Improvement of Intergovernmental Fiscal Equalization System relative to Municipalities in Astrakhan Oblast

Client: Ministry of Finance of Astrakhan Oblast


Project Manager: Alexander Deruygin


Project Duration: November - December 2009


The purpose of the project is to develop methodologies according to which equalization grants will be allocated in order to bridge the gap between the least and the most unbalanced municipalities of Astrakhan Oblast in terms of the predicted level of budget imbalance.


The assignments under the project include the following:



  • Analyze the reasons of discrepancies in the evaluations of expenditure responsibilities of municipal raions (city okrugs) carried out under the current equalization grant allocation methodology;

  • Draft a law of Astrakhan Oblast On Amendments to Astrakhan Oblast Law # 74/2005-OZ dated December 5, 2005, “On Intergovernmental Fiscal Relations in Astrakhan Oblast” that provides for amending the procedure according to which fiscal capacity equalization grants are allocated to settlements from the Oblast budget, the allocation procedure of fiscal capacity equalization grants to municipal raions (city okrugs), the procedure of fiscal capacity equalization grants allocated from municipal raions to settlements as well as the implementation of a methodology for allocating grants to municipal raions for setting up raion funds for financial support of settlements;

  • Amend the current fiscal capacity equalization formulas according to which grants are allocated to settlements, municipal raions (city okrugs) that will include:


    • estimation of a tax capacity index for municipalities;

    • estimation of a budget expenditure index for municipalities;

    • calculate fiscal capacity equalization grants for settlements;

    • calculate fiscal capacity equalization grants for municipal raions (city okrugs);

    • calculate grants to municipal raions to set up raion funds for financial support of settlements;

    • calculate grants from wealthy settlements, municipal raions and city okrugs to the Oblast budget;

    • display results of grants allocation on charts.

  • Correct user manuals for the above grant allocation models in accordance with the relevant amendments to their functions.

  • Calculate fiscal capacity equalization grants to municipal raions (city okrugs), grants to municipal raions for setting up raion funds for financial support of settlements as well as grants from wealthy municipalities to the Oblast budget in 2011.