Results of 2021 for the Consolidated Budgets of the Subjects of the Russian Federation: Overcoming the Crisis or Changing the Model of Intergovernmental Relations?

Abstract

Theyear2021was quite favorable for the consolidated budgets of the subjects of the RussianFederation. The revival of economic activity in the regions and positive trends in the worldcommodity markets have led to an increase in tax and non-tax revenues of regional budgets.Themost significant increase in revenues to the consolidated budgets of the RF subjects wasprovided due to the recovery of wholesale and retail trade. The growth of its own revenuesallowedthe federal budget to reduce the total amount of financial assistance to the subjectsof the Russian Federation. At the same time, there was a pronounced increase in targetedtypesof support while reducing non-targeted ones. The volume of equalization subsidies inreal terms has decreased. The shift in emphasis in financial support to targeted transfers hasled to a pronounced trend towards an increase in the share of federal funds in the structureof expenditures on key sections of the consolidated budgets of the RF subjects within theframework of joint competence. The growth of expenditures of sub-federal budgets in 2021significantly lagged behind the increase in revenue receipts, but was higher than the rate ofinflation. Financing of housing and communal services, the national economy and educationgrew most dynamically. The result of the execution of consolidated budgets in 2021 was asurplus. At the same time, a number of RF subjects budgets were executed with a deficit.Some regions were forced to resort to deficit financing to maintain spending at the level oflast year’s values. Although the total amount of state and municipal debt slightly decreased,there was an increase in debt in some regions.