(this follows from a review
published by the Gaidar Institute). For July-September, transfers to regional treasuries were down 23.2% year-on-year, the highest drop among all revenue items in regional budgets. Almost all types of federal transfers, which account for every sixth ruble of regional budgets, have been slashed.
Moscow is reducing direct support for regions as more and more funds from the federal treasury are consumed by security forces and the army sent to conquer Ukraine.
In the reallocations from the closed to the open part of the budget, the federal government also increased subsidies to some state-controlled companies and for “preferential” (state-backed) mortgages (for the programs that will be in effect until July 1, 2024). Thus, budget expenditures on preferential and family mortgages next year will increase almost fourfold: from RUB 119 billion originally planned to RUB 454 billion
Over the first eight months of 2023, 95% of all mortgages in the Russian primary real estate market were issued through preferential programs. Construction of freestanding houses is completely dependent on these programs, with 99.8% of loans
issued to build them being “preferential.”
Meanwhile, no decision has yet been made on subsidizing loans that the largest state-owned companies previously raised from banks. On November 1, news emerged that officials from the biggest state-owned companies – Russian Railways, AvtoVAZ, Roscosmos, Aeroflot – had complained about rising interest rates on floating-rate bank loans amid Central Bank key rate hikes. Without subsidies, the state-owned companies said they would have to reduce investments and raise tariffs
For example, whereas in 2023 AvtoVAZ is spending about RUB 10 billion to service loans from banks, next year, due to rising rates, these expenses will jump to RUB 17 billion, said Sergei Gromak, vice president for government and investor relations at the state-owned company, during a round table. Russian Railways First Deputy Managing Director Vadim Mikhailov agreed
According to Mikhailov, at a key rate of 15%, rates on five-year loans to develop infrastructure will be more than 17%. In his view, “such a [high] rate for infrastructure projects, which are on the edge of delivering a return or cannot at all, does not make any sense.”
Mikhailov emphasized that Russian Railways understands “all the restrictions that exist now in terms of the budget and the use of NWF funds;” however, without government support for major infrastructure projects, the only alternative source of funds will be increasing tariffs, he warned. Starting December 1, 2024, railway freight tariffs are already scheduled to rise 10.75%
(this is included in the forecast of the Ministry of Economic Development, which serves as the basis for calculating the new budget).