RUSSIAN PRESIDENT'S BUDGET MESSAGE: ADJUST FINANCIAL AID TO REGIONS

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MOSCOW, July 12 (RIA Novosti) - The Russian president's budget message sets the task of adjusting the system of distributing financial aid to the regions and raising its efficiency.

"Lying ahead in 2005 is adjusting the current system of distributing financial aid to the regions from the federal budget. The procedure of forming and distributing the inter-budget transfers should become more transparent", says the message.

"Bearing in mind expanding the authorities of the Russian Federation constituents' governments and local governments in 2005 and raising their responsibility for fulfilling their social obligations, it is necessary to enhance the efficiency of the financial aid rendered from the federal budget", emphasizes the document.

The message points out that of special significance under these conditions is co-funded aid, which provides for developing motivation for the regions to discharge the social obligations, ensuring their compliance with the federal standards and enhancing the state of the regional finances".

"It is important to increase the predictability of the main inter-budget transfers source, the Federal Fund for Financial Support of the Russian Federation's Constituents, by simplifying the approach to the fund's assets distribution", says the message.

"It is necessary to overcome the leading-strings approach to distributing the fund's assets and establish conditions for raising the RF constituents' own taxation base in order to solve the main task of enhancing monetary supportability of the regions in need if financial aid", stresses the document.

At the same time, the volume of the regions financial support fund for 2005 and subsequent years should be formed taking into account its adjustment for inflation, the Russian president's message points out.

"For boosting the business activity in the Russian Federation's constituents and strengthening the regions' financial position, special attention should be paid to the financial aid's investment component directed towards developing the regions' infrastructure. With this regard it is necessary to outline unified approaches to distributing the current discreet investments support sources within the framework of the Regional Development Fund", the document states further on.

The message specially emphasizes the importance of methodological and regulatory support of sharing the powers between federal, regional and municipal authorities next year. The Russian government, and the regions' executive authorities must assist the self-government bodies by providing competent personnel to their financial units, especially in newly established municipalities, reads the document.

"The regions should not suffer from the ongoing reforms. The solution of this task will depend on increasing the efficiency of the financial aid from the federal budget and establishing methodological basis for successful implementation of the current inter-budget relations reform", stresses the Russian president's message.

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