The RF Ministry of Finance relates prospects for raising the efficiency of budgetary expenditures through BOR mechanisms

Recently Vice-Prime-Minister of Finance Alexei Kudrin has informed Prime Minister Vladimir Putin on the development of instruments to improve the efficiency of budgetary expenditures.

According to A.Kudrin, now there is prepared a draft a program concept to improve the efficiency of budget expenditures, and the Program is to be approved before April 1, 2010. Due to the fact that the post-crisis development model of the annual increase in public spending is not applicable further, the Government of Russia is focused on reducing the budget deficit while increasing the return on each ruble of budget funds.

Achieving of this objective is seen primarily in the "conversion of the majority of agencies’ budgets in the targeted program methods within the next year or two", i.e., a significant growth of the share of targeted programs in the budget, as well as the subsequent transition to the program classification of the budgetary expenditures. Another trend in improving the quality of budget execution is the reform of the program and principles of public procurement, including a substantial increase of public expenditures for the innovation sector of economy.

In our view, the main directions of improving the efficiency of budgetary expenditures are chosen quite reasonably, but at the same time, improving the overall quality of budget execution is possible only through a comprehensive approach to this problem, which allows not only to encompass the broadest range of regulating tools, but also to structure their application in time. In particular, in the coming years (2010-2011) it is necessary to focus primarily on increasing the availability of public services, that can be achieved through the restructuring of the national budget network, strengthening of incentives at the lowest level to improve budgetary funds spending, enhance public procurement system, optimize some budgetary procedures (such as introduction of regulations in budget management decisions technology).

As the institutional environment of the further development is formed in the country, rather complex management mechanisms, such as BOR, targeted activities, public-private partnership can be an important factor in the rationalization of budget expenditures and improve the budget process in general. The implementation of this block of activities is planned to be implemented within 2010-2015.

I.A. Sokolov, Ph.D., Deputy Head of Laboratory for Budget Policy