Government meeting


Transcript of the beginning of the meeting:

Dmitry Medvedev: Good afternoon, colleagues! A few words about today’s agenda: we will discuss issues related to the improvement of regional development policy. This is an issue we work on every day. I have recently been to Krasnoyarsk and we discussed the Siberian factor there - the development of Siberia. Of course, the self-sufficiency and responsibility of the regions are very important. The degree to which they are decentralised and the level of power the regions have - I mean, of course, their responsibility for the decisions they make, including financial responsibility. But this responsibility, as well as the process of decentralisation, ought to be a two-way street.

Today, we will discuss two interrelated government documents, two programmes: Regional Policy and Federative Relations, and Creating the Conditions for Effective and Responsible Management of Regional and Municipal Finance and Improving Sustainability of the Regional Budgets. These are two quite major projects. Currently, there are 23,000 municipal entities in Russia. Their effective interaction, the cooperation between the centre, the regions and local governments will determine whether Russia achieves its priority objectives. We need to oversee how the budgets are formed, to increase their competitiveness, and at the same time, make them open, promote competition between managing teams and create conditions for strengthening personnel potential, especially at municipal level. New growth points will appear and we know where – the Far East, Siberia, Russia’s south and the Kaliningrad Region – but we should not forget about other parts of our vast country. A federal form of government is a dynamic rather than a static system. We must find balanced decisions that allow regional and local government bodies to utilise their powers as effectively as possible and meet the justified demands of our people. These bodies must maintain ethnic peace and accord. This is critical for our federative multi-ethnic state. It is necessary to develop all territories in a balanced way and to try eliminate imbalances that have existed historically or have emerged in the last few years.

The draft state programme on regional policy and federative relations submitted by the Ministry of Regional Development consists of three sub-programmes aimed at improving federative relations, strengthening the unity of the entire nation and promoting ethno-cultural development of all ethnic groups. We must also facilitate the voluntary resettlement into Russia of our compatriots who live abroad. This is the first programme.

The second task is to create conditions for the effective and responsible management of regional and municipal finances and to enhance the stability of regional budgets. This document also consists of three sub-programmes. The main goal of the programme as a whole is to ensure equal conditions for carrying out the expenditure commitments at the regional level and improving the quality of state budget management.

Inter-budget relations and financial support of the regions is a major aspect of our regional policy. The programme should provide measures on improving the system of transfers from federal and regional budgets, with a view to balancing them out and encouraging regional and municipal governments to boost their own economic potentials.

The programme calls for huge federal budget allocations – more than 5.5 trillion roubles until 2020. They should be used rationally rather than engendering a welfare mentality.

I’d like to emphasise once again that it is not enough to even out development conditions and budgets. Yet we must work to reduce the number of highly-subsidised regions where the share of inter-budget transfers from the federal budget exceeds 60%. It is also necessary to decrease the amount of accounts payable in the expenditure of consolidated regional budgets, and to increase the number of regions that manage their finances effectively. In fact, this is what all the regions should be doing.

As usual, we have invited two governors to discuss these issues at our Government meeting – the Governor of the Voronezh Region Alexei Gordeyev and the Governor of the Perm Territory Viktor Basargin (I will give them the floor). We have many other issues on the agenda today but I will not dwell on them in detail now.

Let’s start with the first state programme. Mr Slyunyayev, please speak about the draft programme on regional policy and federal relations.

Igor Slyunyayev (Minister of Regional Development): Mr Medvedev, ladies and gentlemen. It was stated in the President’s address to the Federal Assembly and the Main Guidelines for Government Performance until 2018 that balanced regional development is a key priority of federal policy.

The Ministry of Regional Development has drafted a state programme on regional policy and federative relations that is aimed at reaching this goal. Its main goal is to elaborate a common approach to regional policy, consolidate financial self-sufficiency of the regions and reveal their investment potential.

Today our regions differ not only in terms of indicators of socio-economic performance and production potential, but also their infrastructure development level, scientific and technical facilities and living standards. It's clear that in eliminating imbalances between regions, we should supplement our policy of balancing them out with a policy of spurring their development. Each region has its own potential and growth points. Our task is to make the most of regional resources and create the conditions for attracting investment and ensuring high living standards in the entire country.

The further delimitation of responsibilities should become a major instrument of regional policy. Today the regions have 189 basic and transferred responsibilities, most of which directly affect their economic status and living standards. We will continue upgrading legal, personnel and financial support for the transferred responsibilities. Under the programme, we will introduce a common subvention in 2014. This will help us to improve the quality of budget expenditures, consolidate the regions’ financial independence and enhance control over the implementation of transferred responsibilities. A common subvention will give the regions a high degree of freedom of action in distributing funds.

Development of local government is another priority. All key requirements are met locally and people judge the Government in general by the performance of local bodies. The programme lists the main problems: local budgets have low incomes of their own; municipalities are short of skilled personnel and are an object of excessive attention of regulatory, supervisory and law-enforcement bodies. 

A system for assessing the performance of regional and local government bodies creates important incentives. During the time of its application it has become an efficient instrument for providing incentives and revealing different socio-economic problems. Starting this year, people will judge Government performance by the most sensitive spheres, such as salaries, healthcare, education, roads, housing and utilities and business opportunities. The role of public control will increase substantially.

The state programme provides for measures to build up the regional tax potential, including incentives. Annual transfers of 10 billion roubles will be made for this purpose. Calculation of subsidies for the regions will be based on the GRP dynamics, investment, revenues of private households, production and tax indicators.

The sub-programme on assisting in the voluntary resettlement of compatriots living abroad should become yet another instrument of resolving socio-economic and demographic tasks in the regions. We have carried out this sub-programme since 2006 and it has proved its efficiency. Forty regions have taken part in it and 125,500 people have moved to this country. Almost two- thirds of them are young people with higher or special secondary education. They are the most important asset for the regions – the economically active and competitive population.

On September 14, 2012 President Vladimir Putin signed an executive order endorsing a new version of the resettlement programme, which has become of indefinite duration. The legal foundation of this programme has practically been drafted and now it's up to the regions. They will start implementing it at the regional level in the near future.

One more sub-programme is aimed at consolidating the unity of the Russian nation. Today people of 193 ethnic groups who speak 277 languages and dialects live in Russia. The main factor uniting our multi-ethnic society is a common Russian nationality. Our key priorities are to grant all ethnic groups the right to self-identification and preservation of their languages, culture, traditions and religion, as well as to maintain inter-ethnic peace and accord. The sub-programme provides for measures to support national cultural associations, indigenous groups and minorities of the North. It also envisages measures on drafting a strategy of ethno-cultural development and multi-ethnic regional programmes. In addition, it provides for the formation of a system of monitoring inter-ethnic relations to prevent conflicts at an early stage and bring up young people in the spirit of patriotism and religious tolerance.

Thus, the state programme is aimed at resolving various regional tasks. We expect that its implementation will help increase the fiscal capacity in Russia’s regions and municipalities through tax and non-tax revenues to 82% by 2020, boost the quality of local government and citizens’ satisfaction with its work, increase the number of citizens who have a positive view of interethnic relations, as well as increase the annual number of participants in the state programme for compatriot relocation to 55,000 people.

The state programme’s key targets can be met only through a comprehensive deployment of all regional policy tools, including the strategy for socio-economic development programmes for federal districts and regions, special programmes for the priority development of Siberia and the Far East, North Caucasus and the Kaliningrad Region, and plans for the comprehensive development of municipal entities, as well as industry-specific programmes for the development of industry, transport, communications, healthcare, education, and the social security system.

Mr Medvedev, colleagues, the state programme can become a proper tool for regional development together with the programme to create the conditions for efficient management of regional and municipal finances. This programme will be submitted today to the Government for consideration. The draft state programme, in accordance with established procedure, has been coordinated with all concerned ministries and departments, as well as with the bodies responsible for implementing it. I hope you will support it.

Dmitry Medvedev: Seems almost like an idyll. Are there any comments? Mr Belousov (addressing Andrei Belousov), please go ahead.

Andrei Belousov (Minister of Economic Development): I would like to note that we haven’t seen the latest version of the programme, and I will speak based solely on the report. Back then, we agreed – and a decision was taken – that state programmes would become the main tool for implementing the Policy Priorities of the Government. In this regard, I think it is reasonable to compare this programme  with the corresponding Section 5 of the Policy Priorities. First, I would like to say that the goal of the state programme and the goal specified in the Policy Priorities are concurrent. Both goals are stated as ensuring balance in the development of Russia’s regions, or regional development, as the Policy Priorities say.

Yet, I would like to note that the corresponding section of the Policy Priorities cites four priorities. The first is diversifying and developing the economies of single-industry towns. Today, we have 333 single-industry towns, with some 16 million residents. Of them, roughly 70 towns face long-term difficulties. This is the result, among other things, of persistent social and infrastructure problems, as well as of the fact that the dominant enterprises in such towns are heavily affected by the current global economic situation. We think the state programme should include a separate sub-programme spelling out the Government’s efforts to resolve the issue of such towns in the foreseeable future.

The second priority stated in the Policy Priorities is improving inter-budget relations, which includes strengthening competition between regions as a means to stimulate economic growth. The state programme includes a whole range of related issues. But I would like to say that the next issue we will consider is the state programme to promote efficient and responsible management of regional and municipal finances – and there are a number of discrepancies between the programme we are considering now and the programme to be submitted by the Ministry of Finance. I believe that it would be proper to eliminate these discrepancies while finalising the programme.

The third priority concerns setting up new economic growth centres in the Volga region, the Urals and Russia’s remote territories. Unfortunately, the programme does not touch upon this issue. At the same time, the Government has a wide array of measures aimed to achieve this goal – first of all, by establishing and expanding of the standard investment climate and introducing corresponding performance indicators to assess governors’ performance, and so on. This is lacking in the state programme, and I think this should be taken into consideration while finalising it.

The fourth priority of the Policy Priorities is the accelerated development of strategically important regions, such as the Far East, southern Russia, and the Kaliningrad Region. We are developing state programmes for each of these regions.

Another topic is Arctic development, which is a major geopolitical, political and economic issue. We thought that these issues should be reflected in the programme we are considering today. And it would probably make sense to develop a separate programme for the Arctic. Thank you.   

Dmitry Medvedev: Thank you, Mr Belousov.

Quite a lot has been said. Mr Kozak [addressing Dmitry Kozak], the draft protocol resolution has your signature – so you have seen the programme, haven’t you?

Dmitry Kozak (Deputy Prime Minister): We have seen it several times. I think that we should discuss the two programmes together, as they should be compatible and, as Mr Belousov said, mutually complement the programme to make the management of regional and municipal finances more efficient, as regional inter-budget relations – as well as regional and municipal finances – are major tools of regional and federal policy, along with legislative measures. 

Undoubtedly, the programme we are considering requires substantial improvements, including those on the issues mentioned by Mr Belousov. On this point I totally agree with him, and we have agreed that this programme can be taken as the basis and it should be finalised – particularly, in specifying the measures to be implemented under the programme, not just participation in legislative initiatives related to the delegation of authorities. I think that under this programme we should finalise work on delegating authorities soon and not change anything else until 2020.

As for promoting the development of depressed regions as a priority, here all measures should also be spelled out under the two programmes – the programme we are considering now and the programme to be considered next.

The Ministry of Finance and the Ministry of Regional Development were instructed to combine all grants being allocated to regions for their cost-effective work, to form one 11 billion rouble grant and to execute this grant in line with the August 2012 Presidential Executive Order. Programme assets have now been merged. Ten billion roubles are to help expand the tax potential, and the budget stipulates one billion roubles for assessing the effectiveness of regional authorities. In reality, the Presidential Executive Order, which has been issued, contains criteria that make it possible to assess the overall effectiveness of regional authorities and the expansion of the tax potential. These are the key criteria for assessing the effectiveness of regional executive authorities. It is for this reason that I suggest that we in general finalise these provisions today. And we need a ten-day deadline for finalising both programmes, which should not contradict each other, but aim to achieve one and the same goal.

Dmitry Medvedev: Will ten days be enough?

Dmitry Kozak: We have promised the President to approve all these state programmes by March 1. We have been working with these programmes, the ministries have been working for a long time …

Dmitry Medvedev: All right, let’s make it ten days. I don’t mind. Of course, the faster, the better. Let’s hear from Mr Alexei Gordeyev. What do the regions think? Please.

Alexei Gordeyev (Governor of the Voronezh Region): Thank you. Mr Medvedev, colleagues. The objectives we are facing are multi-faceted. Consequently, the authors of the state programme have managed to complete some fairly difficult work. I could name numerous target parameters, including efforts to strengthen the unity of the multi-ethnic residents of the Russian Federation and, at the same time, efforts to expand the regional tax potential. Mr Slyunyayev has made a rather detailed and convincing report. Consequently, I would like to dwell on several proposals, and I will omit the description of the state programme, as a lot  has already been said about it.

First of all, Russian regions approved their respective socio-economic development strategies up to 2020 about a year ago with the active methodological assistance of the federal expert group and the coordination of the Ministry of Economic Development. I suggest that the main executor, co-executors and programme participants should pay attention to these basic regional development documents during the implementation of the programme.

Second, some of the state programme’s measures have to do with local governments. The general target indicator in this section is as follows: “The satisfaction of the population with the work of local governments.” It should be admitted that there are too many factors influencing this parameter, which is impossible to do with the help of a single programme. At the same time, I believe that one factor, namely, the professional standards of municipal employees, should be included in the state programme. As for training municipal officials, the relevant methodological aspects should start at the federal level, to say the least.

And now I would like to mention the last issue. Mr Medvedev, this is a wish for the future. Of course, these comprehensive state programmes, which directly influence regional interests, should be drafted with the cooperation of regional executive authorities. It is possible to overcome this shortcoming, if the Ministry of Regional Development and regional representatives oversee the implementation of the programme and sum up the relevant preliminary results. 

In conclusion, I would like to say that I believe that the approval of the Federal Programme Regional Policy and Federative Relations is quite important and timely. I suggest that we support the document. Thank you for your attention.

Dmitry Medvedev: Thank you, Mr Gordeyev. Mr Slyunyayev (Addressing Igor Slyunyayev), I would like to ask you to clarify two things. First, did you not involve the regions in discussing this programme? Why is the Governor of the Voronezh Region asking about it?

Igor Slyunyayev: You see, in my report, I’m speaking about a comprehensive state-policy approach towards federative relations. The strategy of the socio-economic development of federal districts, the programme of the socio-economic development of Russian regions and departmental programmes, are the main element of our state policy. Of course, we have involved them in the discussion, but, if necessary, we are ready to involve them even more actively.

Dmitry Medvedev: At any rate, this programme should be drafted in direct contact with regional leaders. In reality, this is being done for their sake.

Second, will ten days be enough?

Igor Slyunyayev: Ten days will be enough. May I say a few words about the speeches of my colleagues, including that of Mr Belousov? …

Dmitry Medvedev: There's no need to comment.

Igor Slyunyayev: Just a few words.

Dmitry Medvedev: Please finalise the programme. There's no need to comment.

Igor Slyunyayev: Thank you.

Dmitry Medvedev: Agreed then. I suggest that we use this document as the basis, and that we give them ten days to finalise the programme.

The next programme, Cost-Effective and Responsible Management of Regional and Municipal Finances and Making Regional Budgets More Stable, is linked with the first one.  Mr  Siluanov, you have the floor.

Anton Siluanov (Minister of Finance): Mr Medvedev, colleagues. The stability of state finances is largely determined by the stability of regional and municipal finances, as well as by the stability of their budgets. Consequently, the state budget policy in the sphere of inter-budget relations is called upon to make regional and local budgets more well-balanced. This policy aims to ensure more cost-effective and responsible management of regional and municipal finances.

The Russian Federation’s regions have an extremely differentiated tax potential. The main macro-economic indicators of Russian regions differ by dozens of times over. Consequently, the state programme is called upon to ensure equal conditions for obtaining state services all over Russia, to ensure the sustained fulfillment of regional expenditures and to improve their quality.

The state programme is called upon to accomplish the following three main objectives. First, we must improve the system for the distribution and redistribution of financial resources between various levels of the Russian budget system. Second, we must reduce the differentiation of Russian regions in terms of their budget provision levels and balance both regional and local budgets. And, third, we must ensure more cost-effective management of regional and municipal finances.

This is a two-stage programme. Its first stage is to be implemented in 2013-2015, and the second stage is to be completed in 2016-2020. The purpose of the first sub-programme, Improving the System for the Distribution and Redistribution of Financial Resources between Various Levels of the Russian Budget System, is to improve regulatory documents in the sphere of methodological regulation. It calls for improving the structure and forms of inter-budget transfers.

The current structure of inter-budget transfers is as follows: Grants and subsidies account for about 36% and 40% of inter-budget transfers, respectively.

In our programme, we want to increase the level of regional independence and responsibility. Consequently, the relevant volumes of non-targeted financial assistance being provided in the form of grants … we believe that this support must increase. On the one hand, we will make Russian regions more independent. But, on the other hand, we must demand better results and greater responsibility from them in line with specific parameters being stipulated by Presidential Executive Orders and by the Government.

In these conditions, the state programme stipulates the allocation of inter-budget transfers to regions largely in the form of grants, by reducing the share of subsidies, by completing specific federal targeted programmes and, consequently, by reducing the volume of subsidies and increasing the volume of transfers in the form of grants to even out budget provision levels. At the same time, there are plans to improve the relevant mechanism for providing grants in the form of evening out budget provision levels. First of all, this means incentives making it possible to induce Russian regions to generate their own incomes, rather than resorting to an attitude of dependence.

The relevant grant allocation mechanism already includes several of these instruments. We discuss them frequently with Russian regions and  modify the relevant grant allocation methods. But, on the other hand, we are ready to modify the allocation of grants at a time when we are creating incentives that make it possible to expand the investment potential, primarily in Russia’s Far East and Siberia. At the same time, various preferences being created by regions in order to attract investment should be taken into account during grant allocation. For instance, profit tax and property tax preferences, which reduce the tax potential, should not reduce the volume of grants for evening out budget provision levels. Consequently, we are ready to change the methods for the allocation of the main type of transfers to even out budget provision levels. And we also suggest that these changes be made.

Second, we propose consolidating subsidies. Mr Medvedev, there are currently about 100 types of these inter-budget transfers. Consequently, we are having problems registering these subsidies in regional budgets, monitoring the situation and taking administrative actions, and so on. Obviously, expanded subsidies during the preservation of target indicators and parameters are a step forward, and we have mentioned this repeatedly. In effect, we have noted that the state programme should provide for one or, at most, two subsidies, with the preservation of various target indicators and parameters, which should currently be attained in line with a broad range of subsidies that are being allocated. Despite our discussions of this issue, the situation is still changing rather slowly. Under the draft programme, we stipulate the implementation of projects making it possible to reduce the number of subsidies to 42 before the programme is completed.

After the implementation of the first sub-programme, there are plans to increase the share of grants in the total volume of inter-budget transfers from 37% in 2013 to 42% by 2020. The allocation of the relevant subsidies to the regions, which have been approved in line with the federal law on the budget, is to increase from 16% to 55% by 2020. Colleagues, the situation today is as follows. About 50% of subsidies are currently approved by Government decisions or even by ministerial and departmental decisions, rather than by the law on the budget. Where does this lead? When Russian regions plan their three-year budgets, they don’t see what financial assistance volumes, or subsidies, they should receive during the current fiscal year, as well as during the second and third years. We therefore believe, and I think that this is obvious, that we should make the provision of our financial assistance more transparent. For instance, this can be accomplished by registering all types of inter-budget transfers in the budget, including the three-year budget. As I have already said, the programme calls for reducing the number of subsidies from 93 in 2013 to 42 in 2020. But  target indicators will be retained.

The second sub-programme is intended to ensure the sustained implementation of regional budgets. Its purpose is to reduce the differentiation in budget provision levels of Russian regions and to help balance local budgets. Right now, there is a differentiation of six to seven times between the ten regions with the highest budget provision levels and the ten regions with the lowest budget provision levels. We ensure a differentiation of one and a half to two times, after employing a mechanism for evening out budget provision levels. Consequently, our objective is to provide standard nationwide budget services in such areas as education, healthcare and social services with the help of inter-budget transfer mechanisms and in conditions of substantial differentiation in macro-economic development levels and tax potential levels. The second sub-programme is intended to accomplish precisely this objective.

Such an inter-budget transfer as a budget balancing grant can help balance regional budgets. First of all, we plan to spend this transfer on the objectives, which are stipulated by presidential executive orders, namely, wage increases. We plan to allocate about 100 billion roubles toward these goals this year and in subsequent years. We will monitor this parameter. And, consequently, we plan to include budget balancing grants in the programme, with due consideration for regional efforts to fulfill outlined parameters with regard to wage increases for public sector employees, and to attain qualitative improvements in the relevant budget sector areas up to 2018. We will use precisely these transfers to ensure the provision of quality services in the relevant sectors where the wages are being increased. This is a serious mechanism and instrument for cooperation with the regions.

Under this sub-programme, we plan to increase per capita budget provision levels by 120% up to 2020 as compared to the current period. We plan to ensure the well-balanced implementation of regional budgets. This will ensure compliance with maximum budget deficit and public debt volumes. In addition, overdue payables will be reduced three-fold compared to  2012. This, too, is an important indicator.

The third sub-programme is intended to improve the quality of managing regional and municipal finances. We stipulate transfers to encourage those  Russian regions that attain maximum possible key quality indicators, including the development and introduction of online state and municipal services, the establishment and development of  multifunctional centres for better-quality and more affordable services, the introduction of programme-targeted methods in the activities of the executive authorities, etc. This will make it possible to accomplish the objectives set. The relevant annual transfers, which total one billion roubles, are quite impressive. They are called upon to help improve the quality of managing regional finances. But, nevertheless, the regions receiving these transfers improve the quality of their budget policy implementation.

Colleagues, the programme does not envision any additional funding, as compared to the three-year budget. The provision of resources meets the budget potential of our mid-term plans. The programme has been coordinated with our colleagues, and I ask you to support it.

Dmitry Medvedev: And could you please mention its total volume once again?

Anton Siluanov: Mr Medvedev, the total annual volume of our various sub-programmes is about 500 billion roubles, because a single grant to even out budget provision levels is just over 400 billion roubles. Add to this budget balancing grants and those for the implementation of executive orders. This makes up for about 100 billion roubles. Consequently, the total volume of the programme is …  

Dmitry Medvedev: That's about 5.5 trillion roubles up to 2020.

Anton Siluanov: Yes.

Dmitry Medvedev: All right, thank you.

Anton Siluanov: Thank you.

Dmitry Medvedev: Please, colleagues, would you like to make any comments? Unlike the first one, everything is more or less clear here. Mr Kozak (Dmitry Kozak), you have the floor.

Dmitry Kozak: Although this programme has been finalised to a greater extent, I believe that it should also be modified. We need ten days to approve both programmes simultaneously. All of you have heard that, according to Mr Siluanov’s report, mechanisms making it possible to ensure the more cost-effective performance of executive authorities are the main elements of this programme. This, too, is part of the regional policy. Consequently, I suggest that this programme be approved as the basic document. We should specify some of its measures, which, doubtless, deserve all our support. More impressive subsidies should also be allocated. But we need to clarify measures to expand these subsidies, including specific locations, deadlines and co-executors. Most Government members and representatives of federal executive authorities with powers extending to the regional and municipal levels, who are sitting here, are interested in this. This work has been going on for a long time, but with difficulty. Consequently, we need to take measures that will make it possible to expand these subsidies under the state programme.

In addition, we have to amend budget legislation in order to increase the stimulating role of federal budget transfers into regional budgets. We have discussed this as well. On the one hand, we are encouraging the regions to take federal budget subsidies to perform various industrial tasks. On the other hand, once they receive the transfer, they are listed as highly-subsidised and their financial rights are limited. This policy has no logic at all. Subsidies are an entirely different instrument of regional development and we must make the proposed amendments to the budget legislation.  

Dmitry Medvedev: Okay. Thank you, Mr Kozak. Mr Basargin, what do you think about subsidies? Should we integrate them? What should be done? How do you view this from your region? Go ahead, please.

Viktor Basargin (Governor of Perm Region): Mr Medvedev, ladies and gentlemen. First of all, let’s give credit to the Ministry of Finance for drafting this programme. In this case all wishes of the regions have been taken into account. Last week the programme was polished up, taking into account of the last-minute comments from the regions.

Mr Medvedev, as you have said, it is very important to prevent the programme from depriving the leading regions of incentives to increase their tax base. At the same time, it should not encourage outsider regions to develop a welfare mentality. Maybe we should emphasise these ideas on incentives and work with outsider regions in the programme as such.

As for the proposals to… To ensure the long-term equilibrium of the budget system, it is very important for Russia to assess its expenditure commitments at each level and compare them with available revenues. Therefore, we would like to make one more proposal on analysing federal budget revenues to stabilise the revenues of the regions. We should probably be more specific on the work with municipalities. We do not have anything on them and their finances…So we would like to pay your attention to this as well.

We have several more proposals on assessing performance. First of all, we should reduce the dependence of the regions’ consolidated budgets on federal inter-budget transfers. We think the programme only provides for the perfunctory reduction of transfers, whereas this can be done at the level of fixed local revenues or through the redistribution of responsibilities.   

It is also very important to assess the growth of executive bodies’ independence. We suggest the following main criterion of their independence – the share of non-targeted transfers from the federal budget in the amount of financial aid to the regions. We must make amendments to the Budget Code for the adoption of the programme’s budget. I’m afraid that the figure of 55% of all expenses under state programmes may be too high for the programme unless we make legislative amendments.

In general I believe – as you, Mr Medvedev have already said – that the programmes are interconnected and we should adopt them by all means. We discussed consolidated subsidies at the State Council and this idea enjoys the support of the regions. It will likely give them more freedom of action with respect to their budgets, and I support it for this reason as well. I think we have everything necessary for implementing both the programme on regional development and the one on financial regulation. We must support them.

Dmitry Siluanov: Thank you, Mr Basargin. Mr Siluanov, is everything clear from what was said? Okay. Any questions? In this case I suggest supporting the second programme. Let’s set aside 10 days for finishing touches so that we can submit it for endorsement together with the first one. That’s settled. 


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