Regional budget for 2015-2017: doing away with deficit or doing away with development?

Regional budget in the Vologda Oblast for 2015-2017 was formed under difficult socio-economic conditions caused not only by a longstanding dependence of Russia’s economy and its budget system on the external economic environment, but also by a number of new factors associated with the aggravation of geopolitical tensions and the application of sectoral sanctions by Western countries. Despite an uncertainty in economic development trends, the new budget is announced to be deficit-free. It would seem that the balance of revenues and expenditures, a fundamental principle of the budget system, has been achieved. However, an analysis of the expenditure part of the budget shows that the balance is achieved at the expense of introducing the austerity regime followed by the restriction of all directions of funding. For 2015-2017 the share of the regional budget expenditures in GRP will decrease to 9.8% vs.13.6% in 2014. If macroeconomic dynamics maintains its downward trend, such fiscal policy in the long term will suppress the economy even more significantly and will ultimately lead to the taxable capacity reduction...