Balancing Regional Budgets in the Context of a Planned Economic Cooling

In the context of the country’s economy being in a planned cooling phase due to increased sanctions pressure, extremely unfavorable external conditions, and the Bank of Russia’s tight monetary policy, the issue of ensuring the balance and stability of the budget system, strengthening regional economies, and maintaining the development course becomes particularly urgent. For the upcoming three-year period, the parameters of the consolidated budgets have been determined taking into account the growth of the regions’ own revenue base and the continued provision of financial support from the federal budget aimed at achieving national development goals. The total amount of interbudgetary transfers will amount to 3.6 trillion rubles, most of which will traditionally be allocated to subsidies for equalizing budgetary security, amounting to 1.1 trillion rubles (indexed to the level of inflation). Regions will continue to receive support for expenses related to increasing the salaries of public sector employees. Subsidies for these purposes will amount to almost 120 billion rubles. However, it will be very difficult to achieve growth in the country’s own revenue base in the current circumstances. The draft federal budget for 2026-2028 was submitted to the State Duma simultaneously with a package of budgetary and tax laws that include extensive amendments to the tax legislation, which will increase the revenue of the federal budget. However, according to the business community, these innovations may have a negative impact on the activities of business entities. Given that the regions will most likely be forced to take similar measures on regional taxes to replenish the revenue side of regional budgets, and that the Federation Council aims to develop new sources of revenue, including deep-seated ones, along with reducing inefficient tax and customs benefits, regional businesses will face a significant tax burden. According to the main directions of budgetary, tax, and customs-tariff policy for 2026–2028, when planning the volume Expenditure obligations of the consolidated budgets of the constituent entities of the Russian Federation, the regions are obliged to ensure the implementation of the Decree of the President of the Russian Federation on the indexation of public sector employees’ salaries, expenditures on social security for the population, an increase in the minimum wage, the implementation of national projects and programs, including individual projects for regions with a low level of socioeconomic development. Financial resources for these purposes are usually provided by interbudgetary transfers from the federal budget. However, in many regions, there is a high need for additional funding to address important issues, such as updating social infrastructure, purchasing textbooks for schoolchildren, paying insurance contributions for the non-working population, and a number of other socially sensitive areas. Therefore, in the current financial and economic conditions, the constituent entities of the Russian Federation require special attention and support from the federal center, as well as additional development mechanisms, Reducing the differentiation in the level of socioeconomic development between regions and municipalities should be a priority for state socioeconomic policy.

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