The substitution of more expensive commercial loans loans from the Federal budget led to the fact that many subjects simply sat down on the neck of the state
Photo: lime/Alex Maishev
If a new version of the Budget code came into effect now, not in 2019, almost a third of the regions would be considered unsustainable from the point of view of the national debt. To such conclusion analysts of the NRA (National rating Agency) that is specially for “Izvestia” has analyzed the obligations of the constituent entities of the Russian Federation.
Problem experts see is that the market loans with great speed, is replaced by duty to the budget. The most problematic regions already densely sat on a “budget needle”, treating state money as a free source to solve their problems. If the Ministry of Finance, this situation is tired, the chronic problem of public debt of regions can be malorazlichimyh, believe in the NRA.
On the one hand, painting with the debt of the regions seems to be improving. So, says the NRA, the first eight months of 2016 total liabilities of the RF subjects slightly decreased by 2.28%, to 2,267 trillion rubles. On the other hand, analysts do not associate this fact with income growth and improving budget planning and payment discipline. The reason they see in each other — for January–September 2016 has significantly changed the structure of obligations.
“The main element of the national debt become a budget loans: if at the beginning of the year, they accounted for about 34,88% of the total public debt of regions, in September this figure increased to 48,95%”, — stated in the study, which is conducted specially for “Izvestia”.
At the Federal level, the goal of reducing the cost of debt for the regions. This goal is achieved by replacing commercial loans (interest rate is at least 10% per annum) budget loans (for them is the rate of 0.1% per annum), emphasizes the analyst NRA Alexander Pyhalov. According to him, commercial loans regions give banks and budgetary credits, the regions receive from the Federal budget (that is, this mechanism is similar to intergovernmental transfers).
— The Ministry of Finance does not need to make a special effort to convince of the need for such a replacement — it is obvious that loans from the budget for the regions more attractive, because they represent free money. Therefore, the regions are all less likely to turn to banks and, increasingly, take money from the state. New borrowing on market terms get the most affluent regions, is able to pay interest. Less successful is almost completely refused to cooperate with the banks, although previously actively used this tool, the analyst noted the NRA.
According to him, instead of using the funds received from the difference in interest, principal repayment, the subjects use the money to solve the current problems. And instead of reducing the debt burden only increase it.
“Among the regions combining the budget deficit, high public debt, is dominated by regions with low economic potential and low investment attractiveness. Such regions are traditionally financially dependent on the Federal centre”, — said in the review the NRA.
About the danger of replacing such a situation recently, said the Chairman of the accounts chamber Tatyana Golikova at a meeting on the debt load of regions. In her opinion, the reduction of the debt market indicates a deterioration in the structure of state debt of constituent entities of the Russian Federation. She cited such data: in 2015, for example, regions were attracted 1,184 trillion roubles commercial loans growth for three years in two times, and 1,258 trillion roubles of budgetary credits — an increase for three years almost 10 times.
— It seems to me that this figure is quite eloquently about a situation which developed today in the budgets of the constituent entities. In fact, it is the fact that they receive less in revenue in the form of grants for equalization of budgetary security, — said the head of the audit chamber.
In the end, there’s not much left of the RF subjects, in the structure of the debt which occupy a significant share of Bank loans. In particular, Krasnodar Krai (59,8% of Bank loans), Moscow oblast (37.8 per cent), Moscow (29,5%), Rostov oblast (28,8%), Sverdlovsk region (27.7 per cent) and some others.
According to the new wording of the Budget code, effective from 2019, the subjects of the Russian Federation will be divided into three groups: those with high debt sustainability (regions, whose debt is less than 50% of budget revenues), medium debt sustainability (debt 50-85% of revenues) and subjects with low debt sustainability. From this point of view, the NRA and analyzed the state of Russian actors. The picture is disappointing.
If the rules of the new Budget code was in effect already, by the beginning of September 2016, only 14 regions would fall in the low debt load (not more than 25% of budget revenues). This is Sevastopol, Republic of Crimea, Saint-Petersburg, Moscow, Khanty-Mansi Autonomous Okrug, Bashkortostan, Sakhalin, Tyumen, Vladimir, Leningrad, Irkutsk region, Altai, Perm and Primorsky Krai.
At the same time 25 (almost a third) of all 85 regions would belong to the category of regions with low debt sustainability. And 14 of them, noted in the NRA, broke the agreement on the provision of budget credits with the Ministry of Finance. The worst things in Mordovia, Khakassia, Kostroma oblast, North Ossetia, Astrakhan region, Kalmykia, Karelia, Mari El Republic, Zabaykalsky Krai, Pskov, Kirov, Smolensk and Kaluga regions, as well as in Karachay-Cherkessia. In these regions the ratio of debt to budget revenue exceeds 100%. Of the 25 regions with a debt load of over 85% of revenues in 2016 to reduce the national debt was only three, two managed to keep the status quo. In the remaining 20 commitments continued to grow. The solution to the problem of public debt in these regions will soon be absolutely impossible without drastic measures from the Federal centre, emphasizing the NRA.
To date, the Ministry of Finance has not imposed sanctions against the regions that chronically violate the agreement on budget lending (the Agency agrees with the entity on the achievement of certain indicators).
— However, it can be expected that in future the Ministry of Finance can go on the suspension or reduction of budgetary lending to regions-violators. In fact, in these regions does not occur the recovery of the regional Finance and budget loans are not solve the problem of budget deficits and reduced debt burden, — predicts Alexander Pyhalov.
This means that regions again have to turn to market-based instruments, which are much more expensive to maintain, says the NRA. That is, the declining rate of public debt may again begin to grow like a snowball.