Consolidated Budgets of the Subjects of the Russian Federation in the First Half of 2023. Budget Risks are Increasing

Abstract

The performance of the consolidated budgets of the subjects of the Russian Federation in the first half of this year was characterized by real growth rates of income taxreceipts and only nominal growth personal income tax receipts.The increase in federal transfer receipts was partly determined by the financing of the budgets of the new regions of the Russian Federation. In addition to the growth of economic activity, the dynamics of own revenues of regional budgets in the first half of the year was influenced by factors such as the cancellation of income tax payments within consolidated groups of taxpayers and the accelerated procedure for personal income tax reimbursement.The growth of expenditures of regional budgets lagged behind the growth of revenues, but significantly outpaced last year’s figures, which resulted in a reduction in the surplus of subfederal budgets compared to the previous year. The trend towards an increase in the volume of state and municipal debt has continued against the background of an increase in debt to the Ministry of Finance of the Russian Federation. The growth of public debt is taking place both in relatively prosperous regions and in problematic ones. The reduction in the volume of debt obligations by individual subjects of the Russian Federation cannot yet change the overall picture. The approved law on the federal budget for 2024 and subsequent years assumes a reduction in federal support for regional budgets against the background of an increase in spending needs and contains significant risks for the execution of sub-federal budgets.