Due to the upcoming elections, the regions may be in a desperate situation. To this conclusion, as the newspaper “Vedomosti”, came to international rating Agency Standard&Poor’s (S&P).

According to analysts, the main cause of the increase in debt will be the deterioration of financial performance in the period of 2016-2017 years because of slowing revenue growth and probable increase in costs taking into account the electoral cycle – parliamentary (2016) and presidential (2018) election.

According to their calculations, loans regions in 2017 to reach 1.7 trillion roubles, and expenditures for repayment of debts – 860 bn of the Total debt of the Russian regions will amount to about 4.3 trillion roubles by the end of 2017, and the debt structure will be dominated by commercial loans, i.e. Bank loans.

The subjects of the Russian Federation can also solve their financial problems at the expense of bond issuance and budget loans. But budget loans, apparently, are attracted not all, bonds is not such a flexible and effective tool, as Bank loans.

The direct debt of the regions, thus, can achieve almost half of the current income of the regions, and the prospects for its reduction have not yet seen.

In the Federal budget in 2016 to support the regions allocated 310 billion roubles in loans. This is not enough, according to S&P: the needs of the regions in refinancing for 40% higher.

In addition, aid from Moscow only allows to postpone the issue of refinancing in 2018?2019, when there will come term of repayment of the most part, budgetary credits, mark in S&P.

Some regions may be in a stressful situation: financial markets and banks will not help to refinance a debt that default will be able to save the support of the Ministry of Finance or the hard costs of sequestration. The last before the elections impossible.

According to the chamber, we will remind, in Russia 76 out of 85 regions have a budget deficit. Half of the regions debt load as of January 2015 amounted to more than 60% of revenues, in the 12 subjects it exceeded 100% of revenue.

The growth of the debt burden on the regions has provoked the President’s “may decrees” of 2012. According to them, social expenditures in local budgets has doubled, which in turn has forced several regions to literally wallow in debt.

The upcoming elections leave no room to restrain spending, and the debt load of the regions will grow.

S&P: debt of Russian regions are growing, and to reduce costs does not allow the upcoming elections 12.02.2016

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