The situation in the Russian financial market as a whole and in the debt market in particular is not stable that is caused by the decrease of the Russian economic condition. Subjects of the Russian Federation experience more and more difficulties in solving issues of new borrowings under the conditions of deficit and limited federal funds. However, a significant increase in the state debt of subject of the Russian Federation (for reference only, the 92% increase for the period of 2012–2014) is caused by some factors such as performance of the “May decrees” of the Russian President and the low quality of debt management. The article analyses the current situation in the debt market of RF subjects and gives suggestions for improvement of the regional debt situation.
Highlights:
► The procedure of borrowing by the federal subjects of Russia proceeds under complicated geopolitical and economic conditions
► As of 1 July 2015, the public debt of the federal subjects of Russia is 2 121 billion rubles which is 2,9% of the national GDP
► According to the data of laws on the budgets of the federal subjects, the general upward tendency in the public debt growth will preserve in 2015–2017
► The federal subjects’ public debt growth is conditioned by the regions’ necessity to fulfill their social spending responsibilities and also by the ongoing fulfillment of the so–called “May decrees of the Russian president”.
► Over the recent time the public debt level has not been exceeding 36% of the regional budget profits, excluding the gratuitous receipts, and its level can be considered more or less safe
► The debt structure of a number of federal subjects is far from optimal (a considerable part of the debt is constituted by budget loans and short– term obligations)
► For the preservation of debt sustainability it is necessary to conduct a responsible regional debt policy
► The current legislation contains no efficient mechanism for influencing on the borrowers whose debt ratios are at risk
► There is a need for the discussion of the problem of improving the legislation in the field of the regions’ debt load regulation
► In case of gradual improvement of the macroeconomic situation and relative stability in the financial markets, it will be possible to reduce the borrowing costs, which, in its turn, will entail an activization of the regions’ primary placements in the middle and in the second half of 2015
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