ALEXANDER DERYUGIN: “REGIONAL FISCAL EQUILIBRIUM DEPENDS NOT ONLY ON THE EPIDEMIOLOGICAL SITUATION, BUT ALSO GEO-POLICY”

Alexander Deryugin, Research Associate of the Budget Policy Department, Gaidar Institute commented to the Izvestia daily on the dynamics of incomes and regional fiscal equilibrium in 2022.

According to the Izvestia daily, one Russian region in four completed the year 2021 with a consolidated budget deficit. The number of such regions decreased nearly threefold relative to 2020: 21 constituent entities against 57 constituent entities, while overall surplus amounted to over Rb640bn. Such a result was achieved owing to a 18% growth in revenues up to Rb17.5 trillion, the Ministry of Finance specified.

It is likely that the year 2022 will be as good as the previous one in terms of regional fiscal equilibrium and the share of constituent entities, running a budget deficit, Alexander Deryugin believes. “On the back of high inflation, there will be advanced growth in revenues (primarily, owing to the profit tax), while expenditures are not projected to be too high (the main pandemic-related expenses were incurred in 2020,” Alexander Deryugin noted.

At the same time, Alexander Deryugin notes that regional fiscal equilibrium depends largely not only on the epidemiological situation, but also the geo-policy: with rising tensions it will be quite complicated to project constituent entities’ budget surplus.