CIAO DATE: 11/03

The Federal Budget and the Regions

Abstract

Up until now most specialists on problems of financial transparency have been preoccupied with issues of elementary order, accounting and supervision of state finances. These studies were aimed at rectifying obvious shortcomings in the budgetary process (the need for a coherent legislative base, the treasury principle of execution, etc.) that must be got rid of if a state is to be viable. The question "Why does the economy need a transparent system of public finances?" was reduced to the problem of budget federalism, that is, the adaptation of the budgetary system of Russia as a unitary state to the new setup in which rights and duties are distributed between different levels of government. But today the task is broader, not just to bring order to the budgetary sphere itself, but to determine the place of state finances in an open economy in which the private sector plays the leading role.

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