The Debt Burden of Regions and Regional Policy

Abstract

Topic. The article is devoted to the problem of regional debt, the analysis of the causes and consequences of soaring public debt of the regions. The authors define the problem of imbalance of regional budgets and high debt burden on the budgets of the constituent entities of the Russian Federation as one of the key problems of the modern systemic economic crisis in Russia.Purpose. The purpose of the work consists in a complex analysis of the debt burden of Russian regions, as well as assessing the quality of management of regional finances. The search for new approaches to solving the problem of continuous growth of debts of subjects of the Russian Federation will allow improving the system of intergovernmental relations and policy of regional development of Russia in general.Methodology. The article presents the study of volume and dynamics of changes in the debt burden of Russian regions for the period 2009–2016, analysis of directions of the state policy of debt management of regions, and an overview of relevant legislation. Separately, it was assessed the quality of management of regional finances, based on the report of the Ministry of Finance of the Russian Federation.Results. The article highlights the key causes of the growing regions’ indebtedness, including their own low revenue base of the budgets, the transfer to the regions the powers without appropriate financial resources, increased burden of social expenses, a systemic crisis in the economy etc. There were defined the trends of development problems, changes in the structure of debt obligations of the RF subjects and RF subjects with the biggest indebtedness.Conclusions. The authors proposed possible ways and directions of regional and budgetary policy in the sphere of inter-budgetary relations and debt management of the Russian regions. We concluded the need for a complex changes in the system of inter-budgetary relations and inter-budgetary policy in general.

Keywords

• regional economy
• inter-budgetary relations
• debt burden
• regional budgets
• state government
• budget deficit