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- The regions are doing well: the budgets of the constituent entities of the Russian Federation have managed without a deficit
The regions are doing well: the budgets of the constituent entities of the Russian Federation have managed without a deficit
The budgets of the Russian Federation's constituent entities ended the first quarter of 2025 in positive territory. Revenues increased by 7.5%, which allowed for a national average surplus. More than half of the Russian regions demonstrated positive dynamics of key socio-economic indicators, and the growth in real incomes of the population turned out to be very significant. These are the results of the review conducted by the Russian rating agency Expert RA. See the Izvestia article about how the regional economy felt at the beginning of the year.
Growth without transfers
According to the calculations of Expert RA, the increase in budget revenues compared to the same period last year was due to the positive dynamics of tax and non-tax revenues, which increased by 10.8%. At the same time, transfers from the federal budget decreased by 2.5%. In total, regional governments have received about 4.9 trillion rubles at their disposal. It should be noted that the overall growth of 7.5% with an inflation rate of 9-10% actually indicates a slight decrease in revenues in real terms.
If we talk about tax revenues, there was an increase in all types of income. For example, the volume of personal income tax collected increased by 12.4% due to an increase in the wage fund and income from equity participation in organizations. The same applies to corporate income tax (by 6.3%), corporate property tax (by 8% due to the expansion of the tax base), excise taxes (by 4.6% due to higher sales prices of excisable goods, expanding their list and increasing tax rates). The same dynamics was recorded for the tax levied in connection with the application of the simplified taxation system (by 4.9% due to the growth of the tax base and the expansion of criteria for classification as SMEs) and the mineral extraction tax (+49.2% due to the revision of tax rates for certain types of minerals, an increase in the growth of selling prices of precious metals).
The dynamics of budget revenues by region was heterogeneous: their growth was recorded in 53 regions of the Russian Federation, and specifically revenues minus transfers increased by 75. The largest increase in corporate income tax receipts was observed in the Jewish Autonomous Region (7.4 times), the Trans-Baikal Territory (2.4 times), the Magadan Region (2.3 times), the Kaliningrad Region (2.2 times) and the Kamchatka Territory (1.6 times). But in Karelia, Ingushetia, the Stavropol Territory and the Chukotka Autonomous Region, a strong drop was recorded. Expert RA cites the main reasons for the decline in taxpayers' profits: enterprises of the extractive industry and the timber industry, financial sector organizations due to the cooling of credit activity, the abolition of the institution of consolidated groups of taxpayers and the continued sanctions pressure on purchase prices in a number of key sectors of the economy.
Regional budget expenditures increased by almost 15% over the period, amounting to 4.578 trillion rubles. Thus, the total budget balance of the Russian Federation turned out to be positive, amounting to 332.8 billion rubles. At the same time, the state debt of the regions has changed slightly since the beginning of the year, increasing by 0.7% — from 3147.7 billion to 3170.4 billion rubles.
Budget loans have gained even more weight in the debt structure — their share has increased from 78.4% to 81.4% (which is not surprising, given current bond rates and yields). At the same time, the debt on commercial loans decreased due to the early repayment of some bank loans and the fact that at the beginning of the year the regions usually do not attract loans and do not place bonds.
The economy is gradually slowing down
A review of the regional economy shows continued economic growth, albeit at a slower pace than before. Physical production volumes increased by 1.1% by the same period in 2025, with growth observed in 45 regions. The fastest growth rates were observed in the Chukotka Region (by 28%), while the strongest decline occurred in Dagestan (by more than a third), North Ossetia, and the Kamchatka Territory (manufacturing industries were in the red).
Consumer demand indicators also show positive dynamics: retail trade turnover in comparable prices increased by 3.2% (an increase of 80 in the vast majority of regions), and the volume of paid services to the public increased by 2.4%. Unemployment remains low: in March 2025, it was 2.3%, which is 0.2 percentage points lower than the annual average of 2024. The unemployment rate decreased in 67 regions. The lowest unemployment rate was registered in Moscow (1%), Yamalo-Nenets Autonomous Okrug (1.08%), Khanty-Mansiysk Autonomous Okrug (1.09%), Kaluga (1.12%) and Nizhny Novgorod Regions (1.14%). The leaders in terms of unemployment remain Chechnya (7.36%), Dagestan (11.63%) and Ingushetia (25.71%).
In general, the review shows a fairly stable state of finances and the economic situation of the Russian regions. It should be recalled that the total debt decreased slightly last year, and the total budget deficit amounted to only 400 billion rubles.
"The regions are tentatively planning a total revenue reduction of almost 4% for 2025, with an increase in expenses of almost 7%," Vladislav Bukharsky, Associate Director for Regional and Sovereign Ratings at Expert RA, explained to Izvestia. — All regions, with the exception of four, have a preliminary budget deficit (an aggregated deficit of about 1.9 trillion rubles, or about 9% of revenues). However, the regions are traditionally conservative in their approach to this issue; in fact, we expect more positive outcomes. Based on the results of the first four months of 2025, we see that incomes have increased (compared to the same period in 2024) in almost all regions, with the exception of individual cases.
The same can be said about the economy, which shows a tendency to grow slightly even in the face of very tough labor regulations and other challenges faced by modern Russia. At the same time, the coming months may pose a serious challenge for many regions, especially those that are less affluent and more vulnerable to market fluctuations. According to most forecasts, the Russian economy as a whole is gradually entering a "soft landing", so by the end of the year we are likely to see a drop in growth to a minimum or even a slight decline. These processes are inevitable against the background of the fight against overheating and inflation. Another question is how "soft" the processes will turn out to be in individual republics, territories and regions, where fluctuations even now remain very sharp.
According to Bukharsky, several of the most dynamic regions have good prospects for the coming year.
— Firstly, these are some regions of the Far East with a mining sector. This includes the Chukotka Autonomous District and the Magadan Region, where gold and/or silver production is increasing, and this is already evident in the first months of 2025 (in January – March 2025, the physical volume index of the mining sector was 142.2% and 120.3%, respectively), which is determined by the high price of precious metals. The Khabarovsk Territory is also highlighted here, where projects related to the extraction of coal and metal ores are being implemented (in January – March 2025, the index of physical volume of the mining sector was 158.8%). Secondly, these are regions with industries that are somehow tied to the military-industrial complex sector. One of the most striking examples is the Kurgan region, where in 2024 the index of physical volume of industrial production amounted to 124.9%, the most significant increase was in the production of finished metal products, except machinery and equipment, as well as the production of other vehicles and equipment not included in other groupings of machinery and equipment. In January – March 2025, the growth rate of industry in the Kurgan region was even higher (IFO 120.7%), the expert states.
Vladislav Bukharsky singles out Moscow among other regions — the service sector is developed here, which is growing following the positive dynamics of household incomes, as well as the banking sector is developed and there is active investment in IT.
However, he notes that other regions may have difficulties. For example, due to lower coal prices, reduced demand from China, and shipment volume restrictions under the sanctions, the Kemerovo Region will continue to experience difficulties (it has spent almost all remaining funds in its accounts to finance the budget deficit resulting from falling tax and non-tax revenues).
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