INTERVIEW: Russian regions’ budget deficit at 160 bln rbl in 2019

MOSCOW, Sep 10 (PRIME) -- Consolidated deficit of the Russian regions’ budgets will amount to 150–160 billion rubles in 2019 and will be covered using carryovers from a 2018 surplus, First Deputy Finance Minister Leonid Gornin said in an interview with PRIME released on Monday.

“Deficit for 2019 is currently estimated at 150-160 billion rubles will be covered with carryovers from 2018,” he said, adding that budget surplus stood at 862 billion rubles in January–July 2018.

Gornin said that the 2018 reginal budgets were based on a conservative approach, which envisaged an only 2-3% rise in income while some regions planned no rise at all.

“Thanks to the conservative approach, the regions will have at least 500 billion rubles of extra income this year. Today we have a 654 billion ruble growth of the regions’ own incomes on the year,” he said.

In 2019, growth of the regions’ incomes will slow down from 2018 as seen in the macroeconomic forecast.

“It is clear that next year there will be no such oil prices and ruble rate fluctuations as we see now. The factors resulted in a significant rise in (regional) incomes especially from the income tax in regions having a natural resource-based economy. The income growth will stand at around 3-4% (in 2019) as compared with 14% seen in 2018,” he said.

The official also said that the Finance Ministry plans to raise the share of funds from the federal budget planned for nation-scale projects envisaged by President Vladimir Putin’s May Orders to 95% from 70% to reduce the regions’ burden.

“If we speak about co-financing (of the May Orders) at 5%, the burden on the regionsý budgets will amount to 15-20 billion rubles on average in 2019. This is not a considerable burden, absolutely not,” he said and added that all Russia’s regions should provide full financial support of all the 12 national projects in the next three years.

Gornin also said that in 2018 the Finance Ministry plans to adjust the budget code to allow regions co-finance spending of other regions, a so-called horizontal subsidies mechanism. Such practice exists now, but its scale is very low.

He added that such cooperation may be effective for joint project financing of interregional projects or joint investment in road infrastructure.

He also said that the ministry is ready to endorse a tourist tax in the Golden Ring region and other regions if it is suggested by the local governments.

Gornin also said that the regions may obtain 50-60 billion rubles of additional income from excise duties on spirits in 2019.

“Now the excise is distributed on a parity basis which means that only a half goes to regional budgets. Sending an additional 30% to the regions to achieve an 80% to 20% ratio is preliminarily discussed. This may give the regions an additional 50-60 billion rubles from spirits sales in 2019,” he said.

(69.0286 rubles – U.S. $1)

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