Abstract

The study examines debt situation in 189 urban districts of Russia with more than 100 thousand inhabitants in 2015-2020 and assesses key factors determining level of budget debt. The relevance of the study is established by the fact that an overwhelming majority of large urban municipalities in Russia currently have a significant budget debt. The public debt burden significantly limits the cities’ ability to plan and finance urban projects and therefore becomes a key constraint on their development at the present stage. At the same time, the scale and dynamics of municipal debt in Russian cities remain poorly researched. The goal of the study was to identify key factors determining formation of the debt burden in the 189 largest urban districts in Russia and to assess the impact of the debt burden on the level and dynamics of their socio-economic development. The following tasks were completed: analyzing the level of municipal debt burden in the largest cities in 2015-2020 and creating a classification of large cities by the scale and dynamics of debt; determining key factors of formation of the debt burden in large urban districts and calculating their impact, as well as forecasting the debt situation of the largest centers. The analysis was carried out on the basis of the municipal debt volume and structure indicators, collected from the official portals of local administrations and data on the execution of budgets of urban districts of the Federal State Statistics Service (Rosstat). The following key research methods, among others, were used: statistical and economic analysis, mapping and GIS analysis, infographic construction methods and comparative analysis. The results of the study showed that although the country's large cities are characterized on average by a relatively favorable level of debt burden, significant differences in the debt situation between cities remain. Only 37 large urban districts had no debt at the end of the study period, while about 1/3 (53 out of 189) had a debt burden exceeding 50%, and 15% of cities are approaching its critical level. It is proved that at the present stage, municipal debt is not a real tool for the implementation of urban development projects, but is mainly directed to cover the budget deficit and fulfill basic social responsibilities by the end of the fiscal year. It has been revealed that the greatest influence on the debt situation in large cities is exerted by the factor of the city's population (the level of debt burden increases with population growth), as well as the factor of having a regional capital status (regional capitals have higher debt). The factors of the budgetary and financial situation in municipality, as well as economic factors (apart from several cities) resulted to be insignificant. The absence of high correlations of the debt burden of large urban districts with key indicators of the financial and socio-economic situation suggests a high influence of other institutional factors. It is proved that an increased level of debt burden leads to a decline in migration appeal and investment activity in large cities. The growth of debt slows down the rate of wages increase. The forecast of the debt situation in large cities showed that if the current trends persist in the next three years, even a greater deterioration in the debt situation of the country's largest centers can be expected, as well as an increase in their differentiation by debt. The measures planned for introduction in 2022 in order to limit the volume of municipal debt will have little effect and will not result in a significant reduction in the debt burden of cities. All in all, the findings of the study form a negative forecast of the development of Russian large cities for the coming years. The current situation warrants an urgent need to revise the fiscal policy and the power distribution system at the local government level towards expanding the financial and managerial capabilities of municipalities.  

Abstract

The research work presents a comprehensive analysis of the socio-economic development of the cities in Russia’s Far Eastern Federal District (DFO) and reflects both the current level of territorial development and the dynamics of key parameters over the period under review. The study is relevant due to the fact that Russian cities in recent years have regularly become the subject of discussion and analysis, both among the scientific community and among government representatives. The cities of the Far East are a priority given the remoteness of the territories and the number of projects implemented here in recent years. The goal of the study is to perform basic diagnostics of the socio-economic development of the regional centers of the Far Eastern Federal District and to identify medium- and long-term trends in the development of regional capitals of the macro region. To achieve this goal, the following objectives are identified: conducting socio-economic diagnostics of the socio-economic situation of the DFO regional capitals; comparing the development context of the DFO regional capitals ; identifying sustainable medium- and long-term trends (the choice of a time slice depends on the availability of data for each indicator). The work relies on open data sources. First of all, these include Rosstat data (data from the Rosstat website, the statistical collections of the department, EMISS (Unified Interdepartmental Information and Statistics System) and BDPMO (Municipal Formations Performance Database) databases). For the parts of the work where there are no special links to the data source, Rosstat data is used. In addition, departmental data of the Federal Treasury, the Federal Tax Service, the Federal Air Transport Agency, etc. was used for individual sections. The key research methods used were: statistical analysis, economic analysis, mapping and GIS analysis, infographic construction methods and comparative analysis. The results of the study showed a significant differentiation between the DFO regional capitals in terms of the socio-economic development level and its dynamics in recent years. The best situation is observed in the capitals of extractive regions (due to high salaries and tax revenues of mining companies), as well as the key macro-regional centers, the largest in terms of population, Vladivostok and Khabarovsk, although the latter is noticeably inferior in terms of the residents’ personal income and local budget indicators. The situation is the worst in other regional centers along the Southern border of the Far Eastern Federal District, where low income compared to the national level fails to stimulate the development of market service industries, the share of "shadow" employment is high, and the real sectors of the urban economy are characterized by extended depression and low investment appeal, despite the potential of extractive industry development and trans-border opportunities. The research materials will be useful to the executive authorities at different levels, urban stakeholders and a broad range of experts and analysts.