Perfection of interbudgetary relations and forming the optimal model of budgetary federalism developmentin Russia

Reaching high economic efficiency is complicated by an imperfect mechanism of budgetary resources use by the federal authorities.In this situation a topical issue is of creating an adequate legal provision of interbudgetary relations. Balance of budgets, which is supposedto be realized through the equality of budgetary rights, is now restricted by the budgetary leveling mechanisms aimed at budget consumption,not at equalization of each region's fiscal potential. Reforms in interbudgetary relations will provide transfer to the task-oriented creation of anew scheme based on a balanced differentiation of the income and the cost budgetary powers between the federal and regional budgets of theRF. The process is aimed at neutralizing the centre-oriented forces in regions, at regions' economic independence, at strengthening the system ofstable federalism in the country, at cooperation of the centre and the regions, between the regions. The new organization should be based on abroadly applied model of performance-based budgeting within mid-term financial planning. The perfection of relations of budgetary federalismat all the level of the budgetary system will provide each level of power with enough resources to perform its functions, will adjust rights toincome and cost liabilities, will increase responsibility of each element of the scheme for its actions. In modern reality the primary task of budgetaryfederalism is to level the regions' self-provision and stable development capacities on the basis of active use of the potential of all patternsof ownership.

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