NORILSK, June 3. /TASS/. The use of new financial instruments in the Arctic's development will build up the macroregion's competitiveness, Director General of the Arctic Development Project Office (PORA) Maxim Dankin told TASS on sidelines of a meeting that the State Duma's committee on development of the Far East and the Arctic had in Norilsk.
"It is necessary to create at the legislative level a new line of financial instruments for the Arctic's development, to work systematically on shifting the policy of resources' redistributing towards a policy to build up the Arctic's competitiveness," he said. "Global practice and our experience point to a great underutilized potential of instruments like funds for current and future tax revenues, territorial target capitals, regional and municipal derivatives, and cooperation."
The Russian Arctic's strategic goals are clear, "direct, familiar to us, and budgetary mechanisms to finance these goals have been identified: the federation - regions - Arctic territories," the expert said. "However, direct financing options are limited - results of our research prompt we need additional sources of financing to maintain the Russian Arctic's advanced-development growth and to achieve results outlined in strategic documents."
At the same time, it may be not enough to formalize legally the financing mechanisms, he continued. "For example, the Arctic Fund mechanism, created at the federal level in 2022, to finance development projects from tax revenues paid by the Arctic business residents, has not been used until now. We forecast, by 2031 the fund may amount to about 20 billion rubles ($253 million) - this money could be invested in development of backbone settlements (this amount is similar to funds that are allocated annually for development of the Far East from the Sakhalin-1 and Sakhalin-2 projects under the production sharing agreement)," the expert said.
The introduction of new financial instruments may involve high transaction costs, he added. "Again, it is most important to start using existing mechanisms to the utmost - this is the first and key step. According to results of a survey, we have conducted recently, almost one in two Arctic residents considers important the contribution of large companies to the development of territories. At the same time, we can see that regional support through tax incentives for non-governmental investments in social infrastructures is working not in all regions, thus limiting the infrastructure investments' potential," he said.
The role of backbone settlements
The expert noted that he considered as important and timely the State Duma's initiative to discuss the legal support for integrated development of the Arctic's backbone settlements.
"The macroregion faces the challenge to improve the people's well-being, ensuring their equal access to public services and guarantees, as well as the challenge of structural economic transformation. Backbone settlements play a key role here. Our research shows that the level of satisfaction with life in the backbone settlements, as well as indicators of economic, medical infrastructures and housing provision, are higher there than elsewhere in the Arctic. In fact, the backbone settlements have been developing into centers of the Arctic's sustainable development," the expert said.
Over recent 10 years, the Arctic economy has been growing faster than the national economy, he stressed, adding it generates more than 25% of the federal budget, and produces more than 4 rubles of added value per every invested ruble.