Debt sustainability criteria. Kiryushkina A.N.

The formation of the volume of consolidated public debt (internal and external) must be under the control of the state, since its accumulation in excess of the possibility of actual repayment on time threatens default. In this regard, international financial organizations (IBRD and IMF), member countries of the Paris Club of creditors and international rating agencies use a list of indicators used in assessing the quality (reliability) of debt obligations and assigning sovereign credit ratings.

In international practice, the following indicators are used: in static reflecting the debt situation in the current conditions:

• debt-to-GDP ratio characterizes the scale of accumulated debt. Depending on the share of exports in GDP, the potential for foreign exchange inflows to pay off debt can be determined;
• the ratio of the volume of the budget deficit to the volume of GDP - characterizes the state of the budgetary sphere, in which, in order to cover the budget deficit, the corresponding share of GDP will have to be redistributed through internal loans or resort to external ones;
• the ratio of expenses for repayment and servicing of debt to the volume of GDP - characterizes the share of GDP that will be a “deduction” from the volume of real budget expenditures. This value also characterizes the scale of return of funds to state creditors.

Indicators are also used in dynamics characterizing changes in the debt situation:

• the ratio of external debt to GDP - characterizes the ability to repay the debt;
• the ratio of expenses for servicing public external debt to income from exports characterizes the change in the resource base to repay the debt, since exports are one of the main sources of foreign currency inflow to ensure liquidity of the entire payment system;
• the ratio of the volume of external debt to the volume of total debt - characterizes the change in the need for foreign currency to service the debt;
• The ratio of the volume of foreign exchange reserves to the volume of short-term debt characterizes the change in the economy’s ability to make debt payments during the year. The presence of sufficient foreign exchange reserves helps to improve the country’s rating as a borrower and allows borrowing at lower rates;
• weighted average interest rate – indicates a change in the “price” of the debt;
• composition and structure of debt - reflect changes in the volume and share of the market and non-market parts of the debt, the structure of the debt by the time of occurrence of obligations, by instruments and their maturity dates.

Indicators of debt sustainability can also be:

• outstanding government debt (including interest arrears) as a share of GDP;
• debt per capita, which characterizes the burden falling on each citizen;
• budget deficit to GDP ratio;
• the ratio of the amount of service costs to GDP, i.e. the share of interest payments in the gross national product.

The use of such indicators as:

• borrowing ratio, i.e. share of new borrowing in general government spending;
• the ratio of service payments (interest) to expenses, i.e. share of interest payments in government spending;
• the relationship between interest expense and total tax revenue.

The indicators determined by the Ministry of Finance of Russia when developing the three-year budget plan are given in Table. 8.4.

Table 8.4

Indicators of the debt burden on the Russian economy in 2011-2014, %

Indicator name					Threshold meaning
1. Government debt to GDP ratio
2. Share of expenditures on servicing public debt in the volume of federal budget expenditures
3. Ratio of expenses for repayment and servicing of public debt to federal budget revenues
4. Ratio of total public debt to federal budget revenues
5. Ratio of external public debt to annual export volume
6. Ratio of expenses for servicing public external debt to the annual volume of exports

Debt sustainability indicators are presented somewhat differently in the materials of the Accounts Chamber of the Russian Federation (Table 8.5).

Table 8.5

Indicators of debt sustainability of the Russian economy in 2006-2012.

Indicator name					Control threshold value
Government debt, % of GDP
Public debt, % of federal budget revenues
Share of domestic public debt in total public debt, %
Share of external public debt in total public debt, %
Costs of servicing public debt, % to federal budget expenditures
The share of long-term securities in the total volume of domestic public debt, %
Share of market debt in Russian government debt, %

In dynamics, changes in these indicators quite fully characterize the current situation. If it turns out to be dangerous, then adequate measures are taken to reduce the economy’s dependence on imports, stimulate exports, etc. However, public debt is often used as a tool for creating a default situation. For example, in the United States, as of November 30, 2004, the US federal debt was $7.9 trillion, but already in 2012 it exceeded $15 trillion, a level close to 100% of GDP, and continued to grow. The limit accepted in international practice (60% of GDP and 3% of budget expenditures) does not restrain the accumulation of public debt. As for the validity of the indicated critical values, they do not exhaustively characterize the situation in the country in connection with its debt, but in general they still show under what conditions an excess of the actual values ​​relative to the normative ones is not catastrophically dangerous.

The Ministry of Finance of Russia does not define or publish a whole series of the indicators listed above. The share of direct investment in the volume of funds received from loans is practically not reflected in official statistics.

Back in the 19th century. Russian scientists noted the decisive importance of what the state uses the taxes collected and loans received for. If, at the same time, budget investments grow and infrastructure conditions are created for producers, then even significant public debt is not dangerous, since the source of its repayment grows. However, this problem is not easily solved. Unfortunately, lenders such as the IMF impose such conditions on loans to countries in need that they are not interested in investing. Yet what is important is not so much what the debt is relative to GDP, but what proportion of the debt is used for productive investments and in the social sphere, where quick returns are possible. From these positions, the composition of indicators of the debt burden on the economy it is necessary to introduce the ratio of expenditures on investments from budget funds to the total volume of the aggregate (consolidated ) external and internal debt.

For several years, a gradual decline in both relative and absolute indicators of public debt has been a reality in Russia. The ratio of public debt to GDP decreased (Table 8.6).

Table 8.6

Dynamics of the volume of public debt in Russia (billion rubles and billion dollars)

Name
Public debt, total, billion rubles, including:
domestic debt, billion rubles.
external debt, billion rubles
External debt, billion dollars
All the debt % to GDP*
Interior
External debt, % of GDP

* For reference: Russia’s GDP in 2012 – 58.7 trillion rubles; in 2015 – 82.94 trillion rubles. When calculating the upper limit of public debt, the dollar exchange rate of 30 rubles was used. per dollar

But there were also alarming and clearly negative trends:

• a) after 2007, an increase in the total amount of public debt and an increase in domestic public debt becomes a reality;
• b) rapid growth of external corporate debt. This is evidenced by the data presented in table. 8.7.

Table 8.7

Growth of corporate external debt in Russia (in billion dollars and in % at the end of the year)

In Russia, at the time of the aggravation of the liquidity crisis (August 2008), the external debt of banks and companies exceeded $510 billion - about 90% of the volume of international reserves for that period. It was in this regard that the state was forced to allocate funds to refinance the debt, since by the end of 2008 corporations had to repay about $45 billion in debt to creditors, and by the end of 2009 - about $210 billion. By that time (August 2008 .) the external liabilities of a number of banks were: Vneshtorgbank - $30.2 billion, Rosselkhozbank - $16.0 billion, Gazprombank - $8.3 billion, Sberbank of Russia and Alfabank - $6.1 billion each. A number of companies had significant external debt. In particular, Rosneft at the beginning of 2009 had a debt of $19.4 billion, of which $5.4 billion had to be repaid in 2009. To refinance the debt of the named company and for Transneft to invest funds in the construction of a branch Russian oil pipeline "Skovorodino - China Border" with a capacity of 15 million tons per year with the possibility of increasing to 30 million tons per year, in February 2009, an agreement was concluded with China to receive a loan ($25 billion) provided by transport infrastructure. This became a factor in the expansion of oil supplies to China;

c) weak use of government loans for investment in the real sector of the economy. The growth of domestic borrowing results in solving the problem of covering the budget deficit. However, the share of long-term loans is growing. The upper limits of government internal and external debt increase annually (Table 8.8). It can be reasonably predicted that this process will have an adverse effect on the future generation. Therefore, it is important to observe the measure. In any case, it is necessary to formalize this measure and monitor its compliance. This is also important due to the fact that foreign exchange resources reserved from oil exports are used to invest in securities of foreign countries.

For the next three-year budget period, growth in the volumes of the Reserve Fund and the National Welfare Fund is also predicted. Accordingly, it was assumed that the latter would be used as an external asset. The actual volumes of the Reserve Fund and the National Welfare Fund at the beginning of 2013 were formed at the same level - 2.6 trillion rubles each. every. However, this is less than what was in both funds at the beginning of the crisis year of 2009. Then the Reserve Fund amounted to 4.85 trillion rubles, the volume of the National Welfare Fund was at the level of 2.9 trillion rubles. Given the mentioned volumes of reserved resources, the desire to increase long-term domestic debt raises doubts. This will hinder the process of economic modernization. The use of these debt policy instruments requires radical adjustments.

Table 8.8

Growth of annually established upper limits of Russian public debt, billion rubles.

• Main directions of the state debt policy of the Russian Federation for 2012–2014. / Ministry of Finance of Russia // Ministry of Finance of the Russian Federation: [official. website]. URL: minfin.rU/conimon/img/uploaded/library/2011/08/Dolgovaya_politika_na_sayt.pdf (date of access: 06/25/2013).
Annual supplements to federal laws on the federal budget. See: Federal Law of December 3, 2012 No. 216-FZ “On the federal budget for 2013 and for the planning period of 2014 and 2015.”

Tarba K.O. Debt sustainability of the constituent entities of the Russian Federation // Economics and business: theory and practice – 2017. – No. 5. – pp. 234-241

DEBT STABILITY OF SUBJECTS OF THE RUSSIAN FEDERATION

K.O. Tarba, Master

Financial University under the Government of the Russian Federation

(Russia Moscow)

Annotation. This article discusses the main problems of debt settlement th activity of the constituent entities of the Russian Federation. The purpose of the article is to analyze state T debt of the constituent entities of the Russian Federation and development of proposals for improvement n the development of debt policy. Analyzed the dynamics of debt in the period from 2011 to 2016gg. Recommendations foroptimization of the debt policy of Ro subjects With Siysk Federation. A model is proposed to guide subjects when drawing up a borrowing plan. Defined ways to improve public debt management.

Keywords: debt sustainability, constituent entities of the Russian Federation, balance And budget balance, budget deficit, public debt, budget revenues, budget expenditures, gross regional product.

In modern economic literature A round, significant attention is paid to studying the essence of debt sustainability O sti, but for today there is no clear about definition understanding of this concept. Offered ra s look at this term from the point of view of various approaches and definitions and in s draw conclusions based on the specifics and ki opinions. The global financial crisis, which began back in 2008, demonstrated T stated that debt sustainability indicators th efficiency is not empty statistical data, but direct elements of effectiveness V government debt management rst .

In domestic literature on debt O how stable a subject of the Russian Federation is, it is customary to understand this with O the state of its budget system, with oh oh the nomics of the subject does not exceed the defined e lennogo standards, and the borrowings carried out by the subject are based on the optimal structure and maximum b many uses opportunities debt about new tools.

Experts M International Monetary Fundand the World Bank, debt sustainability is understood as a condition in which the state’s accumulated n debt may be aboutserved at any time.

According to foreign authors, namely Blanchard and Van Riet, optimal The level of external debt is the level of debt that allows the owner th to the existing subject, in the absence of an unexpected And given external shocks, strive for balance. That is, sustainability means the following: accumulated state at the gift debt must be serviced at any time. This requires the budget to be solvent and liquid.

Summarizing opinions domestic and A frontline authors The following definition can be formulated. Debt settlement th responsiveness – this is the economic state of the budgets of public legal images A niy, at which it is capable of prognosis h deadlines to ensure compliance with the principles I obligations, without significant changes e changes in the terms of the borrowing policy, based on the optimal structure of the debt portfolio and established regulatory restrictions.

The 2016 edition of the Budget Code introduced innovations in assessing the debt sustainability of Russian constituent entities th skoy Federation. In particular, the basic indicators of debt sustainability have been determined O ties and their threshold values: the ratio of public debt to total budget revenues djeta – no more than 100% (no more than 50% for entities with a significant share of interbank d cash transfers); annual amount pl A ratios for repayment and servicing of public debt to budget revenues– no more than 20%; share of maintenance costs With debt in total amount p budget expenditures – no more than 10%, and also dShare of short-term liabilities in total debt And is used when monitoring the condition up to l gov stability. Based on pr e separate values ​​regulated by law and at the end, Ministry of Finance of Russiaa gradation of regions according to the degree of debt sustainability has been proposed, which, according to planned data, will be taken into account only by 2019 ode (Table 1).

Table 1. Graduation of regions according to the degree of debt sustainability

Index	High debt with tenacity	Average debt Sustainability	Low debt with tenacity
Ratio of public debt to o b total volume of budget revenues	≤ 50% / ≤ 25% - for highly subsidized subjects	50-85% / 25-45% - for highly subsidized entities	> 85% / >45% - for highly subsidized subjects
Share of maintenance costs And the share of public debt in the total volume of budget expenditures	less than 5%	5-8%	more than 8%
The ratio of the annual amount of payments for repayment and servicing of public debt to budget revenues	≤ 13%	13-18%	> 18%

Note: and source Ministry of FinanceRussian Federation

Also, depending on the assignment A borrower to one or another group of debtstability, the following requirements have been developed(Table 2) .

Table 2. Requirements for borrowers depending on the debt sustainability group

Requirements and restrictions	Group A (high debt sustainability)	Group B (average debt sustainability)	Group C (low debt balance th responsiveness)
Borrowing for financingbudget deficit
Possibility of obtaining budget loans			(targeted loans)
Possibility of release valuable papers, receiving bank loans			(loans from KO in case of refinance ated debt on previously attracted loans)

Note: and Source: Ministry of Finance of the Russian Federation

According to the calculation, debt is sustainable O according to the Methodology proposed by the Ministry of Finance and nom, to “group A” » with high debt With stability for 2015 refers to the time d ka 19 regions, to “group B” with average debt sustainability – 52 regions and to “group C” with low debt sustainability O stu – 14 regions. The Ministry of Finance of Russia has drawn up recommendations for the implementation of responsible T national borrowing/debt policy.

There are methods for determining the level of debt sustainability in science chnoy literature. Wholesale valuation method And small amount of public debt of a constituent entity of the Russian Federation, developed O Tannaya ErmakovaE.A., is more detailed and contains an assessment of two groups of criteria: quantitative and qualitative.. M o del assessment of quantitative criteria for the optimality of debt policy subъ The Russian Federation project includes:

– assessment of debt burden and sustainability And news of a constituent entity of the Russian Federation;

– estimates at state service debt sub project of the Russian Federation;

– structural assessment of government O th debt of a constituent entity of the Russian Federation.

The indicators used may O serve as a basis for conclusions and conclusions O dov relative to the optimal size gstate debt of subject F eder a tions. Moreover, each indicator must reflect the immediate result and characterize the effectiveness of the debt policy of the constituent entity of the Russian Federation and its operations.the optimal size of its public debt.

Doubling public debt subъ projects of the Russian Federation regarding And a relatively short period of time and its increase to 2.2 trillion rubles. at the end of 2016 g. signals that the regions have entered a much stricter regime of formation A budgets, in which tax and non-tax revenues transferred to the e federal interbudgetary transfers do not allow covering the existingCommon types of expenditure obligations(Fig. 1). Ek o nomic sanctions and tense o b position in relations in Europe th country n and Russia showedproblems of development of the country's domestic market, which should serve as an incentive to e understand financial priorities And ticks of regions. The current external O The political situation should push regions to develop key industries and increase the efficiency of use A tion of internal resources.

Note : Compiled by the author based on data from the Ministry of Finance of the Russian Federation

According to the analysis, O the consolidated budget from 2011 to 2016 increased by18%, while the volume of expenses increased by 39%. Volumedebt obligations 01/01/2011 composition and Vil 1.095 trillion. rub . , while in 2016 2,264 tons Rl. rub. (i.e. increase in volume by 106.7%). Analysis of the structure showed that inthe total amount of debt predominates A yut budget loans (48.2%) And loans from credit institutions (28.8%). Until 2012 in the rear structure responsibilities had loansfrom credit institutions A tions. This toolt is pleased but expensive, what also entailed big debt burden in the regions.A goal was setreplace commercial e Chinese loans for budgets. At the moment ment interest rate for a budget loan is 0.1%.

Existing and used in A current indicators of sustainability of public debt of Russian regions th Russian Federation, can be considered asthe result of the development of the concept of debt With stability and methods of its analysis for p O the last few years. Let us apply the model for determining debt sustainability proposed by the Russian Ministry of Finance to Not how many regions and determine, to which debt sustainability group they belong O sit down. The selection of regions was made based on the amount of tax and non-tax O income. Were identified following Yu current regions: Novgorod region, Re With public Buryatia and Astrakhan region.

In table 3 data for 2015 is presented, necessary for calculating debt O howl stability, and then the calculation is shown A debt sustainability(Table 4).

Table 3 . Data from budgets for 2015

Index	Novgorodskaya region	Astrakhan region	The Republic of Buryatia
Nal / non-cash income	19421261,6	2343298,1	22154461,2
From ubvention	1913696,2	1735536,7	349507,2
D otation	912154,7	3097117,1	15194624
Total expenses	25640979,5	34423963,3	47192451,9
R maintenance costs	1068464,9	2132890,5	291254,4
Duty	15439196,1	26099843,1	10124895,1
Redemption	8516000	18563180	172375,9

Note: and source official website of the Federal Treasury

Table 4 . Calculation of debt sustainability indicators

Indicators	Novgorod region	Astrakhan region	The Republic of Buryatia
Ratio of government debt to total volume about budget progress		111%
Share of expenses for servicing state government agencies l hectares in total budget expenditures
The ratio of the annual amount of payments for repayment and servicing of public debt to d about budget progress

Note: with put by the author based on calculations

All indicators of debt sustainability of the Republic of Buryatia are within the limits established by the Budget Code of the Russian Federation e walkie-talkies. Look much worse e overnight indicators of debt sustainability in the Astrakhan and Novgorod regions.There, also in 2015, p prevailed s overnight debt, however, in 2016 due to the refinancing of commercial loans And ratio of commercial and budget loans in the Astrakhan regionalmost equaled, and in Novgorod region b government commercial loans accounted for only 35% of total borrowings A niy against 49.5 in 2015.

Based on the above calculations, we can makethe conclusion that the Republic And Buryatia belongs to the class of borrowers with high debt stability, but V the urban region has average debt sustainability, and the Astrakhan region– with low debt sustainability ( t abl. 5 ).

Table 5 . Graduation of regions according to the degree of debt sustainability

High debt sustainability	The Republic of Buryatia
Average debt sustainability	Novgorod region
Low debt sustainability	Astrakhan region

Note: compiled by the author

According to the author,regions have p e potential for increasing income about Dov. Subjects of the Russian Federation, s A who have taken an active position in search of O current sources and curbing the growth of budget expenditures are to the office mo a winning situation. Many regs O We are in no hurry to optimize income and expenses, which, in turn, requires the regions to make decisions that are not always popular. Many are in no hurry to accept them. K pr And to the best of our ability, not all entities are increasing their income d base, using the full range of possible and information provided by the legislator. In particular, this concerns the introduction of a tax calculated from the cadastral value of commercial objectsreal estate, trade tax.Thus, the region’s income does not increase, but expenses O You are growing. Regions that refused to counter O lirovate your expenses, move along the joint And rallied down. The main task of the regions is V It is necessary to use all its resources to solve emerging financial problems. Align position regions relying only on the decisions of the nevo center h possible, a full build-up is necessary And development of economic and investment potential.

To summarize recommendations for wholesale And mization of debt policy ki, before us a model is laid down to guide subjects when drawing up a borrowing plan. This model describes the purpose and objectives of borrowing and provides for the calculation of target indicators for their assessment. In our opinion, the purpose of borrowing is its efficiency, i.e. debt, guideline O bathroom for the result. The goal defines the following tasks:

– optimization of debt structure and m And minimizing the cost of its maintenance;

– taking into account factors, joint ventures O associated with risk reduction, communication n nykh with borrowings;

– making borrowing decisions based oncalculating the real needs of the budget of a constituent entity of the Russian Federationin attracting borrowed funds;

– reduction in the volume of public debt, while avoiding sequestration With travel obligations;

– compliance with legal restrictions and renditions;

– borrowing policy of Russian subjects th Russian Federation should become a driver for the growth of opportunities in private sects o re;

– borrowing e property for capital expenditures.

Wherein , The following targets should be calculated:

- O ratio of public debt to volume tax about tax and non-taxbudget revenues;

– share of expenses in servicing public utilities debt in total budget expenditures;

- O the ratio of the annual amount of payments for repayment and servicing of public debt to budget revenues;

– share of short-term liabilities in debt;

– ratio of the growth rate of debt to the growth rate of B RP in forecast.

For execution on improvementpublic debt subjects complex development including main components

– borrowing planning and for payments debt in accordance withsubject's policy;

– and risk assessment, in debt obligations;

– active operations with obligations with flattery for expenses for debt, development debt structures and secondary debt instruments;

– establishing and maintaining dialogue with investment development assistancesubfederal debt market.

In subjects of the Russiandeveloped and adoptedlaws, concepts andmanagement relateddebt and debt floor and tikoy. How they have character. But in r e gions are installed show a tels planned achieve as a result, these are the guidelines.

On 2 the mainimproving management debt, on must navigate in Russia .

Note: Compiled by the author

Transition engagement practicesto bond loans save on debt servicing for lower yields for due to market pricing and callings. Except bond for y we, usually provide long terms what is advantage over other debts and allows you to adjust payments for favorable period fromsocio-economic prospectsrelevant territories andRussia as a whole. Usagedebt instrumentfor health improvement region for structure optimizationdebt portfolio. One and to the form of debt addresses onlysubjects of Russia th which is duepreparation mechanismand placement of bond issues. IN reasons for this should be highlightedreduction in creditwhich accordingly on demand investor side. In addition to low information mental literacy,riskiness of borrowing Consequently, price. Partly status with previous attemptsbond loans,were not successful. IN queue, creation subject fund Federation as"airbags"as a preventativefrom the outsidetowardssubject budgetsFederation fromconditions and fromlargest tax registrationOpayers.ByMinistry of FinanceFederations, formsAndrovingfund is observed inyear at 28in 2014 atand in 2015And Howis not 1 % of budget expenditures. INdevelopment incentivenAboard providedreserve fundsto banks at interest.

OptimizationsovereignsTmilitary debtmanifest itself inPdividingits improvement anddevelopment from the point of viewbeforeWiththe next

– growth containmentsovereignsTvenous internalsubject RoWithSiysk Federation;

– use the moston the appropriateperiod of sources,and borrowing instruments;

– reduction in priceavailable andattracted debt

– improvement of toolsReadjustmentsdebt obligations;

– securitysubject accessFederation to the grandsonTearlydebt capitalacceptable conditions;

– maintenance andfinanceOhowl stabilityas reliable

– system improvementdebt obligations andcontrol overbeforeescrap governmentsubject RoWithSiyskas well as furtherlegal framework indebt management.

Howeverrange of tasksdecide withinfinancial year. INbasics withOimprovementsovereignsTmilitary debtaccept resolutionAbootallowing to formOwatdirections of actionstate power inmaking balancedfrom point of viewpayment methodbsubject's identityFederation and itspotential forestablished plan .

As a fundamental rule for managing the public debt of a constituent entity of the Russian Federation, it should beIt should be noted that clarification of indicatorsstate internalshouldn'tto increase the uppersovereignsTmilitary debtbudget and raWithmovespublic servicethe size of whichlaw on businessdjeteanother financialand plAnew period. controlperformance in thiswill bedingAmiki changesincluded in the budget, infrom his originalwhich will allowdeviationetion and judgecarried out forecasting. Exactlyapplication stagecan be donepublic administrationand coordinate debtTAin this wayShe will bereAversatility and effectiveness withspeachievementsgoals andAdacha INforecasting shouldinstrument for harmonization anddecisions regardingbudget process within terms of maintainingand balanced budget execution.

To savedebt forsafe levelconstant monitoringdebt level anditsetemporary measuresfrom the results mOmonitoring. Formedstate levelsubjects of the Russiantalks aboutfurther policystateatgift debtlead toRdinaldebt settlementthcourtesy anddebt load. That's why,becomes importantefficient debtregional authoritiesAsti. Atbuilding up stateatdeed of giftdebt sustainableAndnesscan notwithin the parameters,ondlying downserviceAndreduction of public debt. Together withit is worth notingstuckAndregionalfrom spillshnykhinfluencingatWithtenacity. TimelyfactOmoat, and maintenancedebt loadstrategic taskauthorities. That's whyborrowing policyRoWithSiysk Federationdriver foropportunities in privatewhich providesregional economy as a whole.

Bibliography

1. KutsuriG.N., EllaryanS.A.Debt sustainability of public finances RoWithSiysk Federation / / Economics and Entrepreneurship. – 2015. – 3-2 (56-2). - WITH.351-355.

2. Karimova L.A.Sustainability of budgets of constituent entities of the Russian Federation in conditions of unstable economic conditionsOnomics / L.A.Karimova, D.V.Pantyukova// Sustainable development of Russian regions: economic policy in conditions of external and internal shocks: collection of materials of the XII international scientific and practical conference, Moscow.Ekaterinburg, April 17-18, 2015Yekaterinburg city : [ UrFU], 2015. – S.295-306.

3. IMF report. Electronic resource,URL:

4. Ermakova E.A.A system of qualitative criteria for assessing the effectiveness of the debt policy of a constituent entity of the Russian Federation // Finance and Credit. – 2013. – № 46. – WITH.27-33 .

5. Ermakova E.A. Methodological approachesto assessing the effectiveness of the debt policy of a constituent entity of the Russian Federation // Fitaxes and credit. – 2014. – No.28 (604) .

6. MilchakovM.V. Regional budgets: formation of public debt and financing of expenses / / Financial magazine. – 2016. – №3 .

7. KozelskyV.N.The influence of debt burden on the state and direction of developmentity of regions// Finance and credit.– 2014. – №8. – WITH. 46-48.

8. Savinova E.V.Public debt management withsubjects of the Russian FederationAtions //Privolzhsky Scientific Bulletin. – 2016.– No. 2. - WITH. 82

9. Main directionsbudget policy for 2015 and the planning period of 2016 and 2017.– Official website of the Ministry of FinanceNational Council of the Russian Federation, 2017 –URL: http://www.minfin.ru / (date ofExpansion: 21.05.2017) .

10. Soldatkin C.N.Assessment of debt sustainability of a constituent entity of the Russian Federation as an element of regional debt policy / / Problems of socio-economic development of Siberia.2014 .

DEBT SUSTAINABILITY OFTHE RUSSIAN FEDERATION SUBJECTS

K.O.Tarba, graduate student

Financial university under the Government of the Russian Federation

(Russia, Moscow)

Abstract.This article describes the main problems of debt sustainability of the subjects of the Russian federation. The purpose of the article is the analyzes of governmental debt of the subject of the Russian federation.The analyzes of debt dynamics since 2011 year till 2016 year.The recommendations on optimization of debt policy of the subjects of the Russian Federation are presented. The model of the orientation of the subjects for plan compilation is offered.The methods of implementation of the control of government debt.

Keywords: debt, sustainability subjects of the Russian Federation, balanced budget, budget deficit, public debt, budget expenditures, budget receipts, gross regional product.

In modern conditions of post-crisis development of financial and economic systems and unstable economic relations, issues of public debt of the constituent entities of the Russian Federation are one of the most important and pressing tasks of the balance and security of the regional economy. Having barely recovered from the financial crisis of 2008-2009, which unbalanced the regional budget system and led to an accelerated increase in the debt burden, the regions faced new problems that limited the ability to ensure a positive budget balance.

Since 2010, there has been an increase in regions with budget deficits. The reason for the worsening situation is due to the fall in tax revenues after the 2008 financial crisis. At the same time, a significant burden on the regions came from the decrees of the President of the Russian Federation “On measures for the implementation of state social policy”, adopted in 2012. The main goals of implementing the “May Decrees” were to increase wages for employees of budgetary institutions and intensify housing construction in the regions. At the same time, the main costs of implementing these decrees fell on the budgets of the constituent entities of the Federation. After 2013, a record year in terms of the number of deficit regions and the total volume of the budget deficit, the growth rate of regional and municipal debt, in 2014 the regions faced new challenges of the macroeconomic environment - a decrease in the availability of credit resources, a deterioration in credit ratings, a reduction in economic activity, leading to a decrease in level of tax revenues

Currently, there is a tendency for the government debt of the constituent entities of the Russian Federation to grow. At the same time, over the past five years, the internal debt of the constituent entities of the Russian Federation has increased almost 3.5 times. An increase in the level of debt burden is a significant risk for the execution of regional budgets given the lack of own funds to finance the necessary expenses, as evidenced by the annual mention of this problem in the Main Directions of Budget Policy for the financial year and planning period.

Therefore, public debt management is of particular interest. In Russian economic science, issues of studying the theory of public debt are revealed in the works of B.I. Alekhina, Yu.Ya. Vavilova, S.B. Garkavogo, Yu.A. Danilova, Zhigaeva, E.V. Pokachalova, L.I. Ushvitsky and M.M. Ulyanetsky, which are devoted to the analysis of the composition and structure of the public debt of the Russian Federation, assessment of methods of managing it.

At the same time, the parameters for optimizing the structure of public debt are not widely presented in modern literature. In this regard, we will consider the issues of debt policy and public debt management at the regional level in the context of opportunities to optimize the structure of public debt and maintain debt sustainability within the maximum permissible values. To do this, we will assess the debt sustainability of a number of constituent entities of the Russian Federation and identify the factors that determine it.

The lack of a significant improvement in the economic situation with the increasing level of debt burden of the constituent entities of the Russian Federation may currently become a real threat to the solvency of a number of regions. In this regard, the balanced and moderate approach of regional heads to borrowing makes the analysis of the regions' debt sustainability relevant. Monitoring the debt sustainability of a constituent entity of the Russian Federation is part of the regional debt policy. In this regard, the correct methodological approach to assessing the debt sustainability of a region is important.

To assess the debt sustainability of the regional budget system, we selected 5 constituent entities of the Russian Federation. The selected regions include the city of Moscow, the Republic of Tatarstan and the Tyumen region. These regions are of particular interest due to the structural indicators of public debt, as well as the indicators of debt burden.

Let us characterize the economic feasibility of selecting these regions. The city of Moscow is the capital of the Russian Federation and the region where the largest share of market debt is observed. At the moment, the debt of the city of Moscow on government securities amounts to 85,565.4 million rubles. This is the highest value among all regions of the Russian Federation. Also, the capital of Russia has an external debt, which is not typical for other constituent entities of the Russian Federation. At the same time, the city of Moscow has had a low debt burden for the last 5 years, so this region is of particular interest.

In the Republic of Tatarstan, there is a significant debt on loans attracted to the budget from other budgets of the budget system. At the moment, the debt under this instrument is about 90% of all borrowings. However, the Republic of Tatarstan has high tax and non-tax revenues, and is also one of the few regions whose tax potential index is greater than one. This region has a lot of debt, but this has little effect on the region's debt burden.

According to the rating agency RIA Rating, the Tyumen region has been among the regions with a low debt burden for the past 5 years. At the same time, the region has a low level of public debt. This region has attracted interest because over the past year the region's debt has increased by 218%, and this is the most significant increase in debt obligations among all regions. However, the region maintained a low debt burden due to its own income and high budgetary security.

Let's look at the debt sustainability indicators of the regions represented. Table 1 presents indicators of debt sustainability of the city of Moscow, the Republic of Tatarstan and the Tyumen region.

All indicators of debt sustainability of the city of Moscow are within the limits established by the Budget Code of the Russian Federation. The structure of the subject's public debt mainly consists of debt securities; market borrowings in different years accounted for from 55.14 to 62.10%. The indicator “the ratio of the public debt of a constituent entity of the Russian Federation to the tax and non-tax revenues of the constituent entity” has a downward trend. This is primarily due to the fact that over the past 5 years Moscow has been reducing its public debt. However, this does not alleviate the problem of further optimization of the structure of public debt through the gradual replacement of market borrowings, which in the future will improve the level of manageability of debt obligations.

The estimated indicators of debt sustainability in the Republic of Tatarstan look significantly worse. In the context of the financial and economic crisis, due to a decrease in budget revenues, the Republic of Tatarstan began to actively attract budget loans from the federal budget to cover the budget deficit, in connection with this, the debt burden on the budget of the Republic of Tatarstan increased. Thus, in the structure of the public debt of the Republic of Tatarstan there is a significant amount of debt on budget loans, the share of the debt instrument is about 90% of the total debt of the region. The indicator of “public debt to tax and non-tax revenues” is within the threshold values, but differs from the previous region.

Table 1 Indicators of debt sustainability of the city of Moscow, the Republic of Tatarstan and the Tyumen region.

	Ratio of public debt of a constituent entity of the Russian Federation to tax and non-tax revenues of the constituent entity, in %	The ratio of the amount of public debt of a constituent entity of the Russian Federation to GRP, in%	The ratio of the public debt of a constituent entity of the Russian Federation to the tax and non-tax revenues of the constituent entity (without taking into account the guarantees provided)	Share of expenses for servicing the public debt of a constituent entity of the Russian Federation in the total volume of regional budget expenses, in %	The ratio of the public debt of a constituent entity of the Russian Federation to the value of the property that makes up the treasury of the constituent entity of the Russian Federation, in%	The share of market debt in the structure of public debt of a constituent entity of the Russian Federation, in %
Republic of Tatarstan
Tyumen region

It is worth noting that the Republic of Tatarstan does not have marketable debt, and the region currently has low public debt servicing costs. Despite the fact that the state debt of the subject continues to grow, the Republic of Tatarstan is an innovative and industrial region, therefore the “public debt to GRP indicator” has a downward trend.

The indicators of the industrially developed region – the Tyumen region – look much better. The Tyumen region has had one of the lowest debt levels over the past 5 years. For 5 years, the public debt of the Tyumen region does not exceed one and a half billion rubles. The region has high tax and non-tax revenues, as well as a high GRP value. Last year, the public debt of the Tyumen region showed the largest increase among all subjects of the country. Despite this, the region is among the three most prosperous regions in the country. The structure of public debt involves two instruments: budget loans and government guarantees. Budget loans account for 22%, while government guarantees account for 78%. Most of the estimated indicators are missing, since their values ​​do not affect the debt sustainability of the region.

Thus, the subjects of the Russian Federation considered are characterized by high debt stability. Only the Republic of Tatarstan has some values ​​of estimated indicators at a medium and low level. Most of the estimated indicators are within the threshold values, which indicates an effective debt policy pursued by regional authorities. It is worth noting that the Republic of Tatarstan had the lowest debt sustainability indicators, however, the restructuring of debt on budget loans helped the subject maintain the values ​​of the estimated indicators at an acceptable level. Particular attention should be paid to the indicator “the ratio of the public debt of a constituent entity of the Russian Federation to the value of the property that makes up the treasury of the constituent entity of the Russian Federation. All regions have high estimates for this indicator, which indicates reliable security of debt obligations.

At the same time, the proposed methodological approach, based on estimated indicators of debt sustainability, may not fully assess the effectiveness of the debt policy pursued by regional authorities. Therefore, it is quite logical to supplement the assessment indicators, depending on the increase in the used debt instruments, as well as changes in the debt market conditions, allowing for more detailed monitoring of interrelated budget and debt indicators. Considering that regional authorities have access to a wide range of debt instruments, it becomes especially important to take into account factors affecting the debt sustainability of a constituent entity of the Russian Federation.

In order for the debt sustainability indicators of a constituent entity of the Russian Federation to remain within the threshold values, it is advisable to identify factors that influence debt sustainability. In the process of creating a system of criteria, it is advisable to use economic and mathematical methods of correlation and regression analysis, based on identifying the relationship and dynamics between the debt sustainability of a constituent entity of the Russian Federation and various economic indicators.

However, debt sustainability has a direct relationship with the volume of public debt of the subject. In this regard, the resulting factor will be the public debt of the constituent entity of the Russian Federation, since the calculation of estimated indicators of debt sustainability is based on the attitude to the public debt of the region.

Thus, to maintain public debt at an economically safe level, constant monitoring of the level of public debt is required. The current level of public debt of the constituent entities of the Russian Federation suggests that the policy of further increasing public debt can lead to a dramatic deterioration in debt sustainability and an increase in the debt burden. Therefore, it becomes especially important to carry out an effective debt policy by regional authorities. With a further increase in public debt, the debt sustainability of entities will not be able to remain within the parameters that allow for proper servicing of public debt.

At the same time, it is worth noting the high dependence of the regional economy on various factors influencing debt sustainability. Timely assessment of factors and maintaining a moderate debt burden is a strategic task of regional authorities. Therefore, a reasonable borrowing policy of the constituent entities of the Russian Federation is a driver for the growth of opportunities in the private sector, which ensures the development of the regional economy as a whole.

Bibliography

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Today, the issue of the volume of government borrowing is considered as part of a study of the debt sustainability of public finances, or, in other words, the ability of the state to fulfill its obligations to creditors. The problem of debt sustainability occupies one of the dominant positions in the modern theory of government borrowing. Both international institutions (the World Bank, the International Monetary Fund, etc.) and individual researchers are working on the issue of an acceptable level of public debt.

The theory of public debt was considered many earlier by such economists as J. Keynes, A. Smith, D. Ricardo. Theory is closely related to practice and, as is known, in many cases follows the latter, and in this case, the object of study for scientists was determined by the high volumes of government borrowing and the need to develop and apply appropriate public debt management policies.

One of the constituent elements in the theory of public debt management is the assessment of the state's debt sustainability. In 2008, the problem of excessive government borrowing from insolvent countries became a clear obstacle to the development of the European economy. Issues of public debt management have begun to be comprehensively studied both by individual authors and international financial institutions. Analysis of debt sustainability of public finances has taken a dominant position in the tools of modern theory of public borrowing management. The article analyzes the debt sustainability of public finances of the Russian Federation within the framework of the model proposed by the International Monetary Fund for countries with developing market economies.

Every year, issues of debt sustainability of public finances arise sharply on the eve of the submission to the State Duma of a bill on the federal budget for the next financial year and the planned period. Based on macroeconomic data and federal budget indicators for the last 5 years and forecast indicators for 2015, we will conduct an analysis of the debt sustainability of public finances (DSA - Debt Sustainability Analysis), based on a simplified methodology developed by the International Monetary Fund for countries with developing market economies.7

To begin with, three main characteristics of the financial system in terms of public debt are defined, expressed in the form of questions:

· Does the level of public debt exceed 50% of the country's GDP?

· Does the budget deficit exceed 10% of GDP?

· Does the state need financial support from the IMF?

7 Debt Sustainability Analysis for Market-Access Countries.IMF, 2014. URL:https://www.imf.org/external/pubs/ft/dsa/mac.htm

Based on the affirmative or negative answers to these questions, the country under study falls into one of two categories, with more stringent controls and with less stringent controls, respectively. Let's compile a summary table of the necessary indicators for the federal budget of the Russian Federation for the period from 2009 to 2013 (Table 1).

Table 1 Dynamics of GDP, public debt and federal budget deficit for 2009-2013 (billion rubles)

State debt9
Debt/GDP
Federal deficit budget10
Deficit/GDP

Based on the data provided in Table 1, we can conclude that the level of public debt in relation to GDP throughout the entire period under review remained below the critical level of 50%, and the level of the budget deficit also did not exceed 10% of GDP. Accordingly, the answer to the first two questions can be confidently given in the negative. As for the financial support of the IMF, it should be noted that since 2000, Russia has never once asked for financial assistance from the IMF, and at the beginning of 2005, the Russian Federation returned to the Fund all the debt accumulated since 1992, thereby fully repaying its obligations to the IMF. 11 Consequently, further analysis will be carried out within the framework of “less stringent controls”, involving only a basic analysis of the debt sustainability of public finances. Next, we consolidate the criteria necessary for the analysis into one table with a ranking of indicators into budgetary, macroeconomic and analytical (calculation), as well as auxiliary data on the volume of exports, imports and the country’s trade balance, necessary for analyzing the country’s debt sustainability within the framework of the DSA model (Table .2).

Table 2 Key indicators for analyzing the debt sustainability of the Russian Federation12

Index
Budget indicators (billion rubles)
Public debt, incl.
Domestic debt
External debt
Federal deficit
Trade balance (billions of US dollars)
Balance (USD billion)
Macroeconomic indicators
GDP (trillion rubles)15

US dollar exchange rate (RUB)16
Price per barrel of oil Urals (RUB)17
Inflation
Refinancing rate13
Real rate18
Analytical indicators
State debt/GDP
External debt / GDP
Deficit/GDP
Ext. debt / State duty

8 Federal State Statistics Service.URL:

9 Ministry of Finance of the Russian Federation. URL:http://minfin.ru/ru/public_debt/ (date of access: 10/23/2014)

10 Unified portal of the Budget system of the Russian Federation.http://budget.gov.ru/budget/balance (date of access: 10/23/2014)

11 RIA Novosti. URL:http://ria.ru/spravka/20140224/996722123.html(date access: 10/24/2014)

12 Ministry of Finance of the Russian Federation. URL: http://minfin.ru(date access: 10/20/2014)

13 Federal Law of December 2, 2013 N 349-FZ (as amended on June 28, 2014) On the federal budget for 2014 and for the planning period of 2015 and 2016. URL:http://base.consultant.ru/cons/cgi/online.cgi?req=doc;base=LAW;n=165201 (date of access: 10/20/2014)

14 On the federal budget for 2015 and for the planning period of 2016 and 2017; Forecast of socio-economic development of the Russian Federation for 2015 and for the planning period of 2016 and 2017; Main directions of budget policy for 2015 and for the planning period of 2016 and 2017

15 Federal State Statistics Service.URL:http://www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/ru/statistics/accounts/# (date of access: 10/23/2014)

One of the criteria for debt sustainability is directly correlated with the trade balance. This criterion assumes that the trade balance must be at least equal to or greater than the country's external debt. In each of the periods we are considering, from 2009 to 2013, the trade balance exceeds the volume of external debt; accordingly, within the framework of this criterion, the debt sustainability of the public finances of the Russian Federation has a positive assessment.

The second criterion compares the growth rate of a country's government debt with the growth rate of the effective interest rate. In theory, the level of government debt can rise, but not faster than the real rate. Let's compare these two indicators (Figure 1).

Fig.1. Comparison of the growth rate of the real interest rate and the volume of public debt.

As we can see, until 2012, the growth rate of government debt exceeded the growth rate of the real interest rate, but by 2013 the picture changed. Even despite the constant growth in the absolute volume of government debt, the rate of its growth is gradually decreasing, and the rate of growth of the effective rate is increasing. Accordingly, the second criterion also receives a positive assessment.

The next step will be to analyze a number of indicators at once and compare actual values ​​with standard values ​​(Table 3).

Table 3 Debt sustainability indicators

Index						Standard
Debt/Export
External debt / Budget revenues
International reserves / External debt
International reserves / M2

Deficit/GDP

16 Central Bank of the Russian Federation. URL:http://www.cbr.ru/hd_base/?PrtId=micex_doc(date access: 10/24/2014)

17 Finmarket. URL: http://finmarket.ru/database/fintool/TotalQuotes.asp?id=6032&pl=10136 (date of access: 10/24/2014)

18 Fisher formula ir = (in-π)/(1+π)

The overwhelming share of indicators corresponds to standard values ​​or has positive dynamics and in subsequent periods also meets standards.

Based on the results of the analysis, we can say that the Russian Federation remains a country capable of meeting its obligations. This is confirmed by a positive assessment of the first three criteria of debt sustainability of public finances within the framework of the DSA model, as well as compliance over a long period with the standard values ​​​​proposed by the International Monetary Fund and the Maastricht Treaty for assessing the solvency of the country. The level of public debt in the Russian Federation is acceptable and more preferable than that of many economically more developed countries, however, a number of methods of managing public debt, such as reducing the relative volumes of public debt and extending the maturity of obligations, will reduce the risks of the country's insolvency. In turn, the redirection of state debt policy preferences from external to internal borrowing, which we can observe today, will reduce the influence of external factors on the debt sustainability of public finances of the Russian Federation. Taken together, the above factors will improve the investment ratings of the world's largest rating agencies. Regarding the choice of debt policy instruments in the domestic market, the priority areas are the issue of long-term and medium-term government securities that will contribute to the above goals. The issue of short-term debt instruments is considered solely as a measure to combat unfavorable current market conditions. This approach will optimize the term structure of public debt.

Bibliography

1. Budget Code of the Russian Federation dated July 31, 1998 N 145-FZ (as amended on October 4, 2014). URL: http://www.consultant.ru/popular/budget/ (date of access: 10/15/2014).

2. Order No. 1919-r dated September 30, 2014 On the submission to the State Duma of the bill “On the federal budget for 2015 and for the planning period of 2016 and 2017.” URL: http://base.consultant.ru/cons/cgi/online.cgi?req=doc;base=EXP;n=599811 (access date: 10.10.2014)

3. Main directions of budget policy for 2015 and for the planning period of 2016 and 2017. URL: http://img.rg.ru/pril/article/99/18/44/ONBP_2015-2017.pdf (access date: 10/15/2014)

4. Forecast of socio-economic development of the Russian Federation for 2014 and for the planning period of 2015 and 2016. URL: http://economy.gov.ru/minec/activity/sections/macro/prognoz/doc20130924_5 (access date: 10/15/2014)

5. Debt Sustainability Analysis for Market-Access Countries. IMF, 2014. URL: https://www.imf.org/external/pubs/ft/dsa/mac.htm (access date: 10/20/2014)

6. Kraay A., Nehru V. When Is External Debt Sustainable? The World Bank, 2006 - 35 p.URL: (access date: 10/25/2014)

7. Staff Guidance Note for Public Debt Sustainability Analysis in Market-Access Countries. IMF, 2013. - 54 p. URL: http://www.imf.org/external/np/pp/eng/2013/050913.pdf (access date: 10/22/2014)

A debt crisis is a situation when a debtor refuses to fulfill its debt service obligations in full (declares a default). This applies not only to the official direct refusal of payments on external and internal debt, but also to other situations. Among them:

• 1) partial failure by the debtor to fulfill its debt obligations according to the original (or restructured) payment schedule;
• 2) restructuring of debt obligations by the debtor not previously agreed upon with creditors;
• 3) offering creditors less favorable conditions for exchanging old obligations for new ones compared to the original conditions.

A single delay in servicing debt obligations is considered technical default. This situation arose in the United States in the summer of 2011, when, due to legislative restrictions on the public debt limit, they could not fulfill the repayment of their current obligations to service it.

The following types of debt crises are distinguished: external and internal debt. These debt crises can accordingly arise in the sphere of government, corporate, and regional obligations. Debt crises can also be detailed depending on the specific debtor, the type of debt obligations (bonds, loan agreements, bills) that the debtor refuses to pay.

There are a number of indicators of a country's debt sustainability. Among them:

• the most commonly used indicator is the ratio of debt to GDP;
• the ratio of external debt (or payments to repay it) to exports of goods and services;
• the ratio of payments on public debt to budget revenues;
• average debt repayment period;
• share of debt in foreign currency in total debt;
• the ratio of international reserves to short-term external debt;
• ratio of external debt payments to international reserves;
• the ratio of short-term debt to total outstanding debt;
• state external (domestic) debt per capita;
• budget deficit as the main factor in the formation of public debt; and etc.

Due to the increasing share of market debt (bonds traded on financial markets) in public debt, the importance of investment credit ratings assigned by leading rating agencies has recently increased (Standard & Poor's, Moody's, Fitch Ratings).

For external debt, ratings on long-term liabilities in foreign currency are of particular interest. Investment ratings are used by corporate, institutional and private investors to largely determine the cost of new borrowing and, therefore, the possibility of debt refinancing and new debt financing.

At the same time, the activities of rating agencies have a subjective component and cause reasoned criticism. Nevertheless, the ratings existing for the analysis of investment risks are still recognized by the majority of qualified investors (Table 7.1).

Table 7.1 .

For analytical purposes, the IMF proposes the following threshold values ​​(debt/GDP), which correspond to different degrees of debt crisis risk: low (30%), medium (40%) and high (50%). In terms of the ratio of external debt payments to exports, the threshold values ​​are 15, 20, 25%, respectively.

Standards recommended in 1997 by the European Stability and Growth Pact (Stability and Growth Pact) to ensure the sustainability of the euro area, are: annual budget deficit - up to 3% of GDP; sovereign debt - up to 60% of GDP (in the current crisis - up to 80%). In 2010, almost all members of the European Community exceeded these criteria. On average, the budget deficit of 27 EU countries was 6.4% at the end of 2010 (17 euro area countries -6.0%), and public debt was 80% (in the euro area - 85.1%) of GDP.

The debt burden of an economy does not always serve as a defining sign of a debt crisis, but creates its preconditions. The debtor's difficulties in servicing the debt do not yet mean a debt crisis unless a refusal to pay or a unilateral change in the terms of debt servicing is officially announced. The debt crisis is largely a consequence of external debt management policies.

A country, when deciding to refuse to service and repay its own debts in full, weighs its benefits and losses from such a decision. These losses may be associated with economic sanctions and political consequences from foreign creditors, a drop in credit ratings and a sharp rise in the cost of new borrowings in financial markets, a deterioration in the country’s economic situation if taxes are raised and social programs are cut to pay off debts.