According to Proclamation No. 1250/2021, government subsidies are distributed to Regional States based on specific criteria that differ depending on the type of subsidy.
1. General-Purpose Subsidy
A general-purpose subsidy is a transfer provided as general budget support with no conditions attached, allowing Regional States to use the funds based on their own priorities². The primary objective is to equalize the fiscal capacities of the regions, enabling them to provide comparable levels of public services in line with their constitutional duties².
The two main criteria for distributing this subsidy are¹:
- Expenditure Needs: The calculated essential spending requirements of the Regional State.
- Revenue-Raising Capacity: The potential ability of the Regional State to generate its own revenue.
2. Specific-Purpose Subsidy
A specific-purpose subsidy is a conditional transfer designed to provide an incentive for Regional States to undertake particular programs or activities to meet a nationally identified objective³.
The criteria for the distribution of these subsidies are determined on a case-by-case basis, directly linked to the specific objective of the subsidy itself.