The fiscal impact of the COVID-19 pandemic on the Russian regions: An overview of federal support measures

Abstract

The Russian regions were negatively affected by the COVID-19 pandemic in 2020. In most regions, corporate income tax revenues and small business tax revenues significantly declined, while heath care and social policy expenditures increased. The federal government responded to this challenge by increasing federal transfers to regions by roughly 50% compared to 2019 (up to 3,8, trill RUB.) Despite significant federal fiscal support, many transfers were nontransparent and irregular, while the structure of intergovernmental transfers and the strategy used by the federal government were changing considerably throughout the year. In this article, we analyze the structure of federal fiscal support to the regions and compare the largest intergovernmental transfers in 2020 and 2019 by their type (unconditional transfers, subsidies, subventions, and other transfers). We pay particular attention to non-transparent forms of federal fiscal support, namely, discretionary unconditional transfers and other transfers from the reserve fund of the Russian federal government.