Budget donors in deficit

Analysis of the dynamics of tax revenues paid to the federal budget by Russia’s regions

The number of donor regions has declined insignificantly but most of them will face budget deficit in 2020.

Despite the economic downturn, declining tax and non-tax budget revenues and growing budget transfers, the number of federal budget donors decreased, contrary to ACRA's expectations, by only three1 in the three quarters of 2020 compared to the same period in 2019. In this context, "donors" exclude regions that do not receive subsidies to stabilize their budgets, but include regions that contribute (in taxes and charges2) to the federal budget more than they receive (in gratuitous receipts of all kinds).

The regions that, in our opinion, have lost their donor status include Belgorod Region, the Republic of Sakha (Yakutia) and Novosibirsk Region. The volume of gratuitous receipts received in the three quarters of 2020 to the consolidated budgets of these regions exceeded the volume of taxes collected in them in favor of the federal budget.

At the same time, according to our estimate, 36 regions became donors in the first nine months of 2020.

In general, over the past three years, the list of donor regions has not changed dramatically. About 40 constituent entities (up to 43, in some years) annually contributed to the federal budget more tax revenues than budget transfers they received back. The five leading donors in 2017–2019 were: Khanty-Mansiysk Autonomous Okrug–Ugra (about RUB 3 tln of net contributions3 to the federal budget in 2019), Moscow (RUB 1.5 tln), Yamalo-Nenets Autonomous Okrug (RUB 1.3 tln), St. Petersburg (RUB 0.7 tln) and the Republic of Tatarstan (RUB 0.5 tln). Taken together, these regions paid RUB 7 tln to the federal budget in 2019 (71% of all tax collections).

According to our estimates, the volume of taxes collected in regions to the benefit of the federal budget in the first nine months of 2020 decreased by 15% (RUB 1.4 tln) y-o-y. Taxes and charges for using natural resources fell the most (-35%, or RUB 1.7 tln), mainly MET for fuel and energy minerals; VAT receipts also decreased but not so significantly (-4%). In contrast, other tax revenues (income tax, excise taxes and other federal taxes and duties) increased.

A major decline in federal budget revenues was observed in the largest oil and gas producing regions. However, the donor status of these regions is quite stable because federal transfers have never been significant for most of them. For example, net contributions from Khanty-Mansiysk Autonomous Okrug–Ugra decreased by 36% to RUB 1.5 tln in 9M 2020, but the volume of federal transfers granted to this region amounted to only RUB 17 bln. In Yamalo-Nenets Autonomous Okrug, the decrease amounted to RUB 303 bln (-29%), and the volume of federal transfers was about RUB 10 bln. Despite a decrease in tax revenues, these oil and gas regions, as well as a number of other producing regions (Krasnoyarsk Krai, Samara and Sakhalin Regions), showed budget surpluses in the three quarters of 2020.

Other donor regions with significant oil and gas production volumes were less fortunate, as budget deficits of the Republic of Bashkortostan, Tyumen Region, Perm Krai, Irkutsk Region, Tomsk Region, and the Republic of Tatarstan varied from RUB 7 bln to RUB 16 bln in nine months of 2020. At the same time, the volume of net contributions from Tatarstan to the federal budget decreased so much that Moscow Region and Krasnoyarsk Krai have managed to outstrip the republic in terms of the volume of budget revenues. For the first time since 2016, the Republic of Tatarstan could not get into the top five donor regions. Nevertheless, Tatarstan transferred to the federal budget six times more than received from it. The republic remains a permanent donor for the federal budget.

Donor regions with more diversified tax revenues showed, regardless the current tough economic conditions, a slight increase in their net contributions to the federal budget for three quarters of 2020. Moscow's contributions grew by RUB 42 bln (+4%) reaching the total of RUB 1.2 tln, St. Petersburg's increase amounted to RUB 125 bln (+24%), totaling RUB 637 bln, Moscow Region's increase was RUB 5 bln (+2%), totaling RUB 284 bln. However, budgets of all three regions were in deficit at the end of nine months of 2020.

In view of the above, 23 out of 36 donor regions showed a budget deficit in the three quarters of 2020. Some of them have no reserves high enough to cover the deficit; therefore, many regions may face a debt increase by the end of 2020.


1 Latest comparable periods (nine months) were used. More relevant information (for 10 months of 2020) is available, but in 2019, reports were sent quarterly.
2 Excise taxes on excisable goods registered by the Federal Tax Service do not include some excise taxes registered by the territorial bodies of the Federal Treasury Department, and therefore it is not possible to determine the exact amount of excise taxes collected to the federal budget in regions.
3 Net contributions to the federal budget include regions' contributions net of back transfers from the federal budget.

Table 1. Regions with the highest contributions* to the federal budget in nine months of 2020 (RUB mln)

Region

Contributed
 in 9M 2020

Contributed
in 9M 2019

Federal transfers to the region
 in 9M 2020

Federal transfers to the region
 in 9M 2019

Deficit/surplus of the region's consolidated budget in 9M 2020

Khanty-Mansiysk Autonomous Okrug— Ugra

1,480,850

2,315,571

16,873

15,734

17,023

Moscow

1,263,181

1,198,805

48,302

25,639

-185,320

Yamalo-Nenets Autonomous Okrug

736,032

1,032,774

9,562

3,269

5,754

St. Petersburg

668,204

527,264

31,264

15,136

-2,955

Moscow Region

341,968

322,808

58,318

44,441

-51,810

Krasnoyarsk Krai

313,770

336,725

36,707

19,132

19,264

Republic of Tatarstan

300,221

397,228

49,624

21,551

-15,864

Samara Region

214,918

273,784

29,539

11,964

8,025

Sakhalin Region**

190,685

210,821

7,572

10,381

19,059

Perm Krai

172,952

197,366

32,247

12,575

-10,342

Republic of Bashkortostan

167,481

184,493

61,725

31,149

-15,816

Irkutsk Region

164,698

214,970

40,609

23,715

-9,059

Orenburg Region

163,205

242,250

26,850

14,559

-5,567

Leningrad Region

136,283

139,496

13,131

6,195

-1,918

Tyumen Region

111,059

146,299

10,157

5,481

-12,947

* It is assumed that all mineral extraction taxes are categorized as contributions to the federal budget.
** Including taxes established by special taxation regimes.

Source: Federal Treasury Department, Ministry of Finance of Russia, ACRA's calculations

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