Analysis of Funding for “Russia’s Digital Economy” National Programme: Reassignment of Funds

According to the 2018 budget of the “Russia’s Digital Economy” national programme, it was projected that total funds through 2024 would amount to more than RUB 2,675.8 billion. The financing plan of the programme anticipated a successful launch of six federal projects: “Policy Management of Digital Environment” (0% of the budget), “Personnel For Digital Economy” (5%), “Digital Technologies and Projects” (5%), “Informational Infrastructure” (80%), “Information Security” (1%), “Digital Nation” (9%). However, five months later the Government cut total funding by 38.9%. First of all, it affected the following programmes: “Informational Infrastructure” where the expenses were cut by RUB 1,360.1 billion and “Digital Technologies and Projects” the funding for which was increased by RUB 321.3 billion.

Judging by the data obtained in the period from September 2018 to February 2019, it became clear that the only stable source of funding for this national programme was the federal budget. Business structures did not show interest in national development plans. The volume of private investment is lower than in Western Europe, Brazil and the US. This situation has enormous effect on the performance of Russian companies both on the global level and on domestic market. Hi-tech exports are becoming too insignificant and unprofitable while foreign players on the market of digital trade, social media and search engines are confidently surpassing Russian companies in terms of the number of customers and users.

By February 2019, a number of changes has happened to infrastructure expenses of the projects listed above: “Policy Management of Digital Environment” still accounts for 0% of the budget, “Personnel For Digital Economy” – 9%, “Digital Technologies and Projects” – 28%, “Informational Infrastructure” – 47%, “Information Security” – 2%, “Digital Nation” – 14%.

Increasing funding for “Digital Technologies and Projects” programme will support local suppliers of digital solutions and will serve as a response to international sanctions. Reassigning funds will become a step towards further developing this sector of the economy.

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