Social economy in the structure of the federal budget: distinguishing the narrow and broad interpretations

Abstract

The social character of the state budget admits fundamentally different quantitative assessment depending on what is counted as social expenditure. The distinction between the narrow interpretation, which equates social economy with the Social Policy section of the functional classification, and the broad interpretation, which extends the social dimension to the budget as a whole, remains methodologically unsettled, so that estimates of the social share diverge by a factor of one and a half or more. The aim of the study is to quantitatively compare the narrow and broad interpretations as applied to the federal budget in the parameters of 2024-2028. Horizontal and vertical expenditure analysis, factor decomposition by the method of chain substitutions and scenario modelling on the author's model are applied. It is established that the share of the Social Policy section declines from 16,37% in 2025 to 15,50% in 2028 while its nominal volume grows, whereas the broadened social block reaches 24,51% of expenditures in 2026; the gap between the interpretations amounts to 8,39 percentage points. The factor decomposition attributes the decline of the narrow share to the outpacing growth of aggregate expenditures rather than to a contraction of social payments: the contribution of social expenditures is positive (+0,43 p.p.), that of the total volume is negative (−0,67 p.p.). Scenario calculations show that the narrow share is structurally fixed within the corridor of 15,7-17,3%. Social economy is present in the budget simultaneously as a distinct section and as a cross-cutting principle of allocation, and the conclusion on the degree of the budget's social orientation is predetermined by the choice of the counting frame rather than by a real change in the volume of payments.