Balance of local budgets and reduction of large loans: Tatarstan preparing a financial management programme

Programme will create common conditions for all participants of budget process

So far, the state programme Public Finance Management of the Republic of Tatarstan is represented only in the draft. Over the next six years, it is planned to invest more than 135 billion rubles in it. Of these, 19,9 billion will used in 2024, 17,5 billion — in 2025, and 18,1 billion — in 2026. Financing will be carried out exclusively from the budget of the republic.

As mentioned above, the programme has several goals at once, namely:

• The annual maintenance of the ratio of budget deficit and total annual volume of its revenues, excluding the volume of gratuitous receipts, at a level not exceeding 10%.
• The annual maintenance of the ratio of the national debt of the republic and the total annual volume of its budget revenues, excluding the volume of gratuitous receipts, at a level not exceeding 40%.
• Annual maintenance of the provision of local budgets with revenue sources, taking into account inter-budget transfers, at the level of at least 100% of the required amount of expenditures on solving local issues.

As for the main tasks, their list is slightly wider. Firstly, the Ministry of Finance of Tatarstan will need to create optimal conditions for timely and high-quality budget formation and execution. Simply put, to engage in the formation of budget reporting. According to the authors of the draft bill, this will help to manage public finances more effectively, which, in turn, will contribute to improving the level and quality of life of the population. Secondly, the Ministry of Finance must ensure an acceptable and economically justified amount of public debt and its structure, provided that the costs of servicing debt obligations are minimised. To solve this problem, the attraction of “expensive” commercial loans will be limited, but on condition that the corresponding loans can be taken from the federal budget.

The third point is the organisation of sending inter-budget transfers to municipalities of Tatarstan to equalise their security. This will make it possible to fulfill all social obligations to citizens, as well as ensure the further socio-economic development of the territories. Finally, the last one is the creation of conditions for improving the quality of municipal finance management. The fourth task will be solved with the help of systematic monitoring of the quality of financial management and solvency in cities and districts of the republic.

At the same time, the authorities will develop a draft law on the budget of the republic for the next financial year and planning period, which will take into account the priorities of socio-economic development and the principles of long-term budget sustainability. It will help to solve several problems at once, which are mentioned above.

In general, the state programme is focused on creating common conditions for all participants in the budget process, including republican executive authorities implementing other projects, and also contributes to the comprehensive development of Tatarstan.

Tatarstan has a high level of debt sustainability

According to the Ministry of Finance, the indicators of the consolidated budget of Tatarstan in recent years are generally characterised by positive dynamics. The region is among the leading regions in terms of the amount of revenue mobilised on its territory. So, from 2018 to 2022, according to these indicators, the republic was always in the first place among the regions of the Volga Federal District (PFD) and in the top ten among all subjects of Russia (4th place last year).

Over the past five years, the volume of tax and non-tax revenues of the consolidated budget of Tatarstan has increased from 281,3 billion rubles in 2018 to 429,4 billion rubles by the end of 2022. The growth over five years is 152,7%. In general, this indicator increased by an average of 150,5% in all regions of Russia. At the same time, over the past year, the volume of tax and non-tax revenues of the republic's budget increased by 27,8% compared to the previous year (336,1 billion rubles by the end of 2021), while in general, the growth in all regions of Russia amounted to only 12,7%.

One of the characteristics that determine the state of public finances is the structure of public debt. By the results of 2022, the total amount of the state debt of Tatarstan amounted to 103,5 billion rubles. Over the past 5 years, it has increased by 8,5 billion (95 billion by the end of 2018), including 6,9 billion over the past year (96,6 billion by the end of 2021), due to the attraction last year of long-term loans from the federal budget for the implementation of infrastructure projects. At the same time, the level of debt burden for five years decreased from 40,4% (2018) to 28,2% (2022), the total decrease was 12,2%. Over the past year, this indicator has decreased by 6,3% (34,5% in 2021). The reduction in the burden was the result of the work carried out to ensure a consistent increase in the revenue base of the budget and, according to the Ministry of Finance, a conservative approach to borrowing — Tatarstan has not resorted to loans in the financial markets in the form of loans from banks and securities issues since 2010.

In accordance with the assessment of the debt sustainability of the country's subjects conducted by the Ministry of Finance of Russia since 2020, the republic annually belongs to the group of regions with a high level of debt sustainability.