Murmansk cuts the budgets
The Russian Arctic region is experiencing an economic downturn.
Budget revenues are dropping and we are forced to make cuts in order to cover the growing deficit, Governor Marina Kovtun says. According to the regional leader, the budget deficit in the first half of 2012 amounted to one billion rubles (€25 million), which is about five percent of the whole budget.
The main reason for the negative trend is a drop in regional tax revenues and the growing salary expenditures in the public sector, a press release from the governor’s office informs.
More than 1.3 billion RUB are now taken from the regional reserve fund to cover the 2012 deficit. In addition, the regional government is taking measures to reduce spending in the next years’ budgets. However, as underlined by Governor Kovtun in a televised interview, “there will under no circumstances be made any cuts in social spending”. The social sector accounts for about 70 percent of the regional budget.
Governor Kovtun also strongly criticizes federal authorities for holding back investments to the region. According to the regional government, the budgets of several regional institutions, subjected to federal authorities, are covered only by about 30 percent.
As outlined in the latest Barents Monitoring report, Murmansk Oblast also in 2011 experienced major economic hardships, with a downturn in industrial production, lower investments and a drop in consumer growth.
The budget cuts will leave less space for maneuvering for the governor, who took over office April this year. As previously reported, Kovtun has expressed high ambitions for the revitalization of regional economy, partly by improving the investment climate and diversifying regional industry.