Oil prices began to rise rapidly - and they forgot about budget reform

The most important element of anti-crisis policy is the policy of budget expenditures. For the last 15 years, it has boiled down to two simple options. If there was a lot of income, the government increased spending - usually in proportion to the lobbying power of individual interest groups. If the revenue base was shrinking, then they resorted to sequestration—a more or less proportional cut in spending, adjusted to ensure political stability and the capabilities of individual pressure groups.

At the beginning of this decade, around 2001-2002, the Ministry of Finance set the task of rationalizing and increasing the efficiency of budget expenditures. This fit into the logic of institutional reforms set out in the 2000 Strategic Program (“Gref program”). But there was another motivating factor: Russia was preparing for a “price war” with OPEC, not wanting to reduce production volumes in a coordinated manner. The likelihood of a fall in oil prices seemed quite high. However, prices not only did not fall, but began to rise rapidly - and the reform of budget expenditures was forgotten.

Since the beginning of the crisis, the problem has worsened sharply. Mechanical cost cutting has its limits. Moreover, it does not in any way correlate with the efficiency of budget spending. The need for significant changes in the budgeting system is beyond doubt. We should not just talk about saving money or even streamlining its spending, but about a serious reform of the budget system, at the center of which should be the task of increasing efficiency. Undoubtedly, such a reform would have not only an anti-crisis, but even more modernization orientation.

Several important areas for increasing the efficiency of the budget system can be identified.

Prioritization of budget expenditures. The country's political elite must clearly formulate the priorities of its policies, including budgetary ones. This requirement carries corruption risks, and the question remains to be answered about how to prevent powerful lobbyists from “buying” places on the priority list. However, there is already a certain basis here in the form of priority national projects. Investments in people are rightly considered priorities, and we just need to really ensure that this “slogan of the day” is adequately reflected in the budget schedule.
Consistent introduction of results-based budgeting. It does not matter whether this will be done in the form of reports on the main activities of federal executive bodies or road maps aimed at solving major national problems. The main thing is to create a system that allows you to compare expenses with their final result.
Reforming the budget network, and above all streamlining the organizational and legal forms in which institutions working with budget funds operate. We are talking about a consistent distinction between budgetary (state-owned) and autonomous institutions, streamlining the situation with the notorious SUEs (state unitary enterprises). The law on autonomous institutions was adopted two years ago, but it has not yet become an actual legal act.
Improving the budget process. It is critical to strengthen the role of project finance as opposed to “absorption of funds”. In our country, as in the Soviet system, the ability of a department and organization to spend money before the end of the budget year is the most important criterion for the success of their functioning. The dominance of calendar deadlines over real projects significantly reduces cost efficiency. Ultimately, the solution to these problems involves a real transition to budget planning that goes beyond one year, that is, the implementation of the principle of a three-year budget.
Procurement legislation must be more closely tied to the time parameters of the budget process: procurement procedures, when implemented in a non-corrupt manner, do lead to cost savings, but this means their incomplete “development” with the ensuing consequences for the budget organization.

Finally, it would be advisable to introduce the concept of public-private partnership into the legal field. This topic, which became fashionable in 2004, has died down a bit. But this is a real tool, which will become relevant again with the end of the crisis. And it would be important to have a clear legal understanding of this mechanism.

The author is the rector of the Academy of National Economy under the Government of the Russian Federation

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