Page 79 - RusRPTFeb23

economies notes that regional budgets will have accumulated a total deficit of RUB1.7 trillion ($26bn) in 2022.
Regional budgets are facing leaner times in 2023. Governors are expected to allocate money to support regional industries and possibly a second wave of military mobilisation.
Corporate income tax receipts fell in the second half of 2022, and regions producing coal, oil, and gas cannot expect high revenues either due to trade sanctions. This, in turn, will affect other sectors that rely on these industries for orders.
It should also be noted that since most regions run only small surpluses, they are unlikely to have been able to replenish their reserves.
The situation is manageable as long as the federal centre is able to increase transfers—or cheap budgetary loans—to regional budgets when needed. An alternative solution could be cross-regional budgetary lending, an instrument set up in 2020 that aims to tap the reserves of rich regions.
Rich regions will also likely be expected to spend money on the occupied territories. Chelyabinsk governor Alexey Teksler, who also heads the State Council’s Committee on Economy, suggested that the federal government should write off regions' obligations on budgetary loans in the amount they spent on mobilisation and the occupied territories, but the government’s reaction has been cautious at best.
The Russian Central Bank’s December report on the state of regional economies notes that regional budgets will have accumulated a total deficit of RUB1.7 trillion ($26bn) in 2022, IFPR BMB Russia reports.
Russia’s federal budget deficit will total around 2% of GDP in 2022, Finance Minister Anton Siluanov said on December 8. However, the federal budget was still in surplus in January-November 2022 thanks to special tax payments of about RUB1 trillion from Gazprom. According to preliminary estimates, the federal surplus was RUB557bn ($8.87bn), the Ministry of Finance said on December 12.
Thus budget revenues for the reporting period amounted to about RUB24.8 trillion ($393.9bn), or 99% of the amount approved by the federal law on the budget for 2022-2024. Expenses reached RUB22.23 trillion ($353.1bn), or 102.2% of the planned volume.
The regional deficit is due to a collapse in corporate income tax receipts during the second half of the year. Regional budget expenses grew by 16.5% in the first ten months of 2022 due to the war, including increased social support,
79 RUSSIA Country Report February 2023 www.intellinews.com