Intergovernmental equalization in Russia: Assessing efficiency and the issues of reducing interregional disparities

Growing interregional disparities and the increasing dependence of many Russian regions on federal financial assistance underscore the need to assess the efficiency of the current system of intergovernmental equalization. The aim of the study is to reveal the impact of intergovernmental transfers on regional fiscal capacity and the degree of interregional asymmetry. Drawing on Federal Treasury data on the execution of consolidated regional budgets, we conduct a comprehensive assessment of the effectiveness of the transfer mechanism for 2012–2024. By distinguishing three qualitatively different stages – pre-crisis, pandemic, and post-pandemic – we trace the evolution of the equalizing effect under changing macroeconomic conditions. The methods include statistical grouping, coefficients of variation and asymmetry, Spearman’s rank correlation, and regression analysis. The findings show that intergovernmental transfers smooth interregional disparities in budget revenues (the coefficient of variation falls by a factor of 1.5–1.7), but do not lead to a lasting reduction in the gap between the most and least fiscally secure regions (the decile ratio for total revenues remains between 2.4 and 3.0). The results also reveal a temporary weakening in 2020 of the relationship between regions’ own revenues and federal financial assistance (Spearman’s coefficient dropped to 0.58) due to the expansion of anti-crisis support during the pandemic. Moreover, the interregional hierarchy of fiscal capacity remains highly stable after transfer redistribution (Spearman’s coefficient > 0.7 in most years), pointing to the persistence of existing disparities. Overall, the current model of intergovernmental regulation is highly sensitive to external shocks while offering only a limited long-term equalizing effect: it is effective tactically in smoothing the consequences of crises but remains only partially effective strategically in ensuring long-term regional convergence. The study’s practical significance lies in the possibility of using its findings to refine intergovernmental fiscal mechanisms and design policies for narrowing regional disparities.