Technical assistance to the Ministry of Finance of the Russian Federation in improvement of intergovernmental fiscal relations

This project, implemented by consortium “ Institute for the Economy in Transition  and Center for Fiscal Policy”, is made possible through grant from Noncommercial Foundation for Enterprise Restructuring and Financial Institutions Development

Project team Leader in the CFP Antonina Kovalevskaya


  1. Technical assistance to the subjects of the Russian Federation in increase efficiency and improve quality of public finance management and in implementation of local self-governance reform. Selected pilot regions for this objective include Krasnoyarsk krai, Republic of Mari-El and Smolensk oblast;

  2. Methodological assistance to the Ministry of Finance in regulation of intergovernmental fiscal relations. Increased efficiency of public finance management is necessary condition for implementation of the three interrelated reforms – administrative, budgetary, and local self-government. It can be achieved through

    1. creation of complex system of monitoring of planned and factual results of regional governments’ activities in correlation with planned and factual budgetary parameters. Such a system will provide the federal centre with information on (i) contribution of a region to the achievement of the national development goals, (ii) corresponding regional resource base, and (iii) validity and efficiency of regional fiscal policy.

    2. Transition to the new system of intergovernmental fiscal relations which principles were stated in the Framework for increase efficiency of intergovernmental fiscal relations and improve quality of state and municipal finance management in the Russian Federation for the period of 2006-2008. The project aims to fulfill these tasks through the three project components.

Component 1 Development of the mechanisms and tools to monitor processes and outputs of mid-term and annual planning and execution of regional and local budgets.

Deliverables of this component include:

  • Mechanisms and tools of monitoring and evaluation of execution of responsibilities assigned to the state and local self-governments, including those delegated from the other level of government,

  • Module report on evaluation of execution of state responsibilities by the pilot regional governments, including those delegated from the other level,

  • Draft evaluation report on state and municipal finance management,

  • Defining range of state responsibilities financed from regional budgets that could be co-financed from the federal budget,

  • Amendments to Tax and Budget Codes and draft regulations in tax and budgetary legislations,

  • Indicators and mechanisms to monitor and evaluate activities of state and local governments,

  • System and procedures of evaluation of quality and outputs of planning and execution of mid-term and annual financial planning and execution of sub-national budgets,

  • Framework for strengthening of local budgets’ revenue base and for expanding of the list of responsibilities of local self-governments in the area of local tax administration,

  • Recommendations on formula-based compensation mechanisms for regions and municipalities when re-registration of the large taxpayers is the case,

  • Recommendations of calculation of normative for financing of education, health, and social protection on the regional and local levels.

Component 2 Technical assistance to the Department of Intergovernmental Fiscal Relations (DIGFR) of the Ministry of Finance of RF in implementation of regional and municipal finance reform, and stimulation of reliable finance policy employed by regional and local governments.

This includes:

  • Development of framework for the DIGFR activities including studies, analysis, calculations, draft reports to the Ministry of Finance of RF and to the Government of RF, draft laws, presentations, and the like),

  • Methodological assistance in formation of the development policy in the area of regional and municipal finances,

  • Expertise of the TORs and Reports of other consultants in relation to the issues of this project.

Component 3 Facilitation of the dialog between Ministry of Finance of RF and regional and local finance Departments on the issues related to the development of the budget federalism and predictability of the fiscal policy in Russia.

This includes:

  • 5 seminars and 5 round tables each year in which representatives of the regions and federal agencies will participate. These activities will be devoted to the general outputs of the project and achieving consensus on top issues of intergovernmental fiscal relations for the next fiscal year,

  • Publication of the developed materials, recommendations, draft laws, etc.