Russia Issues a New Budget Approval Procedure for Donetsk, Lugansk, Kherson, and Zaporozhye
The Russian Ministry of Finance has introduced a dedicated procedure to approve budget drafts and oversee their implementation in the four recently reorganized regions: the Donetsk and Lugansk People’s Republics, as well as the Kherson and Zaporozhye regions. This development has been reported by RBC, which cited the content of a draft government decree outlining the approach.
The document targets the 2023–2025 planning horizon and has already been submitted to the cabinet for consideration. Among the notable changes are a shortened budgeting cycle and a streamlined flow of funding. Specifically, budget planning time is reduced to one year, replacing the previous three-year planning window. In addition, cash disbursement will be routed through field offices of the Bank of Russia and Promsvyazbank, simplifying and accelerating the allocation of funds.
Another major element is the reclassification of newly established entities as highly subsidized. In practical terms, subsidy levels for these entities are set to exceed 40 percent of their income, marking a significant shift in the financial support framework available to them during the transition period.
Industry analysts and financial experts weigh in on these innovations as part of a broader transition strategy. Tatyana Tirskikh, Deputy Director of Country Ratings at Expert RA, notes that the changes reflect an ongoing adjustment period. She emphasizes that integrating these regions into the national budgetary system will require time and careful alignment with existing financial procedures and reporting standards. The rollout is expected to unfold gradually as authorities adapt to the new fiscal mechanisms and governance structures.
On September 30, President Vladimir Putin signed a decree formalizing the inclusion of the four regions into the Russian administrative framework. A transitional period remains in effect through January 1, 2026, during which the new budgeting rules will be implemented and evaluated. This phase is designed to allow authorities, regional administrators, and financial institutions to adjust to the revised dynamics without disrupting public spending or essential services.
Overall, the decree and its accompanying measures aim to align the budgeting cycle with shorter planning horizons, accelerate cash flows, and establish subsidy policies that support the transition. The process is being monitored by federal agencies, regional administrations, and financial partners to ensure consistency with national fiscal objectives while addressing the unique needs of the four regions during this period of administrative realignment.