Realities of Financial Independence of Regions

Abstract

AbstractThe formation and effective use of financial resources in the budgetary sphere is complicated by conditions characterized not only by an unforeseen deterioration in the economic situation, but also by the high uncertainty of the future dynamics of the factors affecting it. The purpose of this work was to assess the financial condition of the Russian regions in the context of the pandemic and to find opportunities for further development. Methods used in the research are: analysis and synthesis, induction and deduction, logical and historical method, scientific abstraction and statistical comparisons. The article studies the dynamics and structure of revenues and expenditures of the budgets of the constituent entities of the Russian Federation. The analysis becomes in a section of the consolidated budgets of territorial subjects of the Russian Federation. On the basis of forecast models, a tendency to reduce income and expenses of the regions in the medium term has been revealed and the problem of financial independence of the constituent entities of the Russian Federation is increasing. The shift of emphasis in the structure of federal transfers to the budgets of the constituent entities of the Russian Federation and the transition from non-targeted forms of support for regional budgets to targeted ones with an orientation on federal programs and projects are demonstrated. The dangers of transfer dependence of regional budgets have been identified. The directions of further development of inter-budget relations are systematized with an emphasis on increasing the size of inter-budget transfers and strengthening the tax autonomy of the regions. The originality and practical significance of the study is determined by the tools for ensuring sustainable economic growth, including the balance and fiscal sustainability of the region. The results of the study can be proposed for the development of priority areas of sub-federal fiscal policy, focusing on the formation of potential tax capabilities of the territories.KeywordsFinancial flowsBudget deficitBudgetary securityFinancial independenceTransfer dependenceIncomeExpensesJEL CodesH720H770