsidies - MN) and not deal with the economy or production growth at all,” Siluanov said. Previously, he spoke out even more harshly: raising the question of trust in the governors of those regions that the leadership had brought to a pre-bankruptcy state.
“Unfortunately, the state will not allow the regions to default, but it must. As long as we issue budget loans, then extend them endlessly, and sometimes even forgive them, there will be no financial discipline,” Nazarov is sure.
In general, the debts of the regions are growing from year to year, everyone understands that this is bad, but so far no strict measures have been taken against any “debtor” or their leadership. And perhaps they will never be used. After all, even if a new crisis occurs, the state is unlikely to bankrupt the regions that have fallen into a debt trap; it will most likely forgive their debts and provide new low-interest loans.
Sergey Stepashin, Chairman of the Accounts Chamber of the Russian Federation (from a report to the Federation Council on March 6, 2013)
— We see that the constant increase in the burden on the budgets of the constituent entities of the federation and municipalities also results in an increase in borrowing. We've been talking more and more about external debts lately. But the Accounts Chamber is very concerned about the high level of public debt of the constituent entities of Russia, which as of January 1, 2013 amounted to 1.36 trillion rubles, and today has increased. By the way, the largest debt in absolute terms is in developed regions, which, oddly enough, have a powerful economic complex. Look, Moscow - debt is 194 billion rubles, Moscow region - 81 billion rubles, Tatarstan - 85 billion rubles, Krasnodar Territory - 65 billion rubles, Nizhny Novgorod region - 35 billion rubles. Debt in these regions, of course, is not so dangerous, since they have a significant income base, but at the same time, its constant increase causes us concern. But in some regions, public debt is almost equal to the volume of tax and non-tax revenues. In Kostroma it is already 97%, in the Saratov region - 91%, and in the republics of Mordovia and North Ossetia-Alania this debt exceeded this volume by 182 and 117%, respectively (data for February - “MN”). Bankrupts are essentially bankrupt. By the way, a third of the total volume of regional debt comes from bank loans, which can negatively affect the stability of not only the budgetary, but also the banking system of Russia.
Alexander Zhukov, First Deputy Chairman of the State Duma, - especially for MN
— The country’s total volume of regional debts of 26% of their own income looks safe. Many large regions that are donors to the budget system have a small share of debt to their income, given their large volumes of GRP, budget, etc. But there are many small regions whose debt approaches 100% of their own budget revenues. This, of course, suggests that they are not in a very good situation. All regions whose debt exceeds 50% of their own income are, as a rule, regions that finance the majority of their budgets through transfers from the federal budget. They themselves are unlikely to cope with the repayment of their debts and, one way or another, will raise the question of debt restructuring and deferment. In general, count on federal assistance. And most likely we will talk about budget loans. It is unlikely that they will issue their securities. But it should be noted that the load on regional budgets is now really high. Now they must increase salaries for public sector employees in accordance with presidential decrees. But they do not have enough of their own income base. But the volume of transfers has not increased or not increased sufficiently. This means that they have to cover the budget deficit again by increasing debt. Of course, regions must optimize their budgets and increase the efficiency of spending. But the upcoming increase in salaries for public sector employees requires very large expenses (according to the Ministry of Finance, regions must spend 367 billion rubles in 2013, 557 billion in 2014, and 789 billion rubles in 2015 to implement the presidential decree on increasing salaries. although regional incomes, according to the department, will increase: from more than 1 trillion rubles in 2013 to 1.9 trillion in 2014 and up to 3 trillion in 2015 - “MN”). You can, of course, completely stop all investment projects, but this is also not an option. In your RIA Novosti rating, all problems are correctly reflected.
According to the Ministry of Finance of the Russian Federation, the total volume of public debt of all constituent entities of the Russian Federation at the end of 2016 increased by 1.5% and as of January 1, 2017 amounted to 2.353 trillion rubles. This is the smallest increase in government debt over the past few years. For comparison, in 2015 the state debt of the regions of the Russian Federation increased by 11%, in 2014 - by 20%, in 2013 - by 28.6%. The decrease in the growth rate of regional borrowing can be explained by the more conservative approach of regional authorities to increasing the debt burden on the budgets of the constituent entities of the Russian Federation, which is justified in the context of the continued unstable economic situation. In addition, according to experts from the Rating Agency "RIA Rating" of the media group MIA "Russia Today", a reduction of Moscow's public debt by 78.6 billion rubles, mainly due to the repayment of external debt, had a certain impact on the overall result. Just a year ago, Moscow was one of the leaders in terms of the absolute value of public debt among all Russian regions. At the beginning of 2017, the capital’s public debt amounted to 61.9 billion rubles.
The volume of municipal public debt at the end of 2016 increased by 6.7% and amounted to 364.3 billion rubles. The total volume of public debt of all constituent entities of the Russian Federation and the debt of municipalities that are part of the constituent entities of the Russian Federation as of January 1, 2017 amounted to 2.72 trillion rubles, which is 2.2% more than a year earlier.
A moderate increase in public debt took place against the backdrop of growing budget revenues of the constituent entities of the Russian Federation. At the end of 2016, the total volume of tax and non-tax revenues of all constituent entities of the Russian Federation increased by 9.6%, while a decrease was recorded only in seven regions. Against this background, the volume of total expenditures of the budgets of all constituent entities of the Russian Federation increased by 5.6%.
More and more budget loans
In the structure of regional public debt, an increasing share falls on budget loans. In 2016, Russian regions actively replaced commercial debt with cheap budget loans. Due to this, the share of budget loans in the total public debt as of January 1, 2017 amounted to 42.1%, and the share of commercial loans accounted for 34.9%. At the end of 2015, the ratio was diametrically opposite. The activation of the debt market led to an increase in regional borrowing, which could not but affect the increase in the share of government securities in the debt structure from 18.7% at the end of 2015 to 19.4% at the end of 2016. The share of government guarantees decreased from 4.4% to 3.8% in 2016.
In 14 regions there is no debt to commercial banks. With the exception of Moscow, the Tyumen region and Khanty-Mansi Autonomous Okrug-Yugra, the main components of public debt in these regions are budget loans. Regions such as Moscow, Primorsky Krai and Kamchatka Krai have completely repaid their commercial debts over the past year. At the same time, in a number of regions there is a significant bias in the debt structure towards commercial loans, which may cause concern, especially if the region’s position in the debt burden rating is close to the bottom ten.
To determine the level of debt burden, experts from the Rating Agency "RIA Rating" of the MIA Rossiya Segodnya media group compiled a rating of constituent entities of the Russian Federation by the level of debt burden, which reflects the distribution of regional debts and their dynamics in 2016. The rating used data from the Federal Treasury and the Ministry of Finance of the Russian Federation on debt obligations and revenues of regional budgets. As a measure of debt burden, the rating used the ratio of the public debt of a constituent entity of the Russian Federation as of January 1, 2017 to tax and non-tax revenues of the regional budget (own income) for 2016.
The debt burden on the budgets of Russian regions has decreased
The overall level of regional debt burden has decreased over the past year. The ratio of the total public debt of all regions as of January 1, 2017 to the total volume of tax and non-tax revenues for 2016 was 33.8%, which is 2.7 percentage points lower than a year earlier. But at the same time, the range of values in the regional context remains quite wide. The level of debt burden varied from 0% in the Sakhalin region and Sevastopol to 176% in the Republic of Mordovia. Compared to the results of last year, the leading and trailing regions in the ranking have not changed.
The Republic of Mordovia has been at the bottom of the ranking in terms of debt burden of Russian regions for several years now, but it is worth noting that positive changes are being observed here too. At the end of 2016, the level of debt burden decreased by 6.5 percentage points, which was due to a 15.7% increase in tax and non-tax revenues in the region. The public debt of the Republic of Mordovia itself increased by 11.6% due to budget loans and a bond issue worth 5 billion rubles, placed in September 2016.
The number of regions whose public debt exceeds their own income has decreased
In addition to the Republic of Mordovia, in seven more Russian regions the amount of public debt exceeds their own budget revenues, but, in comparison with 2015, their number has almost halved. As of January 1, 2016, there were 14 such regions. In addition, there are positive trends in this part of the rating: in five out of eight regions, the debt burden decreased over the past year, and in all cases this was due to the faster growth of tax and non-tax revenues compared to increase in government debt.
Judging by the debt structure, not everyone in the bottom group of regions took advantage of the opportunity to replace more expensive commercial loans with lending from the Ministry of Finance of the Russian Federation. If budget loans occupy more than half of the debt structure of the Smolensk region and the Republic of Karelia, and their share in 2016 increased to 58.8% and 51.7%, respectively, then in a number of regions there are structural distortions towards commercial loans. Thus, in the Astrakhan region the share of commercial loans is 50.5%, in the Kostroma region - 52.6%, in the Jewish Autonomous Region - 61%, in the Republic of Mari El - 67.7%. In addition, in the Republic of Khakassia, almost half of the government debt (49.8%) is accounted for by bond issues and another 37.3% by commercial loans. The debt burden in Khakassia in 2016 increased by 28.7 percentage points and amounted to 145.5%. If the debt policy in the republic does not undergo any fundamental changes, then in the near future the Republic of Khakassia may displace the Republic of Mordovia from the position of the bottom region in the rating.
As of January 1, 2017, in 54 regions of the Russian Federation, public debt exceeded 50% of the volume of tax and non-tax budget revenues, of which in 36 constituent entities of the Russian Federation, public debt exceeded 70% of their own revenues. Compared to the previous year, the number of regions in this group decreased slightly - as of January 1, 2016, in 57 regions of the Russian Federation, public debt exceeded 50% of tax and non-tax budget revenues, of which the ratio of public debt to tax and non-tax revenues was more than 70% in 44 regions.
New regions emerged in the group of leaders
A low level of debt burden is still observed in nine Russian regions, but their composition has changed slightly compared to last year. Less than 10% of the volume of tax and non-tax budget revenues is public debt in the Tyumen region, St. Petersburg, Moscow, Altai Territory and Khanty-Mansiysk Autonomous Okrug-Ugra. The places that left the leading group of the Nenets Autonomous Okrug and the Republic of Crimea were taken by the Leningrad Region and Primorsky Territory. There is no public debt in the Sakhalin region and Sevastopol. Five regions in the group managed to reduce their debt burden. In the Khanty-Mansiysk Autonomous Okrug - Ugra and the Tyumen Region, the debt burden has increased.
In most regions of the Russian Federation, the debt burden has decreased
In 2016, the level of debt burden decreased in 63 constituent entities of the Russian Federation. Positive trends are mainly associated with an increase in tax and non-tax revenues, but in some regions there is also a reduction in public debt. The leader in positive dynamics was the Republic of Ingushetia, whose debt burden decreased by 36.8 percentage points due to both a decrease in public debt by 26% and an increase in its own income by 9.4%. In addition, the debt burden decreased by more than 20 percentage points in the Republic of North Ossetia-Alania, the Vologda Region, the Chukotka Autonomous Okrug and the Altai Republic. In thirteen Russian regions, the debt burden decreased by 10-20%.
In 20 constituent entities of the Russian Federation, the level of debt burden has increased, of which in six – by more than 10%. The Republic of Khakassia once again showed the most significant increase, increasing the debt burden by 28.7 percentage points. In addition, in the Nenets Autonomous Okrug the debt burden increased by 25.2 percentage points and in the Astrakhan region - by 24.1 percentage points.
The volume of public debt increased in 49 regions of the Russian Federation
According to experts from the Rating Agency RIA Rating, in 2016 the absolute volume of public debt increased in 49 regions, remained unchanged in the Vladimir region, and decreased in 33 regions. In Sevastopol and the Sakhalin region there is still no public debt.
The leader in positive dynamics was Moscow, whose public debt, including due to the full repayment of commercial loans, decreased by 56%. In addition, the volume of public debt in the Leningrad Region and Kamchatka Territory decreased by more than 30%. The Republic of Crimea, where until recently there was almost no public debt, increased the volume of public debt 13 times in 2016. In the Nenets Autonomous Okrug, the volume of public debt increased 3 times, and in the Tyumen region - by 83%. But the ratio of public debt to the volume of tax and non-tax revenues in these regions is far from risky levels.
The Krasnodar Territory is still the leader in the absolute value of public debt and over the past 2016 its volume increased by 3.3%, reaching 150 billion rubles. But due to an increase in tax and non-tax revenues by 15.4%, the level of the region’s debt burden decreased by 10.3 percentage points, and at the end of 2016 it amounted to 88.2%. In three more regions - the Republic of Tatarstan, the Krasnoyarsk Territory and the Moscow Region - the volume of public debt exceeds 90 billion rubles, but the situation with the debt burden on regional budgets remains at an acceptable level.
In 2017, the growth rate of public debt will be low
Recently, the Ministry of Finance of the Russian Federation has increasingly heard calls for regions to more actively use bond loans, the servicing of which will cost the regions less than loans from commercial banks, and it is also said that budget loans are rather a temporary, anti-crisis measure that cannot exist permanently. basis. As confirmation of this, in the Federal Budget for 2017, only 200 billion rubles were reserved for budget lending compared to 338 billion rubles issued in 2016, and a further reduction can be expected. In addition, budget loans were issued for a period of 3 years, and this year the deadline for repayment of those loans that were received by the regions in 2014 in the amount of 230 billion rubles comes. Even taking into account the fact that the volume of subsidies intended in 2017 to equalize regional budgets has been increased by 100 billion rubles, the Ministry of Finance will not have enough money for everyone. At best, the current debt to the Ministry of Finance of the Russian Federation is refinanced using the budget reserve. Probably, due to the stabilization of financial markets, we can expect a surge in regional activity in the debt market and an increase in the share of government securities in the regional debt structure. Speaking about the absolute volume of debt, we can assume that in the context of expected weak economic growth, the conservative policy of regional authorities regarding borrowing will continue, and the overall situation with regional debts will continue to improve.
Experts from the Rating Agency "RIA Rating" expect an increase in the volume of public debt by 5-7% at the end of 2017, and tax and non-tax revenues of regional budgets within 10%. In this case, the debt burden will be 32-33%, and will not change significantly compared to the 2016 result.
A copy of someone else's materials
The Russian Ministry of Finance published information on the volume of public debt of the constituent entities of the Russian Federation as of January 1, 2018. Materials are available at the link.
According to the data, the total debt of all regions of Russia is 2.315 trillion rubles. Over the year, the amount of debt increased by 174 billion rubles. Compared to January 1, 2011, the figure has more than doubled.
Almost all of this debt is internal. The only region that has debt in foreign currency is Crimea. The republic has an external debt of $4.7 million.
The volume of debt of municipalities is about 367.95 billion rubles.
We post on the website a summary table containing information on the total debt of the entities as of January 1, 2018.
| The subject of the Russian Federation | Volume of public debt, thousand rubles |
| Central Federal District | 484 651 281,47 |
| Belgorod region | 39 762 487,38 |
| Bryansk region | 11 747 650,16 |
| Vladimir region | 4 161 910,77 |
| Voronezh region | 33 489 491,35 |
| Ivanovo region | 16 765 973,92 |
| Kaluga region | 30 177 622,45 |
| Kostroma region | 21 989 339,33 |
| Kursk region | 9 264 115,09 |
| Lipetsk region | 16 401 913,50 |
| Moscow region | 97 310 995,22 |
| Oryol Region | 18 341 519,84 |
| Ryazan Oblast | 24 361 852,86 |
| Smolensk region | 29 500 159,97 |
| Tambov Region | 16 540 850,87 |
| Tver region | 25 645 450,63 |
| Tula region | 18 676 396,00 |
| Yaroslavl region | 36 165 994,14 |
| Moscow | 34 347 558,00 |
| Northwestern Federal District | 244 058 986,49 |
| Republic of Karelia | 24 987 082,14 |
| Komi Republic | 38 549 944,99 |
| Arhangelsk region | 40 916 650,03 |
| Vologda Region | 23 832 464,17 |
| Kaliningrad region | 22 581 867,95 |
| Leningrad region | 3 910 922,08 |
| Murmansk region | 18 982 689,78 |
| Novgorod region | 15 757 293,30 |
| Pskov region | 16 372 264,05 |
| Saint Petersburg | 34 842 808,00 |
| Nenets Autonomous Okrug | 3 325 000,00 |
| Southern Federal District | 281 284 205,16 |
| Republic of Adygea (Adygea) | 3 819 673,14 |
| Republic of Kalmykia | 3 848 542,22 |
| Republic of Crimea | 4 312 790,15 |
| Krasnodar region | 149 149 386,30 |
| Astrakhan region | 27 756 940,00 |
| Volgograd region | 53 359 154,01 |
| Rostov region | 39 037 719,33 |
| Sevastopol | 0,00 |
| North Caucasus Federal District | 83 184 671,19 |
| The Republic of Dagestan | 12 193 740,29 |
| The Republic of Ingushetia | 2 251 341,00 |
| Kabardino-Balkarian Republic | 12 193 328,37 |
| Karachay-Cherkess Republic | 5 528 244,42 |
| Republic of North Ossetia - Alania | 9 290 866,93 |
| Chechen Republic | 4 871 111,34 |
| Stavropol region | 36 856 038,84 |
| Volga Federal District | 545 008 183,00 |
| Republic of Bashkortostan | 18 152 569,25 |
| Mari El Republic | 13 453 322,44 |
| The Republic of Mordovia | 49 990 019,59 |
| Republic of Tatarstan (Tatarstan) | 93 316 484,59 |
| Udmurt republic | 48 940 006,81 |
| Chuvash Republic - Chuvashia | 14 120 803,54 |
| Perm region | 17 877 096,60 |
| Kirov region | 26 055 690,80 |
| Nizhny Novgorod Region | 76 026 497,78 |
| Orenburg region | 27 015 434,37 |
| Penza region | 20 225 514,63 |
| Samara Region | 64 392 236,97 |
| Saratov region | 50 330 082,73 |
| Ulyanovsk region | 25 112 422,92 |
| Ural federal district | 153 765 080,27 |
| Kurgan region | 16 586 948,84 |
| Sverdlovsk region | 75 602 489,90 |
| Tyumen region | 1 600 209,68 |
| Chelyabinsk region | 15 606 479,85 |
| Khanty-Mansiysk Autonomous Okrug - Ugra | 19 095 283,00 |
| Yamalo-Nenets Autonomous Okrug | 25 273 669,00 |
| Siberian Federal District | 364 701 203,56 |
| Altai Republic | 1 509 632,81 |
| The Republic of Buryatia | 11 311 501,11 |
| Tyva Republic | 2 274 372,00 |
| The Republic of Khakassia | 24 612 960,74 |
| Altai region | 2 010 715,44 |
| Transbaikal region | 28 284 884,46 |
| Krasnoyarsk region | 99 633 835,52 |
| Irkutsk region | 18 585 587,01 |
| Kemerovo region | 55 991 352,77 |
| Novosibirsk region | 47 135 826,13 |
| Omsk region | 44 978 839,19 |
| Tomsk region | 28 371 696,38 |
| Far Eastern Federal District | 158 750 851,62 |
| The Republic of Sakha (Yakutia) | 51 816 353,85 |
| Kamchatka Krai | 4 572 959,96 |
| Primorsky Krai | 4 384 337,40 |
| Khabarovsk region | 41 108 239,77 |
| Amur region | 27 665 834,89 |
| Magadan Region | 13 300 049,00 |
| Sakhalin region | 0,00 |
| Jewish Autonomous Region | 5 210 873,74 |
| Chukotka Autonomous Okrug | 10 692 203,00 |
| Total | 2 315 404 462,75 |