Moscow states amount of subsidies for Chechnya and Crimea in 2017

Moscow states amount of subsidies for Chechnya and Crimea in 2017
View of the Heart of Chechnya mosque in Grozny

Federal grants for Chechnya and Crimea in 2017 will remain almost identical to those of 2016, while the amount of subsidies for other regions will be increased by more than 15%, according to the amendments for the second reading of the budget.

Following the pointed retort by the Republic’s leader Ramzan Kadyrov against the reduction of the federal funding, Chechnya will receive 40.4 billion rubles of subsidies in 2017 — almost as much as in 2016. This follows from the government's amendments for the second reading of the budget for the 2017-2019 years. Last Friday, the State Duma Committee on Budget approved them without discussion.

Subsidies for the Republic of Crimea will slightly decrease in 2017 (down to 37.2 billion rubles), according to the same amendments.

Chechnya and Crimea will receive some of the subsidies, i.e. the so-called subsidies to the regions for the alignment of budgetary security, per standard procedure. The distribution of grants for the alignment was submitted in the addendum approved by the Committee, along with relevant state amendment. Those grants were distributed in late November at a meeting of the tripartite commission, which includes members of the parliament, senators, and officials of the Ministry of Finance, members of the Budget Committee explained earlier to RBC. According to this addendum, Chechnya is to receive 24 billion rubles in 2017, and Crimea — 18.5 billion.

These figures impressive, but they are hardly above average. For instance, at the same time Dagestan will receive 52.4 billion rubles in 2017, Yakutia — 36.6 billion rubles, and Kamchatka — 37.16 billion rubles. Even in 2016, these three regions, are expected to become the major recipients of grants for the alignment of budgetary security. In total, the federal budget will allocate 614.6 billion rubles for this kind of regional subsidies in 2017, which is 100 billion rubles more than in 2016.

In a separate amendment, the government decided to allocate the subsidies of another kind for Chechnya, Crimea, and Sevastopol — for the budget balance. According to the initiative, Chechnya will receive 16.4 billion rubles for this purpose, Crimea — 18.65 billion, and Sevastopol — 5.17 billion (the grant for the alignment of budgetary security for Sevastopol is provided in the amount of 2.17 billion rubles). This state amendment was also approved by the Duma Committee on Budget. The distribution of subsidies for the budget balance for other regions was not clarified by the amendments.

As a result, Chechnya and Crimea will receive of one of the largest federal grants in 2017: the financial support for Chechnya (excluding various subsidies and subventions provided the same way as for other regions) will reach 40.4 billion rubles, for Crimea — 37.15 billion rubles. In 2016, Chechnya will receive grants of about 41 billion rubles, and Crimea — 37.8 billion rubles.

Neither government officials, nor the management of the budget committee gave any explanation to those decisions. Lawmakers had no issues with the government's initiative.

The total amount of subsidies from the federal budget to the Russian regions for 2017 is estimated at 738.3 billion rubles — about 97 billion rubles (15%) more than expected at the end of 2016, according to the draft of the federal budget, which is now being prepared for the second reading. This means that grants for other regions (except Chechnya and Crimea) will grow by more than 15%.

In late October, the Head of Chechnya, Ramzan Kadyrov, spoke out against the Ministry of Finance plans to cut funding for the republic’s budget. He claimed that previously Chechen authorities "went with budget cuts," but the current plan of the federal government puts the social obligations of the republic’s leadership in jeopardy. Finance Minister Anton Siluanov replied that Kadyrov’s fears were premature — the Chechen leader could not know what amount of grant the republic would receive in the coming year, as the inter-budgetary transfers had not yet been distributed.

Crimea and Sevastopol authorities did not openly request increased funding the federal budget. However, the government not only envisaged subsidies for these regions, but also introduced a large package of amendments for the second reading, which provided them with additional subsidies across the board.

Other amendments prepared for the second reading

A quarter of budget credits will be reserved "as a safeguard"

The Budget Committee has approved the amendment by the Edinaya Rossiya (United Russia party), doubling the budget allocation for loans to the regions in 2017 and 2018 respectively. The total volume of super-cheap budget loans for the regions will be increased from 100 billion to 200 billion rubles annually. However, so far only 150 billion rubles will be allocated between regions in the form of loans, the chairman of the Budget Committee Andrey Makarov said. Some 50 billion rubles will remain in reserve in case some regions would require emergency assistance throughout the year, the lawmaker explained.

Lawmakers found a way to do without raising premiums on health care

In 2019, there will be no increase in insurance premiums from 5.1 to 5.9% into the Federal Compulsory Medical Insurance Fund (FOMS). The Duma Committee on Budget has approved the amendment of its chairman Andrey Makarov to the budget of the fund, which stipulates that the FOMS deficit will be compensated from the federal budget. The new balancing mechanism, which sources in the government and the State Duma told RBC about earlier, will work as follows: if charges by FOMS from the working population are less than 1.3 trillion rubles in 2019, a decision will be made to raise tariffs for compulsory health insurance of unemployed population. This is stated in Makarov’s amendment. Increasing the contribution rate of the non-working population will mean growth of regional budgets, since regional authorities pay for the health care of non-working population. However, Makarov’s amendment stipulates that simultaneously with the increase in contribution rates on the non-working population, the federal government will introduce a special subsidy to the regions so that they could square up with FOMS.

Prosperous regions will be allowed to finance their police

Regions that do not receive grants from the federal budget, will be allowed to subsidize the federal budget "in order to co-finance the execution of Russia’s expenditure commitments in logistics of policing." On December 2, this state amendment was approved by the Duma Committee on Budget. Currently, there are 13 donor regions in Russia, the chairman of the Budget Committee Andrey Makarov said earlier on other occasion. Earlier, at the budget committee meeting, MIA representatives claimed they lacked almost 500 billion rubles for the fight against crime in 2017-2019. Before the second reading, the government managed to find additional funds for the execution of the relevant state program, but not in the volumes requested by the Ministry of Internal Affairs.

The Government tempered its expectations for Rosneftegaz dividends by 20 billion rubles

The Government has reduced the minimum bar for dividends expected from the state company Rosneftegaz (owns 69.5% of Rosneft shares and 10.97% of Gazprom shares) by 20 billion rubles in 2017. According to the draft budget adopted by the Duma in the first reading, the company was expected to bring 156.46 billion rubles (anything above this amount was promised to the state-owned companies that develop IL-114 and modernize IL-96). By second reading, the government asked to reduce the expected minimum of dividends from Rosneftegas down to 136 billion rubles. Official provided no explanations for such a decision to the lawmakers.



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