Russian Regions Prefer to Save

However, it is to be noted that starting from March the revenues of the consolidated budget of constituent entities of the Russian Federation have been decreasing. So, in five months of 2012 the largest drop of 0.4 p.p. of GDP took place in profit tax revenues as compared to the same period of 2011.   

In January–May 2012, profit tax revenues and revenues from use of public and municipal property to the consolidated budget of constituent entities of the Russian Federation fell insignificantly by 0.1 p.p. of GDP each on the same period of 2011.  

At the same time, the revenues of budgets of constituent entities of the Russian Federation from placement of temporary available budget funds of constituent entities of the Russian Federation grew in absolute terms from Rb 4.9bn in January-May 2011 to Rb 10.4bn in the same period of 2012 due to an increase of Rb 3.0bn in account balances of budgets of constituent entities of the Russian Federation in five months of 2012.

The above permits to suggest that regions stick to the austerity policy in respect of expenditures, including investment expenditures as they expect that the crisis situation in the economy may change for the worse.

In addition to the above, according to the data of the Ministry of Economic Development of the Russian Federation in the 1st quarter of 2012 the share of budgetary funds in the structure of sources of funding of capital assets investments amounted to 11.0%, which is the lowest value for the 1st quarter in the entire period of observations since 2005.

Т.V. Tischenko, PhD (Economics), Senior Researcher of the Budget Policy Department