FINANCIAL MECHANISMS AND INSTRUMENTS OF SOLVING THE PROBLEM OF THE INSOLVENCY OF MUNICIPALITIES: RUSSIAN PRACTICE AND FOREIGN EXPERIENCE

Abstract

Currently, the problem of fiscal insolvency is relevant for the majority of municipalities of the Russian Federation, whose poor condition is indicated by the low share of own revenues and significant amounts of debt obligations of municipal budgets. On the basis of the analysis of the legal and regulatory framework, the work of specialists skilled in the art, as well as the author’s personal research on the practice of applying temporary financial administration, the most significant causes of this state are highlighted: the insufficiency of municipal financial resources to ensure their expenditure powers; low efficiency of financial management in the municipal budgetary sector; the existence of gaps in the actual institutional environment. The assessment of the foreign experience of the crisis management of municipalities was carried out to identify tools and methods that can be used in the Russian context. Special attention is paid to the mechanism of municipal bankruptcy. As a result, preventive measures have been identified as the most promising tools for resolving the problem of insolvency of municipalities of the Russian Federation. These measures include limiting the volume of short-term borrowings of municipalities and the need to obtain permission from higher authorities to borrow. A number of proposals to improve the effectiveness of temporary financial administration the solvency of municipalities was also offered.