The excess of the region budget revenues over expenses registered in the first half of the year was primarily due to a substantial saving in expenditures - 13% of the authorized figure.

Savings were achieved through:

a) Rapid desubsidization of most foodstuffs. The region was one of the first - on January 16 - to unfreeze prices on milk. Only infant-feeding centres continue to be subsidized; bread subsidies were given only during three weeks in June in order to relieve the burden of the price rise following the increase in grain costs. From January to June, foodstuff subsidies amounted to 380 mln roubles or 4.4% of the budget outlays.

b) Restraining wage increases for employees of budget- financed institutions.

c) Sharp decrease in capital investments during the first quarter: without the agricultural sector investments, only 108 mln roubles or 4.5% of the budget outlays were used. For the fourth consecutive year, state capital investments in the region continue to decrease. Their percentage in the budget outlays has also sharply declined: 1989 - 15.5%, 1990 -9.3%, 1991 - 4.3%. If one takes into account that during the current year the federal budget's centralized investments were cut by two- thirds, one may assume that the natural limit to capital investment decreases is already in sight. And it is no coincidence that during the second quarter, state capital investments from the region's budget were substantially increased.

d) Of no small importance for saving of expenses was the use of accumulated stocks and budget carry-overs by enterprises and budget-financed institutions.

Savings received were allocated to a number of the budget-financed programmes, aimed at earnings some time in the future. Among them were purchase of land from agricultural institutions and allocation of land plots to individuals to construct their own houses or to lay out market gardens; the setting up of a fund for support to entrepreneurs; purchase of fuel, etc.

However, by the middle of the year the reserves seemed to be practically exhausted. Further capital investment savings could lead to serious losses. At the same, time new major budget-financed programmes have already been planned, in particular subsidies to cattle-breeding farms totalling 1.8 mln roubles, and additional wage rises for employees engaged in the social welfare and cultural spheres. Starting from the second quarter the region budget expenditures tended to exceed its revenues.

Under the circumstances the excess of revenues over expenses is highly unsteady, and should prices on oil, fuel and grain be sharply increased before the end of the year, a regional budget deficit may arise. The state of affairs dictates that the region, city and district administrations pursue an active policy of budget outlays.

[up]

[previous] [CONTENTS] [next]