Russian Federation: Fiscal Transparency Evaluation

EXECUTIVE SUMMARY Most aspects of Russia's fiscal reporting and budgeting practices are in line with good or advanced practice under the July 2013 draft of the Fiscal Transparency Code, and the disclosure and management of fiscal risks has significantly improved in recent years (Table 0.1). Specifically, over the past decade and a half: * the 1998 Budget Code and subsequent amendments have established a comprehensive legal framework for fiscal management at all levels of government; * the government began publishing cash-based in-year and year-end fiscal reports and accrual-based annual financial statements as well as fiscal statistics which consolidate Federal, regional, and municipal governments in line with international standards; * detailed and credible medium-term macroeconomic forecasts have been prepared since early 2000, and a new oil price-based fiscal rule was introduced in 2013 to encourage sustainable and counter-cyclical fiscal policymaking; * the coverage of the Federal government budget has steadily expanded and the three main remaining extra-budgetary funds are presented and approved alongside it in a timely manner; * the policy-orientation of the budget has improved thanks to a comprehensive and detailed medium-term budget framework introduced in 2008, and a new program and performance budgeting system introduced in the 2014 Budget; and * firm central controls over key sources of fiscal risks have been established, including annual limits on the issuance of debt, credit, and guarantees by the Federal government, and on borrowing by sub-national governments.2 At the same time, this evaluation highlights a number of important areas where fiscal transparency practices could be further improved: * while fiscal reports provide a relatively comprehensive picture of the Federal and sub-national government finances, they exclude the financial activity of various classes of government-controlled enterprises with net expenditure of at least 29 percent of GDP and liabilities of at least 127 percent of GDP in 2012;3 2 As a result of these successive enhancements to fiscal disclosure, between 2006 and 2012 Russia's rating under the International Budget Partnership's Open Budget Index has risen from a score of 47 to 74 out of 100 and from a ranking of 28th out of 59 countries to 10th out of 100 countries. 3 Figures quoted here and in the remainder of this report are based on data from the 26 largest government-controlled enterprises by liability.