BOFIT Viikkokatsaus / BOFIT Weekly 2019/41

A recent study of Russia’s Accounts Chamber notes that information about partially implemented fixed investment projects is collected by a variety of public agencies. Rosstat compiles comprehensive information on them for the national accounts, but announced that it has stopped processing this information as decided in spring 2018. Rosstat data suggests that the ratio of the value of investments in progress relative to the value of Russia’s total stock of fixed capital has held steady throughout this decade (Rosstat adjusts both stock values each year to reflect changes e.g. in prices). The value of investments relative to the capital stock at the end of 2016 was 6−7 %.

The Accounts Chamber assessment of unfinished projects focuses on those that are financed from federal, regional or municipal budgets. Despite various information systems, comprehensive investment figures appear only in budget information. These data provide the basis for the Account Chamber’s estimate of public sector investment projects in progress, i.e. an amount equal to just over 10 % of the public sector’s capital stock. Nearly 30 % of investments in progress have been under construction for over five years, halted or abandoned.

The Accounts Chamber finds that data collection is generally adequate only for the Federal Targeted Investment Programme (FAIP). According to a presidential decree, there should have been an inventory of all federal projects by the beginning of 2016 and all regional projects by the beginning of 2017. The software for reporting and data management are still not ready, however, and data collection to date has been spotty. The reporting forms for the main reporting system were only provided to regions this year.

To reduce the number of unfinshed investment projects, the government gave local and regional governments a two-month deadline at the beginning of 2017 to provide development plans. As of this summer, most recipients of federal funds had submitted their plans, but only 23 of Russia’s 80 regions. The Accounts Chamber gave recommendations on data collection and drafting of plans. It also recommended improving related laws and regulations, determining the responsible regional authorities, as well as providing technical assessments of the projects in order to decide on their continuation.