This text is an automatic translation from Русский. It was generated by AI and may contain inaccuracies.
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This text is an automatic translation from Русский. It was generated by AI and may contain inaccuracies.
Read original →How IBL and TIL work for regions: preferential terms at 3% per annum, financing volumes up to 1 trillion rubles, issues with deadlines and rising project costs according to the Accounts Chamber. Analysis of economic effects and risks of growing regional debt.
Due to emerging financial constraints and expensive commercial credit, the government has strengthened financial support for regions through infrastructure budget loans (IBL) and treasury infrastructure loans (TIL). These mechanisms serve as an alternative to direct budget transfers and commercial loans, facilitating the financing of large-scale, long-term projects aimed at stimulating economic activity and regional development.
Infrastructure budget loans are government loans provided to regions from the federal budget on preferential terms. Key parameters:
IBLs differ from grants and subsidies in that they are provided as borrowed funds with a repayment obligation for implementing specific infrastructure projects, rather than as non-repayable aid. Projects are selected on a competitive basis and approved by government regional development agencies. The repayable nature of the funds reduces pressure on the federal budget compared to non-repayable transfers, while financing is distributed according to long-term schedules, allowing regions to plan investments and expenditures.
Treasury infrastructure loans (TIL) are an instrument approved by the government for accelerated financing of infrastructure projects using federal treasury funds. Unlike IBLs, the source of funds is specifically federal treasury resources, not a separate budget line item.
TILs are oriented toward high-readiness projects: utilities modernization, transport infrastructure, and utility networks. Regional applications undergo selection and approval at the federal headquarters level, after which financing is provided within shorter timeframes. For example, in 2025, 14 regions received TILs worth more than 46 billion rubles for implementing 37 infrastructure projects, primarily in utilities.
Besides infrastructure loans, regions receive non-repayable budget assistance—interbudgetary transfers, which include grants, subsidies, and subventions. These transfers do not need to be repaid and they cover regions' current obligations.
According to the draft federal budget for 2025–2027, the amount of interbudgetary transfers to regions is:
Transfers are substantially larger than the volume of budget loans planned for annual provision (150–250 billion rubles for TIL in 2026–2027). Unlike transfers, loans require repayment. The government allows for partial debt forgiveness in exchange for targeted investment in infrastructure development.
The federal budget allocated approximately 1 trillion rubles for IBLs for the period 2021–2025. These funds were used to implement more than 900 projects in Russian regions for infrastructure construction and modernization. Additionally, the draft budget for 2026–2028 stipulates that budget loans for infrastructure will be provided to regions annually until 2030 in amounts of approximately 150 billion rubles.
For regions
IBLs and TILs allow regions to reduce borrowing costs compared to commercial loans in capital markets and implement projects that would otherwise be unavailable. Preferential rates (~3%) are substantially lower than market rates, especially against the backdrop of rising lending costs in the economy. Thanks to IBLs, more than 1,000 units of public transport have already been deployed in 16 regions—buses, trams, and metro cars.
For the federal budget
Unlike subsidies, infrastructure loans are repayable instruments, meaning the federal budget maintains financial stability and redistributes funds through debt financing. In cases where a region has already completed work and reported results, the government periodically forgives part of regional debts on infrastructure loans. In 2025, debts worth more than 47.3 billion rubles were written off, freeing up these funds for further infrastructure investments. This practice emerged due to financial constraints in regions. In December 2025, regional public debt reached 3 trillion rubles, 80% of which consisted of budget loans. The most significant debt burden is in Arkhangelsk Oblast, Khakassia, and Tomsk Oblast.
For the economy overall
Infrastructure loans contribute to growth in fixed capital investment. Projects implemented with IBL assistance since 2022 have helped attract approximately 3.4 trillion rubles in private investment to the economy and create tens of thousands of jobs.
Accounts Chamber reports document systemic problems in the use of infrastructure loans. According to auditors' data, deadlines have been postponed for 368 out of 983 measures implemented through infrastructure budget loans. Moreover, cost increases have been recorded for 277 out of 773 projects (35.8%), totaling 216 billion rubles. In individual audits for 2022–2024, project cost growth amounted to 13.2 billion rubles (32.8%).
Problems persist with treasury infrastructure loans as well: as of January 1, 2025, 82.4% of funds (156.6 billion rubles) had been utilized, while completion deadlines for 228 out of 508 facilities were postponed.
Against this backdrop, the structure of regional debt is changing. According to the Accounts Chamber, at the beginning of last year the aggregate public debt of Russian regions stood at 3.1478 trillion rubles, with the share of budget loans reaching 76.8%. Over 2022–2024, the share of budget loans in the debt structure grew from 55.4% to 78.4%, displacing market borrowings. At the same time, auditors specifically note that since 2021, IBL volumes and payments on them have not been included in calculating regional debt sustainability, which may distort the real assessment of debt burden and infrastructure loan repayability.