Interlevel Financial Flows in the Budget System of the Russian Federation

Abstract

The article examines direct and reverse financial flows between regions and the federal center. The objectives of regional and budgetary policy are considered. The methodological problems of assessing the scope of financial flows and their interchangeability are discussed. The author agrees that donor and recipient regions should be distinguished according to the criterion of balance of all interlevel financial flows, rather than being based only on receipt of funding or transfers from the federal budget. Such an approach makes it possible to partially eliminate changes in budget legislation on allocation of funding to regions. Comparison of the results of studies conducted in 1996–1998 and now shows that the number of donor regions has slightly increased for the period under review. It was found that consolidation of public finances in Russia did not lead to a significant reduction in differentiation in the development levels for regions. A trend of partial replacement of interbudgetary transfers by direct federal budget expenditures is revealed.