Moscow Government approves 2024–2026 draft budget — Sobyanin

In 2022–2023, Moscow’s economy adapted to unprecedented sanctions imposed by unfriendly countries and returned to its long-term growth track, as the Moscow Government took prompt actions to support local industries and businesses, thus, contributing to the rebuilding of logistics and supply chains of Moscow-based enterprises so that they could occupy the market niches of foreign companies who had fled away and, moreover, win new overseas markets.

The growth of business activity is confirmed by the positive changes in budget indicators. Income from manufacturing, construction, IT and communications, retail and other industries is increasing at a rate faster than inflation, so by the end of the year the growth in Moscow budget revenues is expected to exceed 12 per cent.

Moscow budget revenues are estimated to grow by 7 per cent in 2024 and by 7.2 and 7.3 per cent in 2025 and 2026, respectively, while the main increase in revenues is projected to be due to personal income tax, corporate tax and special tax modalities for small and medium-sized businesses.

The expected steady increase in revenue receipts over the next three years is due to the growth of the country’s economy as a whole; it is also the result of many years of Moscow’s consistent policy to drive entrepreneurship and the business environment, stimulate investment, create cutting-edge urban infrastructure and support employment.

In terms of expenditures, Moscow’s draft budget for 2024 and the planning period of 2025– 2026 maintains continuity with the budgets of previous years as it is focused on social security and investment and is also aimed at tackling issues related to ensuring technological sovereignty of the Russian economy.

The priorities of budget policy are to boost the economy and manufacturing, ensure robust social protection for Muscovites, improve the quality of social services and further continue the city development plans.

The draft budget provides funds for indexation of social security benefits/allowances, increased wages for public sector workers, better services to residents, a comfortable environment in local healthcare, education, sports and cultural institutions, projects to create new production facilities, and investment in the expansion and modernization of the urban infrastructure.

Program budget

In 2024, expenses under 13 state programs run by Moscow, including the development of healthcare, education, transport, hospitality, preservation of cultural heritage and social support for residents, will amount to RUB 4.4 trillion and almost RUB 13.3 trillion in three years.

Social budgeting

The existing social obligations to Muscovites will be fulfilled by all means, while support for local residents is to be greater, thanks to the draft budget. In 2024, allocations for social support, healthcare, education, culture, sports and other social events will amount to half of the city’s budget expenditures, or RUB 2.5 trillion, and, if counting healthcare payments from the Compulsory Medical Insurance (CMI) Fund, almost RUB 2.9 trillion; therefore, the social expenditures, including the CMI, are to grow by 15.5 per cent.

Social support for Muscovites

Furthermore, the draft budget for 2024 provides RUB 615.9 billion for social support to Moscow residents in cash and in kind, including pension supplements, commuter, housing and utility allowances, drug provision, etc.

On January 1, 2024, benefits and allowances to seniors, families with children and disabled people will be indexed by 5 per cent, so the minimum pension with the local additional payment will increase up to RUB 24,500 per month, approximately 2 million Moscow pensioners to receive municipal add-on extras.

The draft budget encompasses expenditures on cash payments at RUB 89.5 billion to families with children and RUB 202.3 billion to seniors, the latter including RUB 177.7 billion of extras for non-working pensioners.

The Moscow Government plans to allocate RUB 31.4 billion in 2024 to finance housing and utility allowances for certain categories of people, the related expenditures for low-income families estimated at RUB 23.8 billion, about 3.4 million Muscovites being eligible for housing and utility allowances.

Over RUB 157 billion will be allocated for certain categories of residents to take fare-free or discounted fare trips in public transport in Moscow and the Moscow Region, using the Moscow Central Diameters (MCD) and commuter trains, including free transfers between different types of rail transport.

The Moscow Longevity project, which is very popular with senior Muscovites, will be further developed, indeed, with RUB 4.9 billion to be earmarked for it in 2024.

RUB 9 billion are also reserved to provide targeted social support to Moscow residents.

Support for SMO participants and revival of new regions

Comprehensive targeted support for participants in the Special Military Operation (SMO) and their family members will continue and payments to SMO participants established in Moscow will be made in full. Moreover, it still provides for a wide range of additional social support to families and children of SMO participants, including a monthly allowance for each child, free stay in kindergartens for preschoolers, free meals, additional education and stay in after-school groups for schoolchildren, targeted cash support, free social services, employment, retraining and legal or psychological assistance.

Support for SMO participants and their families is provided at the one-stop-shop support center in Moscow, which offers comprehensive personalized aid both during and after the military service; they can opt for all possible services aimed at speedy adaptation and socialization, including psychological assistance, medical care, rehabilitation, and employment.

Moscow will continue to provide assistance in restoring the infrastructure in Donetsk and Lugansk as the relevant budget funds will be spent on repairing social facilities, utility networks and other priorities.

It is also planned to allocate money to further assist the Ministry of Defense and the military-industrial complex (MIC).

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Better accessibility and quality of health care

The Moscow Healthcare will remain the largest municipal program in 2024 as the related budget expenditures are estimated at RUB 593.2 billion, including RUB 1,015.6 billion under the CMI (+ 12.9 per cent).

In 2024–2026, Moscow will continue its large-scale program to modernize the healthcare infrastructure, in particular, to complete Phase II of the city’s major outpatient modernization program by the end of 2025, to ultimately introduce the new Moscow healthcare standard in all Moscow outpatient clinics, revamped outpatient clinics creating a cozy, patient-friendly environment, including well-designed layout of the premises, modern interiors, high-tech equipment, and similar teams of required specialists.

In the inpatient sector, they are going to create a network of flagship emergency care centers, to be accommodated at 6 major city hospitals; each flagship is a fully functional hospital with admissions and diagnostics departments, ORs, ICUs, and state-of-the-art medical equipment.

Phase II of emergency care modernization will cover reconstruction of 22 admissions departments in alignment with the flagship centers, while it is also planned to renovate cancer care departments. In 2024, the Kommunarka Multi-Purpose Clinical Center will get a radiation therapy building, new buildings of Moscow City Oncology Hospital No. 62 in Skolkovo with a full range of diagnostic and treatment capabilities to be launched in 2025.

High-tech medical care costs to be paid from the municipal budget in 2024 will amount to RUB 14.5 billion, or more than RUB 34 billion, if counting the CMI funds; high-tech services will be provided to Muscovites in all medical disciplines, including cardiovascular surgery, traumatology, orthopedics, and cancer care. Moscow will continue to develop innovative treatment methods, including robotic surgery, the use of Gamma Knife machines, and bone marrow transplantations.

Over RUB 55 billion will be allocated in 2024 to provide Muscovites with free or discounted medicines, medical products and medical nutrition therapy; patients with cancer, cardiovascular, rare and life-threatening (orphan) diseases, diabetes, bronchial asthma, etc. will benefit from the latest and the most efficacious medications.

The draft budget for 2024 provides RUB 5.8 billion for creation of a common digital healthcare platform, the funds to be used to drive digital medicine, introduce artificial intelligence (AI), increase the capacities for making medical appointments and other functionality to facilitate the work of doctors, improve patient experience and ensure the use of medical image analysis tools.

Education

In 2024, RUB 547.5 billion will also be spent for the development of Moscow’s education, with the start of a large-scale program for renovating the capital’s schools, which involves modernization of more than 900 educational facilities, 50 school buildings to be reconstructed next year.

September 1, the authorities kicked off the transformation campaign for secondary vocational education to take into account the needs of the real economy. The new educational programs encompass more of practice-oriented classes (70 vs. 30 per cent), to be taught at educational institutions and potential employers. The authorities will also start a large-scale equipment upgrade at colleges; this primarily applies to workshops and laboratories.

Moscow schools will continue to use the new pre-vocational education standard, which covers 6 areas of pre-professional training, such as classes in IT, medicine, engineering, psychology and teaching, business and media; pre-professional courses to be also more practice and career oriented for students to gain comprehensive knowledge of future occupations.

The city will also go on introducing the new format for targeted teaching high-school students for the Unified State Exam (USE) for them to prepare for exams, repeat what they have learned, avoiding common mistakes and analyzing complex problems at special workshops.

Grant support for prominent educational institutions will also continue, the draft budget providing RUB 4.3 billion for grants from the Moscow Mayor.

Teachers will receive payments for classroom management and an allowance for using e-solutions under the Moscow Electronic School (MES) project; in addition, those participating in the project to prepare students for the USE exam will enjoy some extra benefits, depending on the work load and achievements.

The Moscow Government will also continue to award grants for the development of MES-related online learning materials, including teaching aids, study scenarios, topics and tests on functional literacy, which are needed to both teachers and schoolchildren.

Investment-focused budget

The development budget for 2024 will amount to RUB 2.1 trillion, or 44 per cent of the city’s budget expenditures, covering the Moscow Targeted Investment Program (RUB 903 billion), development engagements, including major repairs, buying equipment or rolling stock, multi-purpose development projects and renovation programs (RUB 1,223 billion).

Modernization of the municipal fleet

The city will keep going with the program for upgrading municipal fleet, as well, prioritizing the purchase of environmentally friendly electric vehicles. RUB 86 billion will be assigned for that purpose in 2024, the funds to be spent on new-gen metro cars, MCC trains, electric buses and latest trams.

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Enhancing social care infrastructure 

The draft budget provides RUB 640.7 billion for repairs and re-equipment of educational, medical and other social institutions with cutting-edge devices, including RUB 231.3 billion reserved for 2024.

It is planned to allocate RUB 227.5 billion for development and enhancement of the healthcare infrastructure in 2024–2026, including RUB 121.6 billion for 2024, the funds to be used in order to complete Phase II to overhaul outpatient clinics by 2025, modernization of hospitals’ admissions departments, creation of women's health centers, and equipping of healthcare institutions with state-of-the-art medical devices, including under life cycle contracts.

It is planned to allocate RUB 248.1 billion for expansion and enhancement of the educational infrastructure in the three years, including RUB 44.3 billion in 2024, to unfold the city’s major program for reconstruction of local schools (the first 50 schools to be renovated as soon as in 2024), repair and equip educational institutions as needed, in particular, additional educational and lab devices, and to complete modernization of children’s art schools (the Art for Children project), school yards and stadiums, as well as kindergarten sites to be further improved and landscaped, so schoolyards will get children’s play grounds, sports equipment and benches, football fields, volleyball and basketball courts to be fixed, too. To improve such areas, the draft budget for 2024–2026 provides for allocations of RUB 18 billion, including RUB 3.6 billion to be spent in 2024.

It is also planned to allocate RUB 44.2 billion for expansion and enhancement of the social care infrastructure in the three years, including RUB 16.6 billion in 2024, to carry out repairs, upgrade existing equipment and build a network of Moscow Longevity centers in all districts across Moscow, with a comprehensive overhaul of at least 55 sports facilities to be done within the next three years; a total of RUB 47.7 billion will be earmarked to strengthen sports infrastructure, including RUB 16.4 billion allocated in 2024.

In addition, the draft budget provides for RUB 55.2 billion to enhance capabilities of cultural institutions, to be spent in 2024–2026, including RUB 28.8 billion in 2024, to do landscaping, modernization, and revamp of Moscow’s major cultural and recreational parks and to modernize or equip local theaters as needed.

Creating a comfortable urban environment 

Thanks to synchronized efforts to create a friendly and safe urban environment, today Moscow is certainly one of the most beautiful and comfortable megacities.

So, the draft budget for 2024 also includes funds for rehabilitation of protected natural areas and improvement of streets, public spaces and green areas.

The large-scale home-to-home landscaping project will continue to evolve in the upcoming fiscal period not just to repair roads, but also to ensure the safety and comfort of local residents. In fact, the municipality plans to arrange new pedestrian crossings and improve roadside areas, modern stop pavilions to be installed for passengers, while motorists are to enjoy convenient approaches to residential areas and new parking spaces.

As in previous years, the majority of improvement projects will be implemented in residential quarters outside the historical center, under the My District program.

Renovation and other citywide housing programs

In 2024–2026, the Moscow Government will double the pace of its housing renovation program The housing programs involve building 6.5 million square meters of housing, including 6.2 million square meters under the renovation program, for more than 175,000 residents of the resettled five-story buildings to move to new homes.

Apart from residential housing, the renovated neighborhoods will have needed social infrastructure, including schools, kindergartens, outpatient clinics, and sports facilities. A comfortable urban environment will be created for the ones that move in, including nice looking green courtyards, parks and recreation areas, all necessary next-door facilities, and time-saving public transport.

The draft budget for 2024–2026 provides for allocations of RUB 1,136.6 billion to continue the renovation program.

Support for the real sector and multi-purpose development

A key priority of the draft budget is to support the real sector; in 2024, the municipality will go on with all of its business support programs, including preferential lending and driving import-substitution, innovative production and tourism.

Industrial enterprises will enjoy programs enabling compensation of up to 50 per cent of their costs of connecting to utility networks, equipment subsidies and preferential loans.

In 2024, the Moscow Government plans to back projects for arranging educational and cultural venues at shopping malls and bettering their architectural features.

In total, they will allocate RUB 15.8 billion for direct financial support of the economy.

Another important area of stimulating investment activity is the creation of infrastructure for new production facilities. In order to drive priority sectors, e.g., microelectronics, photonics, electric vehicles and pharmaceuticals, they will continue building infrastructure facilities in the Technopolis Moscow SEZ, as well as in the Rudnevo and Southern Port industrial zones, RUB 58.7 billion to be allocated for these purposes in 2024.

The municipality will also continue to contribute to creation and growth of modern R&D clusters, including the Vorobyovy Gory R&D Center of Lomonosov Moscow State University (MSU) and the National Space Center (NSC), which is being created at the Khrunichev State Research and Production Space Center, RUB 5.6 billion to be earmarked for that in 2024, and multi-purpose development projects to gentrify Moscow’s industrial areas and create high-tech factories with new jobs, business centers, social care facilities and public spaces.

The city will continue to involve manufacturers through offset contracts; with this mechanism in place, Moscow will accommodate plants and factories to satisfy local needs, whereas businesses will receive a guaranteed order for their products.

Fiscal deficit

The deficit for 2024 is planned at RUB 500.3 billion, though they will take steps to reduce it during the planning period; it is estimated at RUB 403.6 billion in 2025 and RUB 209.9 billion in 2026.

The existing deficit can be reduced in the budget execution due to savings during competitive procedures and due to additional revenues.

The draft budget provides for attracting RUB 159.5 billion of loans in 2024, including a loan from the federal budget to provide RUB 9.5 billion financial support for the infrastructure project, the money to be spent on buying rolling stock for the third Moscow Central Diameter.

The actual amount of borrowing will be determined upon budget execution.

In 2024, the municipality will provide the Moscow Government guarantees in the amount of up to RUB 15 billion to facilitate the prompt attraction of borrowed funds by public utilities and power providers that contribute to municipal multi-purpose development/renovation projects; the borrowing will not unbalance the city budget. The Moscow Government performs its obligations to repay and maintain the public debt promptly and in full.

In general, the programs financed under Moscow’s draft budget for 2024 and the planning period of 2025 and 2026 will drive social budgeting, robust social protection of Muscovites, better services for the population, further implementation of the city development plans, technological sovereignty projects for the domestic economy, sustainability and stability of Moscow’s budget system.