© Dmitry Rogulin/TASS

MOSCOW, December 21. /Offset. TASS Daria Karamysheva, Lana Samarina/. The Finance Ministry has declared regions that the crisis period in the economy coming to an end and in this regard, the government changed the rules and scope of support of subjects, expecting them more independent and balanced approach to finances. Experts polled by TASS believe that the regions will be able to cope with the problem, if the economy hits a new wave of crisis.

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As regions achieve a surplus and balanced budgets

The budget for 2018-2020 involves reducing the overall amount of transfers to regions from the Federal budget by a quarter, refusal to issue new budgetary loans and the launch of the restructuring programme already accumulated.

According to most experts, the problem of the debt of the regions has accumulated many years and the government has proposed a set of measures to address it. In particular, regions have tried to encourage the placement of regional bonds in order to reduce the amount of interest on the debt, to replace them with government loans, to oblige the regions to adopt a long-term strategy to reduce debt levels and so on. However, none of them fundamentally has not solved the problem. At the moment the total debt of the regions is more than 2 trillion rubles.

Seven subjects of Russia have commercial and budgetary debt, the amount of which exceeds the income of these regions. According to statistics of the Ministry of Finance, 16 regions the amount of debt is 85-100% of the annual income, from 31 regions this share is between 50% to 80%, and 31 in the region – less than 50% of revenues. Four regions, the share of current liabilities is more than 50% of income.

The restructuring program

Finance Minister Anton Siluanov has repeatedly said that the program of granting of budgetary credits should be phased out, as was a measure of the crisis of previous years. Its objective was the replacement for the “expensive” loans taken by the regions to commercial banks on loans from the budget at an interest rate of 0.1% per annum. However, the authorities have repeatedly stressed that, unlike subsidies and grants, this tool is provided to the regions on a revolving basis and the regions will be obliged to return it. In 2018 would be the deadline for the return of the main part taken by the regions with budget loans. In order not to destabilize the financial situation in the regions during election years, the subjects announced the launch of the restructuring program accumulated budgetary credits for a period of 7-12 years. The program will take effect from 1 January 2018.

In the first two years the regions will have to pay only 5% of the debt annually. According to the Finance Ministry, announced by the President of the restructuring will enable the regions to save about 430 billion rubles in the next two years. The right to extend the restructuring until 12 years will get only those regions that show in 2018-2019 income growth above the rate of inflation.

Under the terms of the restructuring program, the subjects with the volume of the state debt on November 1, 2017 at least 35% of the income can make additional borrowing to meet social obligations. However, the increase in the national debt is only possible up to 35% of revenues. Subjects who have a decrease in revenues of regional budgets, can also increase the volume of public debt to meet social obligations to the extent of the shortfall in income.

Sanctions for Laggards

The Ministry of Finance has exposed the regions of the conditions of participation in the program. Regions will need to monitor two important parameters: its budget deficit and debt levels. The Ministry has provided in the agreements on restructuring proposals for the reduction of public debt of regions of at least 2% of the total.

Another condition for the participation of regions in the program will be stricter requirements for new commercial loans. According to the Finance Ministry, they must pass at a rate not higher than the key rate of the Central Bank plus 1 percentage point.

For failure regions in terms of restructuring the sanctions. So, for the breakdown of the payment schedule for the debt restructuring will have to return the entire loan. And failure to monitor key indicators – the level of budget deficit and debt levels of the region will be fraught with a return of up to 20% of the restructured budget loans. For the failure of the restructuring program will be provided and disciplinary measures against officials of the regions, promised the Minister of Finance.

Deputy Prime Minister Dmitry Kozak did not rule out personnel consequences and to guide those regions, which allowed a high level of regional debt and not applying for participation in the program of restructuring.

Will the program work?

Director of the Center for regional reform studies, Ranepa Alexander Deryugin sure that the new program of support regions, of course, will work but mostly it will depend on if Russia expects another wave of crisis or not. “So everything is growing, everything is fine, but if everything will collapse once again, the regions will have to quickly restructure their debts,” – said the expert.

The restructuring program is beneficial to the regions and they will be willing to join it, the experts agree, as primarily we are talking about a delay. Budget loans issued for a period of 3-5 years, and now the timing of payments will be charged over longer periods and during the first few years 2018-2019. – will be paid a small percentage of the debt. “Therefore, the regions will assume that it is now better to go for restructuring, but in 2-3 years that’ll be that. Clearly felt the desire of the Federation a little bit under the rug to bury the problem, defer to the far. But when they come, can be prolong the restructuring, maybe the situation will change. But early years until everything is fine, regions will pay a little,” commented Deryugin.

Center for strategic research, headed by former Russian Finance Minister Alexei Kudrin, in turn, offers to consider the possibility of reducing the expenditure commitments of the regions, that is, to revise the division of powers. In particular, to take on the Federal government obligations for the payment of HIF contributions for non-working population. This will allow regions to release about 630 billion rubles per year. “This measure would reduce the intergovernmental transfers and budgetary loans would not need so actively used”, – said the expert CSR Ilya Sokolov.

According to authorities, three to four regions of Russia participate in the restructuring programme will not be enough to solve their financial difficulties. The President, in turn, in the framework of the annual press conference promised additional aid to these regions.

Find out who is the biggest debtor, the media has not reached at the press conference, the President mentioned only Novgorod oblast. However, it is known that the most difficult debt situation today in Khakassia and Mordovia. Urgent support is also asked Kabardino – Balkaria, Kostroma, Volgograd, Orel and Astrakhan region.