Budgetary Borrowings and Investments in Russian Regions: Regulatory Issues and Opportunities for Enhancement

Abstract

The institutional context, norms, and mechanisms for attracting financial resources by the authorities of the constituent entities of the Russian Federation, and/or for determining the directions of their use (including investment in fixed assets), are of interest for study at the intersection of institutional studies and public finance. Currently, capital expenditures of Russian regional budgets are generally insufficient to ensure sustainable economic growth or even for basic infrastructure maintenance. The primary explanation for this is the limited availability of budgetary resources, particularly the own revenues of regional budgets. While acknowledging this fact, it is necessary to consider why and how regional authorities utilize or do not utilize alternative sources of financing, primarily through borrowing as permitted by budget legislation. This article aims to identify the reasons behind the inefficiency of existing regulations that govern borrowing and investment activities in Russia's regions, as well as the effects of recent innovations in budget legislation. The article offers suggestions for improving the regulatory framework and enhancing borrowing and investment activities of the subjects of the Federation.