Page 52 - RusRPTDec19

In the first 10 months of 2019, government departments and agencies have spent less than two-thirds of the year’s planned expenditure, and will struggle to make-up the difference before the end of the year, deputy chairman of the Audit Chamber Galina Izotova said at a Duma committee hearing.
So far, the government is running RUB778bn behind schedule — the biggest difference between the official budget and actual expenditure since 2010, Izotova said, in comments reported by Russian daily Vedomosti.
At the end of September, the government had spent just 66% of the annual budget​, and the budget surplus reached a staggering 3.8% GDP. This has been a boon for banks, which now hold $53bn of federal money on their balance sheets. And indeed, the budget is expected to make RUB180bn ($3bn) in interest in 2019, more than double that of last year. Yet while banks and the federal treasury enjoy fat revenues, the low execution of budget spending bodes poorly for the government’s development plans.
Data from the Ministry of Finance reveals that the situation is even bleaker when looking at the national projects in particular. As of November 5, federal spending on the national projects amounted to RUB1.1 trillion, almost 64% of the planned RUB1.78 trillion. Yet of the funds (RUB611.8bn) earmarked for budget transfers to the regions, which are largely responsible for implementing the projects, only 57% have been transferred. Regional and local governments have thus far spent RUB760bn of the year’s allocated RUB1.3 trillion, or roughly 58%.
There are several possible reasons for the holdups. One, albeit optimistic, explanation is that bureaucrats are simply being careful with taxpayer money, only spending on the most effective and necessary projects. Another is that bureaucrats are cautious about outlays due to the high-level of scrutiny surrounding the projects. Indeed, the General Prosecutor’s office announced this week that it has already found 2,500 violations in the implementation of the projects, for, which there should be serious consequences, both administrative and criminal.
Regardless of the reason, spending is on the up. Whereas in January-June regional governments spent RUB285.9bn on the projects, in October alone, they spent RUB625.9bn. Outlays on the national projects jumped 17% month-over-month in October. Perhaps this means the consolidated budget won’t miss its spending target by a whopping RUB1 trillion ($15.6bn) this year as the Audit Chamber predicts. It remains to be seen.
52​ RUSSIA Country Report​ December 2019 ​ ​www.intellinews.com