Russian Regions Face High Budget Deficits and Little Support From the Central Government
Publication: Eurasia Daily Monitor Volume: 17 Issue: 66
The pandemic and the partially related collapse in oil prices will lead to the highest budget deficit in the Russian regions for the past 20 years, despite the support of the central government, says a recent assessment by the global credit rating agency S&P. Regions of the Russian Federation will have to amass more debt and spend down all their reserves, according to the report, cited by RBK. The total deficit of regional and municipal budgets is expected to reach 6–9 percent of total revenues in Russian regions (RBK, May 7).
Moscow’s extra financial aid for the Russian regions is currently capped at 200 billion rubles ($2.7 billion) plus 80 billion rubles ($1.1 billion) for medical supplies. Russian federal authorities also offered a deferral on the repayment for budget loans, an extension of short-term treasury loans, and the right for the regions to extend horizontal budget loans among themselves starting from 2021. Yet, these measures, according to S&P, will not be sufficient to keep Russian regions afloat. Indeed, Russian regional economist Natalya Zubarevich estimates that the country’s federal subjects (oblasts, republics, krais, etc.) will lose at least 1.3 trillion rubles ($17.7 billion) in revenues in 2020, compared to the previous year (Ekho Moskvy, April 29). Read more