Problems of Concluding Agreements on Granting Subsidies to Russia’s Federal Subjects

A. B. Zolotareva

doi:10.18288/1994-5124-2020-5-90-111

Problems of Concluding Agreements on Granting Subsidies to Russia’s Federal Subjects

A. B. Zolotareva

https://doi.org/10.18288/1994-5124-2020-5-90-111

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Abstract

The article examines the evolution of regulation of the conditions for granting subsidies to equalize the budget sufficiency of Russian regions as well as the practice of concluding agreements between the Russian Ministry of Finance and Russian regions on the provision of such subsidies. The author states that there is a ten-dency to tighten the conditions for granting subsidies to regions, and substantiates the opinion that concluding agreements with the Ministry of Finance being required as a condition for granting subsidies to regions that are not among the highly subsidized ones does not correspond to the principle of budget independence. According to the author, in a situation where most of the regions’ expenses on subjects of joint management are predetermined by federal law, grants cannot be considered as non-targeted financial support, the provision of which may depend on the discretion of federal authorities. Among the shortcomings of the institution of agreements with the Ministry of Finance as a condition for granting subsidies, the author also considers the lack of legislative regulation of the terms of such agreements, unrealistic demands to regional authorities, and the objective impossibility of establishing effective mechanisms for enforcement of such agree-ments. Based on the results of the analysis, the author comes to the conclusion that it is advisable to abandon the practice of concluding agreements with the Ministry of Finance as a condition for granting subsidies to all regions, or to significantly soften the terms of such agreements. The author also offers alternative tools for the Federation’s influence on the financial policy of regions in order to improve their budgets.

Keywords

intergovernmental transfers, subsidies, subsidies for equalization of budget sufficiency levels, conditions for granting subsidies, agreements on granting subsidies.

JEL: Н7, Н77

About the Author

A. B. Zolotareva

Institute of Applied Economic Research, Russian Presidential Academy of National Economy and Public Administration; Gaidar Institute for Economic Policy
Russian Federation

Anna B. Zolotareva, Cand. Sci. (Law)

84, pr. Vernadskogo, Moscow, 119571

str. 1, 3–5, Gazetnyy per., Moscow, 125009

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Review

For citations:

Zolotareva A.B. Problems of Concluding Agreements on Granting Subsidies to Russia’s Federal Subjects. Economic Policy. 2020;15(5):90-111. (In Russ.) https://doi.org/10.18288/1994-5124-2020-5-90-111

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