Lobbying will help Russian regions fill fiscal gaps

Subject

Competition for resources among Russia's regions.

Significance

Since signs of economic slowdown emerged in 2013, Russian regional governments have been under pressure to adjust policies to sustain economic activity, employment and above all stability. Expanding budget deficits and growing commercial debt have forced many to shift from growth to retrenchment and cuts. The strongest performing regions include hydrocarbon producers, joined by farming regions benefiting from import substitution.

Impacts

• Moscow has yet to find funding sources for much of its 'anti-crisis plan'.
• Crimea will be a special case, with 65% of its revenue coming from Moscow in 2016.
• Regional staff cuts will clash with Moscow's demand for social stability.
• Arms-industry regions will benefit from procurement, even if the defence budget is trimmed.