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Our debts are heavy

Will the Far Eastern Regions Become Bankrupt, EastRussia Understanding

Only two Russian regions are now free of government debt - these are the data of the Ministry of Finance. In two more at the beginning of 2018, external financial management was introduced, that is, they were, in fact, declared bankrupt. Can the Far Eastern regions that have accumulated large debts become bankrupt, and what does this mean for their residents, was EastRussia.

Our debts are heavy

According to the Russian Ministry of Financeand, as of the beginning of 2018, the total amount of public debt in all regions of Russia was 2,3 trillion rubles. During the 2017 year, it grew by 174 billion rubles, and over the past five years, the amount of public debt has doubled.

For the first half of the year, the aggregate amount of public debt of all subjects of the Russian Federation slightly decreased - by 5,4% (by 125 billion rubles) - and amounted to 2,19 trillion rubles. However, this decline was mainly due to three regions - the Kemerovo and Sverdlovsk regions and the Krasnodar Territory: on them, according to the agency "RIA Rating", accounted for almost half of the amount, which reduced the national debt.

The state debt of the Far Eastern Federal District, if you look at absolute values, is far from the largest in the country: 172,36 billion rubles. Almost all other federal districts have a greater national debt, and some of them have more public debt. The exceptions are the North Caucasus (in the North Caucasus Federal District the state debt is about 82 billion rubles) and the Ural Federal District (134 billion).

In some Far Eastern regions, the size of the national debt, at first glance, is also not the most impressive, if compared with other subjects of the Russian Federation. In this case, a completely unique situation in the Sakhalin region - there, according to official data, there is no state debt at all, and at the beginning of 2018. In Russia, except Sakhalin, only one subject with zero state debt is Sevastopol.

And even in the Far Eastern regions that have accumulated serious debts, they are not as large as in some other regions of the Russian Federation. Thus, the state debt of Yakutia (55,2 billion rubles, growth by half a year - by 6,6%), the Khabarovsk Territory (46,6 billion, + 13,4%), the Amur region (28,7 billion, + 3,6%) is still incomparable with the indebtedness, for example, Tatarstan (94,2 billion rubles), the Moscow region (96,8 billion), Krasnoyarsk (100,6 billion) or Krasnodar (129,2 billion) edges.

Against this background, it seems that the debts of Primorsky Krai (5,4 billion, + 22,8% for six months), Kamchatka (4,2 billion, debt for half a year decreased by 8,5%), Magadan region (16,1 billion, + 21,3%), Chukotka (10,4) billion, declined by 3%), the Jewish Autonomous Region (5,7 billion, + 10,1% since the beginning of the year).

However, the absolute figures in this case do not say anything at all. After all, as you know, relatively. And the fact that in half of the Russian regions the national debt has declined in six months, and in the majority of the Far Eastern - has grown, it says more than the specific amounts of debt.

The most important is how the debts of the region and the revenues of its budget are correlated. For example, in the already mentioned Krasnodar and Krasnoyarsk regions, the amount of arrears amounts to 65,2% and 56,8% of tax and non-tax revenues to their budgets in the last year, respectively. In the Amur region, the national debt is 75,7% of budget revenues. In Magadan - 87,5%. In the Chukotka Autonomous District - 96,3%. In the Jewish Autonomous Region - 100,8%. That is, in the latter case, the debts of the region (apparently not so large - 5,7 billion rubles) are greater than its revenues. If you call things by their proper names, this region is bankrupt. And three more are close to this: the maximum allowable amount of public debt, as indicated in the Budget Code of the Russian Federation, they are exceeded.

However, here we can also mention the subjects - "antirekudsmen", to which the Far Eastern regions-debtors are still far from this indicator. So, in the Oryol region the ratio of debt and budget revenues is 102,6%, in the Karachevo-Cherkess Republic - 108,7%, Khakassia - 123%, in the Kostroma region - 128%, in the Republic of Mordovia - 246%.

Earlier this year, the Federal Treasury introduced the external financial management in two of thex: Khakassia and Kostroma region. In fact, these regions were officially declared insolvent, and all financial processes in them were taken under total control. This happened for the first time in the history of Russia.

- All expenditures of the regions in this case are completely controlled by the federation through the treasury. For regions, there is practically no economic freedom. Introducing treasury execution in these two regions is an absolutely correct move: it is an opportunity to prevent a full default in them, "explains Evgenia Bukharova, Ph.D. in Economics, Professor of the Department of Social and Economic Planning of the SFU.

Why was the treasury department introduced only in two regions of those where debts are greater than budget revenues? When making a decision, such an indicator as the share in the total amount of public debt of budgetary and commercial loans was also taken into account. If the share of the latter is high, and the region's income is less than its debt - in the aggregate, this means that it is practically impossible to repay the debt, it will only grow. Of the listed regions of the Far Eastern Federal District, which are "in the red financial zone", two - the Magadan Region and the Jewish Autonomous Region - have commercial loans for half of the total public debt.
How did it happen that several Far Eastern regions were on the verge of failure? Is it possible to do something to improve the situation? Perhaps, in these regions of the DFO, too, to introduce external financial management, to take the economy under total state control? In Khakassia and Kostroma, it gave results: the national debt decreased.

- Whether the Federal Treasury or other external structure will manage the region's economy does not, in my view, increase or decrease the surplus product that is being created in the region. The only way out is to provide greater financial autonomy to the regions and at the same time to place greater responsibility on them for their economy, "said Albert Falaleyev, professor, doctor of economic sciences, corresponding member of RAO. - Now, in a very difficult economic situation, the state is forced to compensate for the deficit of production lost due to this income deficit and the inability to enter the Western markets through various financial manipulations. But financial instruments and manipulations in themselves are of no value at all. At the same time, the economic relations of the regions with the center are, to put it mildly, unbalanced, since a significant proportion of the total surplus product produced, that is, we will say, of finance, is seized from the regions and settles down in the center. Now, when the situation is close to critical, work on ensuring that this balance is still observed begins and is currently being implemented in the form of providing additional subsidies to the regions, which still do not compensate for the losses they incur. And work in this direction is necessary, because now even the richest regions, which were traditionally among the donors, suddenly found themselves among debtors.

Yevgenia Bukharova agrees with this point of view. In a situation where a significant part of regional revenues goes to the center, the subjects of the Russian Federation will inevitably become debtors. And to borrow money at the same time as interest from the state, as well as from commercial structures. And interest (and interest on interest) will practically not allow the debt to decrease. Classical vicious circle.

- The situation with the size of the national debt is in fact the trouble of not the regions, it is the trouble of our legislation. When most of the revenues are withdrawn from the regions, they do not have the opportunity to improve the situation, invest in the development of their economy in order to increase the revenue side of the budget, "says Evgenia Bukharova. - The situation has overridden: intergovernmental fiscal relations need to be transformed and adjusted. At the same time, the regions have a formal financial freedom. They have no money. All the subsidies that go there, come bundled. The regions have obligations that they can not but fulfill, and other means are no longer sufficient. That is, the problem is not that at the regional level, someone does not want or does not know how to competently manage finances - often there is nothing to manage, and not through the fault of the region.

В the regional budget of the EAO it is noted that during 2018 the amount of debt will be reduced by more than 600 million rubles. At the same time, almost $ 268 million will be spent on debt service. This amount - interest on already restructured loans - is more than double the regional budget deficit. And the sources of financing for the regional budget are loans received both from the state and from banks.

So, it seems, in the role of eternal debtors, the Far Eastern regions will remain forever.
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