The Samara government has softened the conditions for providing budget loans

The government of the Samara region has reduced the requirements for municipalities that want to receive a loan from the regional budget. Now municipalities will be able to rely on a loan with much greater debt than before. Experts consider such changes logical and predict an increase in requests from local authorities for loans.

Yesterday, the government of the Samara region made changes to the procedure for providing loans from the regional budget to municipalities (MU) in 2010.

Some of the changes are of a technical nature: the deadlines for consideration of applications and the form of submitted documents are being clarified. At the same time, a significant relaxation is being introduced for potential borrowers: municipalities with a much higher debt burden than before will be able to receive a budget loan. Now the borrower’s maximum municipal debt can reach 50% of budget revenues, rather than 30%.

Budget loans are issued for a period of up to 3 years at an interest rate of up to one-eighth of the refinancing rate of the Central Bank of the Russian Federation, which is currently 7.75% per annum. Yesterday, the Ministry of Finance did not specify how much funds are planned for issuing such loans in 2010. According to information posted on the department’s website, it is planned to allocate 413.6 million rubles from the regional treasury this year to urban districts and about 52 million rubles to districts to cover budget deficits of the Moscow Region. Budget loans are popular among municipalities. At yesterday’s meeting of the regional government alone, three loans were issued: to Isaklinsky district - 15.5 million, Pokhvistnevsky - 10.5 million and Chelnovershinsky - 10 million rubles.

The mayor of Zhigulevsk, Alexander Kurylin, notes that it is very profitable for municipalities to borrow from the regional treasury. According to him, Zhigulevsk is currently using 118 million rubles received on credit from the region (the city budget is more than 500 million rubles). Mr. Kurylin reacted positively to the changes made, although he noted that Zhigulevsk is not going to borrow anymore, but, on the contrary, intends to pay off debts. Chairman of the Samara Gubernia Duma Committee Nikolai Renz says that all municipalities have to borrow. “Cash gaps often arise, for example, due to uneven tax receipts,” he says. “Nobody has enough money.”

Director of the Samara Guild of Financiers Dmitry Yakovenko notes that in 2009, due to the crisis, the debt burden on the budget increased in all regions and municipalities. The expert believes that the abolition of the 30% threshold for municipal debt when obtaining loans is logical. “This limitation existed only for us,” says Mr. Yakovenko. According to him, municipalities of the Samara region borrowed less last year than in other regions. According to Dmitry Yakovenko, none of the municipalities in the region currently have municipal debt approaching 50% of their income. However, according to the expert, now municipalities will be forced to borrow money. “Many municipalities now do not have the money, for example, to continue the construction of capital projects that began in 2006, 2007,” says Dmitry Yakovenko. “We need to continue construction, since conservation will greatly increase the cost of the estimate.”

Noting, in general, the logic of concessions for municipalities when receiving loans, experts also recognize the problem of uneven distribution of taxes, in which most of the income collected locally goes to the regional or federal budgets. “Most of the taxes are accumulated in the federal budget; there is not enough money for both municipalities and regions. There is a lot of talk about this, but for now this issue exists at the level of philosophical reasoning,” concluded Nikolai Renz.

Maria Gutorova

Municipalities have fulfilled a great duty