Page 74 - RusRPTNov20

Pandemic shock
The arrival of the coronavirus in Russia has knocked this whole system off its feet again. Spending has soared as regions scramble to beef up healthcare facilities and at the same time try and offer subsidies and stimulus packages for the local economies. Even those regions that have managed to accumulate some reserves have found they do not have enough to fully absorb the corona-shock. Early this year, 37 regions ​only had reserves​ amounting to less than 5% of their income in 2019. All the regions are being forced to turn to the centre for help.
“Regions, on the whole, ​lost​ about 26% of their revenues in the first seven months of this year, compared to the same period in 2019. Although regional revenues rebounded slightly in the summer, they can easily plunge again in the second wave of the pandemic,” Toth-Czifra says. “Oil- and gas-producing and processing hubs, such as the Yamal-Nenets Autonomous District, the Krasnoyarsk Territory, the Astrakhan Region, and the Komi Republic suffered a double whammy—pandemic and oil price decline—and ​lost​ up to half of their revenues in the second quarter.”
The situation has somewhat improved since, but federally mandated deferments of tax payments mean that revenues are ​still lagging​ significantly behind plans. Even wealthy regions like Tatarstan had to rely on state guarantees to cover healthcare expenses as the federal budget absorbed two-thirds of the republic’s tax revenues.
The federal government has transferred RUB2.13 trillion ($27.97bn) in the first eight months of the year to the regions, which is RUB697bn ($9.13bn) more than in the same period a year earlier
“This includes ​at least​ RUB200bn ($2.62bn) of extra grants announced in April, with RUB100bn ($1.31bn) still to be transferred by the end of the year and RUB100bn next year,” says Toth-Czifra.
And the money has been unequally distributed with the politically powerful regions take more and the politically weak regions getting less than they need to meet their needs, according to Toth-Czifra.
As part of the pandemic response the MinFin has eased the rules on commercial loans, but this has been capped: regions can double their debt to pay for pandemic responses by turning to the banks, but only to the limit of what they are allowed to borrow from the federal government. This gives the green regions a lot more firepower, but the red regions are not allowed to borrow anything at all and so have been left behind. Overall the total borrowing available to all Russian regions is effectively capped at RUB74bn ($970mn) –
74 ​RUSSIA Country Report​ November 2020 www.intellinews.com