Regional Disparities and Fiscal Federalism in Russia

By Oksana Dynnikova, Annette J Kyobe, Slavi T Slavov

May 20, 2021

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Oksana Dynnikova, Annette J Kyobe, and Slavi T Slavov. Regional Disparities and Fiscal Federalism in Russia, (USA: International Monetary Fund, 2021) accessed September 20, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper examines how regional disparities have evolved in Russia and how Russia’s system of intergovernmental fiscal relations is managing these disparities. Regional disparities have fallen over the past two decades but remain relatively high. Socioeconomic outcomes remain worse in lagging regions despite faster growth and convergence in income levels. The twin shocks of COVID-19 and lower oil prices appear to have impacted richer regions disproportionately. Compared to other large countries with federal systems of government, Russia stands out with its high reliance on direct taxes as a revenue source for its regions. Transfers from the federal budget to the regions provide some redistribution by reducing the dispersion in real per capita fiscal spending, but also tend to be associated with lower growth. The Russian fiscal system offers degrees of redistribution and risk sharing of around 26 and 18 percent, respectively—with in-kind social transfers contributing the most. Finally, federal transfers in the aggregate tend to be procyclical and are also fairly unresponsive to shocks to regions’ own revenues.

Subject: Disposable income, Economic sectors, Financial crises, Fiscal federalism, Fiscal policy, Income, Income inequality, National accounts, Revenue administration

Keywords: Complex system, Disposable income, Fiscal federalism, Global, Income, Income inequality, Inequality in Russia, Risk sharing, Russia's system, Transfers from the federal budget

Publication Details

Pages:

42
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/144
Stock No:

WPIEA2021144
ISBN:

9781513573649
ISSN:

1018-5941

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