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21:52 | Nov 24 | 2011

Top-down government to be reversed

What opportunities the decentralization of powers gives for the regional and federal governments.

Recently the President of the Russian Federation Dmitry Medvedev initiated «to destroy the vertical powers structure» meaning to redistribute powers among federal and regional authorities. The Federation Council was assigned to develop a complex approach to this issue.

The main task is to solve the problem of interbudgetary relations, because, according to the president, «the more the region earns, the more it should transfer to the federal budget». At that, federal authorities should secure transferring of full powers to regions with finance, otherwise local authorities may fail to manage new powers.

More independent
Judging by recent speaking of the Minister of Economic Development Elvira Nabiullina in the State Duma, this offer "was elaborated and deliberated". Then the deputy of fraction «Spravedlivaya Rossia» Fedot Tumusov asked: «One of the basic directions and conditions of national economy development is stimulation of investment activity. That is on the one hand. On the other hand, President Dmitry Medvedev speaks about the necessity to broaden the regional governments’ rights that is to transfer some center powers to regional governments. As far as I understand, the question is about economic federalism. In this connection we would like to know what rights for the investment attraction the regional governments have now and what rights could be transferred in future?»
«Really, the question to depute some powers from the federal government to the regional one is often discussed. It will make regions more independent and let them have sources of revenue of their own, - the Minister answered. – Talking about regional governments’ possibilities to attract investments, it should be noted that, in our opinion, regions have all the possibilities already. Though, of course, investment climate in all of the regions differs much from one another and from the federal center as well».

The middle class increased twice
Besides, Elvira Nabiullina noted, a new financial tool was created this year which would stimulate regions to improve their investment climate. That is a special fund (10 billion roubles), which monetary means will be transferred to those regions, whose heads have been successfully working on increasing of taxation base.
Concluding the speech, Elvira Nabiullina noted: «Effective social policy can exist only in case if we have stable economic growth. That is economic growth which has allowed us to increase real incomes of the population. The quantity of people who are referred to the middle class has practically doubled for some years in Russia. That is also a great breakthrough which reflects growth of real incomes of the population. And their further growth is possible only if we have economic growth».
At the present moment there are two government commissions in Russia headed by Vice-Premier Dmitry Kozak and Presidential Plenipotentiary in the North Caucasian Federal District Alexander Khloponin occupied with the decentralization issue. The commission headed by Mr. Kozak is engaged in legal aspects of redistribution of powers among federal, regional and local authorities. And Mr. Khloponin was assigned by Mr. Medvedev to work out the financial aspect of the issue.

In search for answers and investors
Broadening of powers for foreign investments attraction means much for Yakutia. Exactly because of searching for potential investors, the Republic delegation actively visits foreign countries, such as Japan, the Republic of Korea, Great Britain.
In his recent speech in London, the Vice-Chairman of the Government Gennady Alekseev specified some tasks which are to be implemented by the authorities of the Republic such as provision of corresponding infrastructure to implement complex industrial and transport projects; systematic work on searching and attraction of investments, including private investments; commercialization of products.
According to Gennady Alekseev, the government of Yakutia faces three core questions which are to be discussed every day. What infrastructural projects can be implemented using the model of state-private partnership? How to attract and provide safety of private Russian and foreign investments? How to support development of innovations in the region?
At the present moment Gross Regional Product (GRP) in Yakutia amounts to 11937 US dollars per capita. The purpose of the Republican government is to increase GRP by 30% by 2020 taking into account that core industries will provide GRP growth by 250% by the same year. To support this mass economy diversification it is necessary to build not only railways, but also highways, pipelines and hydro-electric power stations in the Southern Yakutia, and also to consolidate with national electric network.

Ratings: Economy is "treated" by diamonds
The Fitch Ratings International Agency has raised long-term credit ratings of the Sakha Republic (Yakutia) in foreign and national currency from «BB» up to «BB +» and national long-term rating from «AA - (rus)» up to «AA (rus)». «The short-term rating of the region in foreign currency has been confirmed at «B» level, - the Agency informs. - Increase in ratings reflects the rational budgetary policy of the region, low debts level and economy diversification. The restored demand for raw materials resources, in particular for diamonds, positively affected regional economy in 2010. Besides, rapid development of oil and gas projects improved and diversified taxation base of the region».
The agency supposes that the Republic of Sakha (Yakutia) will improve its financial position in the medium term.