In 2023, four new regions joined Russia’s administrative framework, receiving a total of 410.7 billion rubles in subsidies from the federal budget. This information comes from the Electronic Budget system and has been cited by RBC as the reporting source.
The Donetsk and Luhansk People’s Republics, along with the Zaporozhye and Kherson regions, are set to obtain 410.7 billion rubles in federal subsidies in 2023. This amount would account for about 89% of the consolidated budgets of these territories, including local municipalities and regional administrations. A large share of these revenues is allocated as subsidies designed to support a balanced budget rather than to fund specific, earmarked projects. The implication is that these funds could be used broadly for social programs, wages, and population support as needed by local authorities (Source: RBC).
Market observers note that these transfers are gratuitous and not necessarily earmarked for particular purposes. Such flexibility allows regional administrations to determine how best to deploy the funds, which likely translates into funding for social benefits, public-sector wages, and general population support rather than dedicated sectoral programs (Source: RBC).
Analysts also highlighted that the reported figures may not include direct federal budget expenditures or sponsorship transfers from other regions, nor a portion of transfers from the Social Fund intended to pay pensions. Nevertheless, the substantial federal subsidies allocated to these territories could persist for a period, even as the economic potential of the DPR and LPR evolves and strengthens (Source: RBC).
Towards the end of November, Russia’s Ministry of Finance prepared changes to tax legislation to align with the governance of the new regions incorporated into the Russian Federation. The prepared document indicates that local businesses would begin paying a mining extraction tax for activities that might have previously been licensed under Ukrainian law. The plan also provides a transition period for moving to online cash registers and offers preferential rates for entrepreneurs who adopt certain tax regimes (Source: RBC).
These developments reflect a broader fiscal reorganization accompanying the incorporation of the four territories. The subsidies, tax adjustments, and transitional provisions collectively shape the budgeting landscape for the affected regions, with implications for revenue streams, public services, and economic policy in the near term (Source: RBC).