Infrastructure Budget Loans and Treasury Loans: How They Work and Their Economic Impact

Why does the state need infrastructure loans and what are they?

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:

• Terms up to 15 years;
• Interest rate not exceeding 3% per annum;
• Targeted use—transportation, utilities, engineering infrastructure, social facilities, industrial parks.

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:

• 2025—3.44 trillion rubles,
• 2026—3.53 trillion rubles,
• 2027—3.59 trillion rubles.

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.