The debts of the Russian regions has stabilized and will decrease, believe Moody's analysts. The annual growth was only 1.5% in 2016 against the growth by 11% in 2015 and 20% in 2014. But the reduction of budget credits program (from 350 billion in 2016 to 200 billion in 2017 ) can force the regions to increase commercial loans. Over the past year the regional debts decreased as a whole, writes the Accounting Chamber, but in December it rose to 2.35 trillion rubles. The regions ended the year with a deficit of 12.6 billion rubles, evaluated the Chamber, although on December 1, 2016 the consolidated budget of the regions was formed with a surplus of 501.8 billion rubles.

The budget credit program has significantly reduced the dependence of the regions on market loans, says the leading analyst of Moody's Vladlen Kuznetsov: new budget loans, restrictions on the size of the debt and the growth of regional income will allow the regions to borrow less in 2017 and will reduce interest expense.

In general, over the year the debt has risen in 49 regions, indicated the Accounting Chamber: The most significant growth was recorded in the Crimea: by 13.1 times; in the Nenets Autonomous District: by 3.6 times; and in the Tyumen region: 1.8 times. Budget surplus was recorded in 29 regions (in the amount of 189.0 billion rubles), 56 regions are in the deficit (201.6 billion rubles). Improvement of the regional finance structure was promoted by the program of budgetary credits. But they do not stabilize the growth of debt and do not ensure the balance of regional budgets, the auditors say.

Most likely, the regions will again have to borrow on the market, ACRA analysts say. In 2016, the total debt of the regions to the banks dropped to 157 billion rubles, estimated theexperts; more budgetary loans will be returned in 2017 than issued. The schedule of repayment of budget loans this year exceeds their additional size in the federal budget by 20-30 billion rubles. Reverse refinancing and the need to finance the deficits will once again change the structure of government debt of the regions, according to ACRA, so by the end of 2019 the share of the market debt in the structure of debt could reach 80%.

Placement of bonds is more profitable than bank loans both in terms of the cost of borrowing and deadlines, according to ACRA. The Ministry of Finances in its guidelies on debt policy also advises the regions reduce the budget and bank loans, and shift to the long bond loans. However, bank loans remain the most popular marketing tool: from 2013 more than 2 times more funds have been raised with them than using government securities, calculated ACRA.

The Central Bank is worried about the situation. In 2016 there was a slight decline in banks financing the regions, said the chairman of the Central Bank Elvira Nabiullina, but simultaneously the regions increased their borrowing in the form of securities. To finance the budget deficit at the expense of commercial lending with no clear future repayment sources is not the best option, she said.

At the end of 2016 the debt of regions to the federal budget for the first time since 2011 exceeded the debt to the banks, estimated ACRA: public debt over the period increased by almost a quarter, the bank one fell by 16%. In 2016, 42% of the debt of regions accounted for budget loans, 35% for bank loans, 19% for on bonds and 4% for state guarantees, follows from the data the Ministry of Finance. But the structure may change, if the budgetary credits issued earlier are not restructured, warns ACRA, and so far such possibility hasn't been foreseen.