Public Capital Budgeting and Management Process in Russia

Public Capital Budgeting and Management Process in Russia

Natalia B. Ermasova (Governors State University, USA) and Polina Ermasova (DePaul University, USA)
Copyright: © 2019 |Pages: 21
DOI: 10.4018/978-1-5225-7329-6.ch006

Abstract

This chapter provides a case study from Russia regarding public capital budgeting and management at the federal, state, and local levels. This chapter presents an analysis of four main components of Russian capital budgeting system including (1) long-term public capital planning, (2) annual public budgeting and financing, (3) project execution, and (4) public infrastructure evaluation. This research explains the general challenges of capital budgeting process after the several decades of financial and budget reforms. This chapter presents the structure and classification of the capital budget as well as recent trends in capital expenditure levels in Russia. The authors review the capital resource allocations across sectors based on investment needs and national priorities in Russia. The chapter explains public investment management processes and presents recommendations to improve the efficiency of public capital budgeting in Russia.
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Background

Previously a part of the Soviet Union, Russia is the largest country in the world by geographic area, but its population is sparse in many parts of the country. In the Soviet Union, all revenue was centralized and then allocated according to the national plan, including capital investments. In the last thirty years, Russia has undergone significant changes since the collapse of the Soviet Union, moving from an isolated, centrally planned economy to a more market based and globally integrated economy.

The governments are structured in three layers: federal, regional, and local. Federal expenditures increased from 16 percent of GDP in 2005 to 18 percent in 2016 (Ermasova, 2008, 2016, World Bank, 2017) (Table 1). Table 1 demonstrates the dynamics of federal expenditures in % of GDP in Russia from 2005 to 2016.

Table 1.
Federal expenditures in % of GDP in Russia from 2005 to 2016
YearFederal Expenditures in % of GDP
201618
201517
201417
201318
201217
201117
201018
200920
200817
200717
200617
200516

Source: World bank, 2017

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