INTRODUCTION

THE PROBLEM OF THE BUDGET DEFICIT

1. The concept of budget deficit, its types

   Ways to finance the budget deficit

STATE DEBT

1. The essence of public debt

   Public debt servicing

   Economic consequences

   Problems and controversies

CONCLUSION

LIST OF SOURCES USED

APPLICATIONS

INTRODUCTION

Public finance is an important area of ​​the country's financial system, designed to provide the state with the funds it needs to perform economic, social and political functions. According to the economic essence, public finance is monetary relations regarding the distribution and redistribution of the value of the social product and part of the national wealth, associated with the formation of financial resources at the disposal of the state and its enterprises and the use of public funds for the costs of expanding production, meeting the growing socio-cultural needs of members society, national defense and governance needs. The economic content of public finance is heterogeneous; in their composition there are separate separate units, each of which performs specific functions. Public finance includes: budgets of different levels of government, extra-budgetary funds, finances of state enterprises, state credit 1.

The budget consists of expenses and income. When government spending exceeds revenue for a given year, we experience a budget deficit. There are several conceptual approaches to the budget that consider how the budget should be balanced or whether it should be balanced at all. The amounts of budget deficits accumulated in previous periods of time form public debt, which can be both internal and external. The causes of public debt can be wars and cyclical economic development. The state can counteract the growth of public debt by:

1) taxes;

2) additional issue of money;

3) issuance and implementation of government obligations.

The more serious problems associated with government debt are:

a) interest payments on government debt are likely to increase income inequality;

b) paying interest on debt requires higher taxes, which can undermine economic incentives;

c) payments of interest or principal to foreigners cause the transfer of a certain part of the real product abroad;

D) government borrowing from the capital market to refinance debt or pay interest may increase interest rates and crowd out private investment financing.

The purpose of the work is to consider the problems of budget deficit and public debt.

Job objectives:

Review and identification of budget deficit problems;

The essence, servicing and problems of public debt.

The work consists of an introduction, 2 chapters, a conclusion and a list of sources used.

The first chapter is devoted to the theoretical foundations of the budget. Consideration of the essence, types of budget deficit, methods of financing the deficit.

The second chapter is devoted to consideration of the essence of public debt, methods of servicing and economic consequences, as well as the study of the problems and contradictions of public debt.

1. THE PROBLEM OF THE BUDGET DEFICIT

1.1 The concept of budget deficit, its types

A decisive role in the formation and economic development of any modern society is played by state regulation, carried out within the framework of economic policy elected by the authorities. One of the most important mechanisms that allows the state to carry out economic and social regulation is its financial system, the main link of which is the state budget. It is through the financial system that the state forms centralized funds and influences the formation of decentralized funds of funds, ensuring the ability to perform the functions assigned to state bodies. However, this system often faces problems expressed in the form of budget deficits. Therefore, one of the most important issues of public finance is the problem of the budget deficit 2.

In the process of adoption and execution of the budget, the balance of income and expenses becomes of great importance. If income exceeds expenses, a surplus occurs. But more often than not, expenses exceed income. In this case, a shortage occurs 3.

There are many reasons for this (decline in social production, massive release of “empty” money, significant social programs, large-scale circulation of “shadow” capital, huge non-productive expenses, losses, additions, theft, etc.), but the increasing role of the state in various spheres of life, expanding its economic and social functions, increasing military spending and the size of the state apparatus.

The budget deficit refers to the so-called negative economic categories such as inflation, crisis, unemployment, which are, however, integral elements of the economic system.

It should be noted that the absence of a budget deficit does not mean the “health” of the economy. At the same time, any state strives, if not to cover completely, then to partially reduce the budget deficit 4 .

The budget deficit is due to various reasons. In some cases, the state may deliberately increase the budget deficit. In particular, in order to stimulate economic activity and aggregate demand during a period of decline in production, the government may take special decisions aimed at increasing the level of employment (for example, financing programs to create new jobs) or by significantly reducing taxes. As a result, budget expenditures increase or budget revenues decrease, and a deficit arises. But this deficit is deliberately created by the state. This deficit is called a structural deficit.

Unlike the structural deficit, the cyclical deficit depends to a lesser extent on the conscious fiscal policy of the state. It is due to the general decline in production, which occurs at the crisis stage and is the result of the cyclical development of the economy. In the context of a decline in production, taxes and state revenues are reduced, which means a deficit arises.

There are also active and passive deficits. An active deficit arises as a result of expenses exceeding income, and a passive deficit arises as a result of a decrease in tax rates and other revenues, which is a consequence of a slowdown in economic growth, underpayments, etc. 5 .

There are short-term and long-term budget imbalances. Imbalance is short-term in nature if the excess of expenses over income is limited to one financial year and is a reflection of changes in the macroeconomic situation compared to the one in which the budget was drawn up. This is mainly due to the lack of necessary experience in macroeconomic forecasting and insufficient consideration of possible changes in a number of circumstances. For example, a reduction in budget revenues may occur as a result of falling export prices, a reduction in production volumes below the stipulated level, shifts in the structure of demand for manufactured products and a decrease in their competitiveness. An increase in the government budget deficit could also be caused by an unexpectedly sharp increase in government spending due to an increase in inflation above the target value, the expansion of transfer payments in combination with the introduction of tax breaks, which is a very popular measure before the next elections.

Long-term fiscal imbalance is associated with a widening gap between government expenditures and revenues over a number of years and is due to reasons that are more persistent in nature. Thus, in most developed countries over the past 15 years there has been a steady trend towards an increase in the national budget deficit due to the following factors:

1) an increase in the number of social payments, and therefore the social burden on the budget;

2) an unfavorable demographic situation associated with the aging population, as a result of which the costs of paying pensions, allocations for health care, etc. increase;

3) liberalization of tax legislation and, as a consequence, a reduction in tax rates (without corresponding adjustments to government spending);

4) an increase in the volume of external debt.

In general, the state of the state budget is determined by the long-term trend in the dynamics of tax revenues and government spending; the stage of the economic cycle in which the economy is located during the period under review; current government policy in the field of budget expenditures and revenues.

Very often, especially in our country and in other countries, there is an artificial either overestimation or underestimation of the true size of the budget deficit.

Thus, artificially lowering the budget deficit can be carried out using the following tools:

1) “tax amnesty”, which allows taxpayers who previously evaded paying taxes to pay at one time the entire amount equal to a certain part of the total tax collection;

2) measures to collect overdue tax payments;

3) introduction of temporary or added taxes;

4) deferrals of wage payments to public sector employees;

5) deferred mandatory indexation of wages in accordance with the dynamics of the inflation rate;

6) sale of state assets;

7) the presence of a hidden deficit caused by quasi-budgetary expenditures.

The latter include centralized loans provided on preferential terms by the central bank. In addition, the Central Bank can finance individual operations related to public debt, cover losses from measures to stabilize the exchange rate, refinance agriculture, etc. As a result, the Central Bank's losses are growing and inflation is increasing, but the deficit is not growing.

An artificial increase in the size of the state budget deficit may occur as a result of the following circumstances. Firstly, when assessing the amount of government spending, depreciation in the public sector of the economy is not always taken into account. Secondly, an important item of government spending is servicing the public debt. However, very often the amount of interest payments on the debt is inflated due to inflation payments. At high rates of inflation, when the differences in the dynamics of nominal and real interest rates are very significant, this overstatement of government spending can be quite significant. There may even be situations where the nominal (official) deficit and government debt increase, while the real deficit and debt decrease, which makes it very difficult to evaluate government policies. Therefore, when the budget deficit changes, an adjustment for inflation is necessary. Taking this amendment into account, the real budget deficit is determined, which is the difference between the nominal deficit and the interest rate on public debt multiplied by the inflation rate. The total budget deficit minus the inflation portion of interest payments is the operating deficit.

The Budget Code of the Russian Federation establishes maximum amounts of budget deficits at different levels. Thus, the size of the federal budget deficit for the next financial year should not exceed the total volume of budget investments and expenses for servicing the public debt of the Russian Federation.

The size of the budget deficit of a constituent entity of the Russian Federation cannot exceed 15% of its budget revenues without taking into account financial assistance from the federal budget. If the Budget Law approves the amount of proceeds from the sale of property, the estimated budget deficit of a constituent entity of the Russian Federation may exceed this amount, but not more than by the amount of proceeds from the sale of property.

The size of the local budget deficit cannot exceed 10% of local budget revenues without taking into account financial assistance from the federal and regional budgets. Moreover, revenues from sources of financing the local budget deficit can be used to finance exclusively investment expenses and cannot be used to finance the costs of servicing and repaying municipal debt.

If the sale of property is considered as a source of reducing the deficit of regional or local budgets, then, according to the Budget Code of the Russian Federation, the maximum size of the deficit of the corresponding budgets may exceed the specified restrictions, but no more than by the amount of proceeds from the sale of property 6 .

1.2 Methods of financing the budget deficit

If a budget for the next fiscal year with a deficit is adopted, it is necessary to determine the sources of financing the budget deficit. They differ according to the levels of the budget system.

Sources of financing the federal budget deficit are:

1) internal sources in the following forms:

Loans received by the Russian Federation from credit institutions in the currency of the Russian Federation;

Proceeds from the sale of state-owned property;

The amount of excess of income over expenditure on government reserves and reserves;

Changes in account balances for federal budget funds;

2) external sources in the following forms:

Government loans made in foreign currency by issuing securities on behalf of the Russian Federation;

Loans from foreign governments, banks and firms, international financial organizations, provided in foreign currency, attracted by the Russian Federation 7.

The sources of financing the budget deficit of a constituent entity of the Russian Federation and the local budget can only be internal sources. For subjects of the Russian Federation they appear in the following forms:

Government loans carried out by issuing securities on behalf of a constituent entity of the Russian Federation;

Budget loans received from budgets of other levels of the budget system of the Russian Federation;

Proceeds from the sale of property owned by the state of a constituent entity of the Russian Federation;

Changes in fund balances in accounts for accounting for budget funds of a constituent entity of the Russian Federation.

And for the local budget:

Municipal loans carried out by issuing municipal securities on behalf of the municipality;

Loans received from credit institutions;

Budget loans received from budgets of other levels of the budget system of the Russian Federation;

Proceeds from the sale of municipally owned property;

Changes in account balances for local budget funds.

A budget deficit can be financed in three ways:

Through the issue of money (monetization of deficit);

Loans from the country's population (domestic debt);

Loans from other countries or international financial organizations (external debt).

The first method is called the emission or cash method, the second and third - debt methods 8.

Monetization as a way to reduce the budget deficit is an increase in the amount of money in circulation (including through bank financing). Although this method is used very rarely by the state, in exceptional cases, since it is purely inflationary, it should not be excluded from the arsenal of methods for financing the budget deficit.

With monetization, the amount of money in circulation increases, the growth rate of the money supply significantly exceeds the growth rate of real GDP, which leads to an increase in the average price level. At the same time, all economic agents pay a kind of inflation tax and part of their income is redistributed in favor of the state through increased prices. The state generates additional income - seigniorage, i.e. new income from printing money.

Monetization of the state budget deficit may not be directly accompanied by the issue of cash, but is carried out in other forms. For example, in the form of an expansion of Central Bank loans to state-owned enterprises at preferential rates or in the form of deferred payments. In the latter case, the Government buys goods and services without paying for them on time. If deferred payments accumulate in relation to public sector enterprises, they are often financed by the Central Bank or accumulate, increasing the overall government budget deficit. Therefore, although deferred payments, in contrast to monetization, are officially considered a non-inflationary way of financing the budget deficit, in practice this division turns out to be very conditional.

Monetization turns out to be a rather risky way of financing the budget deficit, since it can have a negative impact on the balance of payments. This is due to the fact that as a result of monetization, the supply of money increases and excess cash accumulates in the hands of the population. It inevitably generates an increase in demand for domestic and imported goods, as well as for various financial assets, including foreign ones. This, in turn, leads to higher prices and puts pressure on the balance of payments. If the balance of payments becomes negative, this does not reduce the federal budget deficit, but, on the contrary, leads to its increase. Moreover, this negatively affects the exchange rate of the national currency - its partial devaluation occurs. The mechanism for restoring the equilibrium of the balance of payments in these conditions is based on “tying up” the excess money supply through the sale of part of the official reserves of the Central Bank on the foreign exchange market, which allows stabilizing the money market as a whole.

Monetization of the state budget deficit causes a smaller increase in the level of inflation in the country, the more foreign exchange reserves the Central Bank can spend to support the relatively fixed exchange rate of the national currency and restore the balance of payments. At the same time, the increase in inflation as a result of monetization of the budget deficit turns out to be more significant in a flexible exchange rate regime, although the expenditure of official foreign exchange reserves decreases. Inflation increases to the greatest extent in conditions of absolutely free exchange rate fluctuations, due to which the balance of the money market is restored. In the latter case, the level of official foreign exchange reserves of the Central Bank remains virtually unchanged.

The negative inflationary consequences of fiscal deficit monetization can be mitigated by tight monetary policy measures. If the Central Bank reduces the lending capacity of commercial banks (usually this is done by increasing the reserve ratio or the discount rate) at the same time as expanding credit to the public sector to finance the budget deficit, then domestic market rates increase, restraining economic activity. As a result, private investment and net exports are reduced and inflation no longer has such an active impact on the balance of payments.

Money emission can be non-inflationary only at significant rates of economic growth, since growing economic activity is accompanied by an increase in demand for money, which absorbs part of the additional money supply. But at the same time, the influence of such factors as inflation expectations, the size of the monetary base and the preferences of economic agents becomes of great importance.

In general, monetization can be used as a way to solve the problem of the state budget deficit. However, it must be borne in mind that this is an economically unsafe method. By national governments it is usually used in exceptional cases where, for example:

1) there is a significant external debt, which excludes preferential financing of the budget deficit from external sources;

2) the possibilities of domestic debt financing are practically exhausted;

3) the foreign exchange reserves of the Central Bank are depleted, due to which regulation of the balance of payments remains a primary task;

4) the economy is able to withstand high inflation, and citizens are already accustomed to constantly rising prices.

If the government nevertheless chooses the emission method of financing, then the Central Bank must first introduce restrictions (limits) on lending to state-owned enterprises and organizations. Otherwise, there may be a risk of complete displacement of the private sector from the credit market and a drop in investment activity. It is also necessary to constantly keep the inflation rate under control and monitor the balance of payments.

A less painful and more manageable way to solve the problem of government budget deficit is debt financing. As a result of debt financing, the budget deficit is covered by loans made by the government both within the country and abroad. Based on this, the external and internal debt of the state is formed.

Different schools of economic thought have different views on debt financing. Thus, representatives of the neoclassical movement, starting with A. Smith, have a negative attitude towards debt financing. They believe that A. Smith was right when he said that deficit financing is “a one-way street, once entered you cannot turn back.” As a result of debt financing, the nation's wealth decreases and the tax burden increases, which impedes the accumulation of capital.

Modern monetarists (M. Friedman, F. Caten and others) believe that if the state finances its needs through loans on the capital market, this leads to an increase in the interest rate, and therefore to the crowding out of private investment and a sharp reduction in investment. In addition, through public debt, the economic burden is shifted to future generations, when citizens will be forced to pay off government debts at the expense of tax revenues in the future.

Representatives of the Keynesian school, on the contrary, believe that there is nothing wrong with government borrowing. Thanks to them, the tax burden is distributed over time, which is not so bad, since the results of such borrowing can be enjoyed by several generations, so they must bear the burden of repaying them. Public debt acts as a source of mobilizing additional resources and increasing financial opportunities, therefore government loans can be an important factor in accelerating the pace of socio-economic development.

The objective need to use debt financing to meet the needs of society today is due to many factors, primarily an increase in government spending. Carrying out an active social policy, ensuring defense capability, international activities, etc. require the state to constantly increase budget expenditures. Meanwhile, state budget revenues are always limited by taxation opportunities. In this sense, state credit helps to weaken the contradiction between the ever-increasing needs of society and the limited resources of the state.

The use of government loans to finance additional government expenditures is also determined by their significantly smaller negative consequences for the economy compared, for example, with additional emissions. On the other hand, the practice of debt financing is politically more favorable to the government than raising taxes. In countries where budget deficits are prohibited and financing through a bank of issue is also unacceptable, the revenue side of the state budget can only be financed through taxes. But tax increases are always negatively perceived by citizens, whose opinion is not indifferent to the government, especially during elections. Therefore, through debt financing, the government can significantly increase spending without increasing the much unpopular tax burden. This, by the way, explains why credit financing has recently become one of the popular instruments of economic policy in most developed countries, whose debts have increased significantly over the past two or three decades.

Debt financing can stimulate economic growth. By increasing its expenses through loans, the state thereby creates demand for investment and consumer goods. At the same time, a positive multiplier effect begins to operate, providing a stimulating effect on other sectors of the economy and employment.

At the same time, it must be borne in mind that the total volume of government debt cannot be too high. Otherwise, public debt becomes difficult to manage. Increasing government spending complicates the problem of controlling future deficits, and ever-increasing interest payments on government debt significantly limit the government's ability to use the budget as a stabilizing lever for the economy. At the same time, external debt can become a serious factor of not only economic but also political significance. Exorbitantly high payments from the state budget for debts divert funds from financing social, economic, defense and other government programs 9 .

In recent years, significant changes have occurred in the area of ​​public debt of the Russian Federation. First of all, the structure of public debt has changed significantly, in which the share of domestic debt has increased to almost 50%. This is primarily due to the fact that replacing government external borrowings with internal borrowings is one of the priorities of the debt policy of the Russian Federation both for the federal level and for the regions of the country.

Such an increase in government internal borrowing leads to the fact that the country’s public internal debt begins to play an active role in macroeconomic regulation, that is, to perform the functions attributed to it by the “new orthodox theory,” which is based on calculations made back in the last century by John Maynard Keynes in “ General theory of interest, employment and money."

Contrary to classical ideas about the undesirability of financing budget deficits associated with military expenditures or economic downturn through the issue of monetary and government securities and giving priority to taxation, as well as budget balance, budget deficits financed by issuing government securities are central instrument of Keynesian macroeconomic policy.

In Russian practice, it is necessary to take into account foreign theoretical experience, since in conditions of persistent high inflation, which in essence is a hidden tax paid by all economic entities and, above all, the most socially vulnerable segments of the population, the growth of government internal borrowing is one of the effective tools of containment inflation and thus maintaining macroeconomic stability. On the other hand, while drawing excess liquidity from the financial market, the state must carry out this process carefully enough so that it does not lead to a reduction in private investment 10 .

2. PUBLIC DEBT

2.1 The essence of public debt

The national debt is the total amount owed by the federal government to holders of government securities equal to the sum of past budget deficits (minus budget surpluses).

The question arises, why does public debt appear? From a long-term historical perspective, the answer is twofold: wars and recessions were the causes. Let's look at these reasons. During a war, the state is faced with the task of reorienting a significant part of the economy’s resources from the production of civilian products to the needs of military production. Accordingly, government spending on armaments and maintenance of military personnel will increase. There are three options for financing this spending: increase taxes, print enough money, or use deficit financing. Financing through taxes can lead to tax increases to levels that undermine the incentive to work, which is not beneficial during a war. Printing and spending more money will create strong inflationary pressures. Consequently, most of the costs must be financed by selling bonds to the public. This way, a significant share of expendable income will remain and resources will be freed from civilian production, which can then be used in military industries.

The second source of government debt is recessions. During periods when national income declines or fails to increase, tax revenues automatically decline and tend to cause deficits.

Types of public debt:

There are several classifications of public debt depending on the characteristic that forms the basis of this classification.

Public debt is divided into capital and current.

Capital public debt is the entire amount of issued and outstanding debt obligations of the state, including accrued interest that must be paid on these obligations.

Current debt includes government expenses to pay income to creditors and repay obligations that have become due.

According to current legislation, state and national debt should be distinguished. The latter concept is broader and includes the debt not only of the Government of the Russian Federation, but also of the governing bodies of the republics that are part of the Russian Federation and local authorities. This paper examines the first concept, that is, simply public debt.

Chronic deficits of state and local budgets and high public debt are typical at the present stage for most industrialized countries. The state, making extensive use of its capabilities to attract additional financial resources in order to timely finance budget expenditures, is gradually accumulating debt to both domestic and foreign creditors. This leads to an increase in public debt - internal and external.

According to the Budget Code of the Russian Federation, external debt is obligations arising in foreign currency. State internal debt refers to debt obligations of the federal government arising in the currency of the Russian Federation. The federal government's debt obligations are backed by all the assets at its disposal.

From a formal point of view, external loans are loans concluded on foreign exchanges or through foreign banks in foreign currency. But essentially (from a material point of view) foreign loans should be understood as those that are in the hands of foreign creditors; Formally, a domestic loan can go into the hands of foreigners and back again.

Forms of public debt:

In accordance with the legislation of the Russian Federation, public debt includes:

Credit agreements and agreements concluded on behalf of the Russian Federation, as a borrower, with credit organizations, foreign states and international financial organizations;

Government loans carried out by issuing securities on behalf of the Russian Federation;

Treaties and agreements on the receipt by the Russian Federation of budget loans and budget credits from budgets of other levels of the budget system of the Russian Federation;

Agreements on the provision of state guarantees by the Russian Federation;

Agreements and contracts, incl. international, concluded on behalf of the Russian Federation, on the prolongation and restructuring of debt obligations of the Russian Federation of previous years.

2.2 Public debt servicing

The public debt service system is a powerful tool for redistributing income from the productive sector in favor of the financial sector. This conclusion applies to both voluntary and forced forms of borrowing. In the first case, an indirect method of redistribution is used through the abnormal level of profitability of instruments. In the second, a direct method of redistribution is practiced through unequal, monopolistically low prices for the purchase of public debt instruments by financial intermediaries from the primary owners, representing mainly the production sector. The obvious result of this redistribution is a relative decrease in income in the manufacturing sector and an increase in income in the financial sector. At the same time, part of the excess income is used by the financial sector in a frankly unproductive manner. Part of the excess income is used “productively”, i.e. invested in the development of the economy, but in those sectors that are not capable of providing the foundation for a balanced and highly organized economy (import of consumer goods, export of raw materials). Only a minor part of such income is spent for the purpose of actual economic development through participation in the capital of enterprises and the provision of funds for technology modernization.

The economic result of the functioning of the market system of public debt is a general significant narrowing of the investment opportunities of the economy.

The Ministry of Finance carries out servicing of public debt. Servicing includes repayment of loans with funds received from the placement of new additional obligations, repayment of the principal amount of debt from budget funds, payment of income in the form of interest on obligations from budget funds or in another form. Traditionally, the cost of servicing public debt includes the cost of paying off the principal amount of the debt and current interest on issued loans and attracted loans, as well as fulfilling obligations under guarantees (sureties) that come due in the current financial year.

In the conditions of the crisis state of the economy, a reduction in budget revenues along with increasing expenses, servicing loans from budget funds was not possible, which is why government authorities resorted to refinancing debt obligations. Refinancing involves paying off current obligations using funds received from placing new obligations. Also, based on the results of the placement, deductions were made to the state budget in order to finance the budget deficit, for which, in principle, they were placed.

2.3 Economic implications

How does government debt and its growth affect the functioning of the economy? Could mounting national debt at some point lead to the bankruptcy of a nation? Is debt somehow placing an unreasonable burden on our children and grandchildren?

All these questions are incorrect and far-fetched. Debt will not bankrupt a government or a nation as a whole. Also, except for specific conditions, the debt does not impose any burden on the future generation. Let's take a closer look at why this doesn't happen.

It cannot lead to bankruptcy for three reasons. First, it should be noted that there is no reason that would force the public debt to be reduced, let alone the need to completely eliminate it.

In practice, once portions of that debt come due each month, the government typically does not cut spending or raise taxes to raise funds to pay off the bonds that are due. The government is simply refinancing its debt, i.e. sells new bonds and uses the proceeds to pay holders of redeemed bonds.

Secondly, the government has the constitutional right to impose and collect taxes on the population. If it is acceptable to voters, increasing taxes is the government's way of raising enough revenue to pay interest and the overall national debt. Private households and corporations in financial distress cannot generate revenue through tax collection; the government can. Private households and corporations may go bankrupt; the government can't.

Thirdly, the bankruptcy of the government is very difficult to imagine, if only because it has the right to print money with which it can pay both the principal amount of the debt and interest on the debt.

Growth of government debt does not create any burden on future generations. Because state holders debt are the citizens of this country themselves, i.e. the population owes it to themselves. About 87% of government bonds are placed domestically, i.e. they are in the hands of citizens and organizations. Thus, public debt is also a public asset. While government debt represents the amount of liabilities owed to citizens (as taxpayers), most of that same debt is also an asset of those same citizens (as bondholders). Repayment of state debt would therefore cause a huge amount of transfer payments, in which citizens would have to pay higher taxes, and the government in turn would have to pay a large part of these tax revenues to the same taxpayers (individuals and organizations) to pay off the bonds, at their disposal. Although such a huge financial transfer would result in a significant redistribution of income, it would not necessarily cause an immediate decline in total wealth in the economy or a decline in living standards. Redemption of government bonds held by residents of a given country does not cause any leakage of purchasing power from the country's economy as a whole.

But the distribution of ownership of government bonds is certainly uneven, i.e. The state owes not everyone, but only a minority of the population. Also, the current level of public debt requires annual interest payments. If debt growth is not used, these annual interest payments must be made from tax revenues. Such additional taxes can dampen the desire to take risks, the desire to innovate, to invest, to work. In a similar indirect way, the existence of large public debt can undermine economic growth. Not all bonds are located within the country; some are owned by citizens or organizations of other countries. We certainly do not “owe” this part of the national debt to ourselves, and in real terms the payment of interest and principal requires in this case the transfer of our real output to other countries. As an exception to my previous comments, there is a way for governments to transfer the real economic burden of their debt to future generations. Let's consider two scenarios that will give us two results.

First scenario. Let's say that an increase in government spending is financed by an increase in taxation, say an increase in personal income taxes. Since most of the income is consumed, consumer spending will fall by almost the same amount as taxes will rise. In this case, the burden of increased government spending falls primarily on today's generation in the form of reduced consumption of goods.

Second scenario. Let's assume that an increase in government spending is financed by an increase in government debt. In this case, the government enters the money market and competes with private investors, thereby crowding them out. This could result in future generations inheriting a smaller “national factory” and therefore having a lower standard of living under deficit financing.

But it should be noted that if government spending is linked to investment spending, it strengthens the future productive capacity of the economy. And also, if there is initial unemployment, then deficit spending should not necessarily cause an increased burden on future generations in the form of a reduction in the size of the “national factory.”

2.4 Problems and controversies

The problem of servicing public debt is the key to macroeconomic stabilization in the country. The state of the federal budget, gold and foreign exchange reserves, the stability of the national currency, the level of interest rates, inflation, and the investment climate depend on its decision. In addition, taking into account the attempts of our international creditors to use the debt problem for political pressure on Russia, competent settlement of the national debt becomes a factor of national security and a condition for conducting an independent foreign and domestic policy.

1. A deficit budget leads to an accelerated growth of public internal debt: during 2007 - two times (from 190 trillion to 380 trillion rubles), during 2008 - 1.8 times (up to 690 trillion. rub). If such growth rates are maintained, by 2008 the volume of public internal debt will be comparable to the value of GDP.

2. All current budget underfinancing over the past six years, which takes on surrogate forms, is written off as public debt. This is debt to agricultural enterprises, organizations carrying out northern deliveries, converted into treasury bills, a bond loan to repay commodity obligations and debt to the Central Bank of the Russian Federation, the Pension Fund, etc.

3. The Central Bank and the Ministry of Finance of the Russian Federation concentrated their efforts on the narrow “bond” segment of the financial market. Debt management was reduced to planning the volumes and circulation period of the next issue of GKO-OFZ.

4. There is no medium- and long-term planning, including in the preparation of the draft federal budget, the composition and volume of public debt, as well as its repayment schedules. Without such a forecast, at least for a two- to three-year period, it is impossible to conduct a long-term analysis of the situation.

5. The market for Russian government securities will become civilized only with an increase in the number of instruments and the share of long-term securities (with maturities of 5-30 years), which will happen no earlier than in two to three years. Management of state liabilities at the first stage requires ensuring a uniform approach to reflecting transactions with state debt obligations in the budget.

6. The concepts of internal and external debt are gradually becoming closer together. This process is accelerated when using such a form of borrowing as the issue of securities, including those denominated in foreign currency. On the one hand, there is a massive influx of non-resident funds into the GKO-OFZ market (an instrument of internal borrowing), on the other hand, there is a confusion of concepts - “domestic foreign currency debt”, existing in the form of “web loans”. With the admission of non-residents to the GKO-OFZ market, the main aggregates of the balance of payments of the Russian Federation changed, in particular, according to estimates of the Central Bank of the Russian Federation, the current account balance decreased in 2008 by $7 billion compared to the previous year. Today, the Central Bank is actually forced to take on the functions of a guarantor for transactions of non-residents with GKOs, which are not typical for it. Such additional risks do not contribute to the solution of the main task entrusted to the Central Bank - maintaining the stability of the Russian monetary system. The accession of the Russian Federation to Article 8 of the IMF Charter and the transition to the convertibility of the ruble for current transactions will accelerate the process of “accretion” of two types of public debt. With the issuance of Eurobonds and their placement among both non-residents and residents, the task of maneuvering ruble and foreign currency liabilities takes on a completely different character.

Let us consider the main problems associated with the current state of public external debt.

1. Fundamentally different legal and economic approaches are practiced in relation to the external debt of the former USSR assumed by the Russian Federation, and the newly arising debt of the Russian Federation. If the legal regime of the former is determined by the specifics of concluded international treaties, then the use of special economic approaches and the procedure for reflecting the latter in budget reporting is hardly justified.

2. A serious problem is due to the role that Vnesheconombank has historically played in settlements with foreign creditors. As audits conducted by the Accounts Chamber of the Russian Federation have shown, Vnesheconombank is an agent of the government of the Russian Federation for servicing external debt and an agent of the government for servicing the internal foreign currency loan of the Russian Federation during 2000-2008. still operates outside the legal framework and copes extremely mediocre with the functions assigned to it. The status of Vnesheconombank can be brought into line with the complexity and significance of the tasks it solves only by introducing changes to federal legislation.

3. Government operations to place Eurobonds, as well as the mechanisms implemented by the Central Bank of the Russian Federation for admitting non-residents to the external borrowing market (GKO-OFZ) have not yet received proper economic and legal assessment. The impact of these credit flows on Russia's balance of payments remains unstudied.

It should be noted that information about the activities carried out by the government and its agents to resolve issues related to Russian foreign debts and assets is unreasonably closed and is practically inaccessible even to auditors of the Accounts Chamber of the Russian Federation. This makes financial monitoring extremely difficult, complicates control over such transactions, and encourages abuse.

CONCLUSION

Based on the above information, we can draw the following conclusion: budget policy as a purposeful activity of the state to determine the main tasks and quantitative parameters of the formation of budget revenues and expenditures, and management of public debt is one of the main instruments of the state’s economic policy.

The budget deficit plays a key role in the mechanism of development of inflationary processes that destroy the country's economy, as well as its leading role in the system of indicators of the country's economic security. The policy in the field of financing the budget deficit should be based on the use of internal sources, which involves reducing deficit lending by the National Bank, increasing market efficiency and improving the mechanism for managing internal debt.

The budget deficit criterion, in fact, plays the role of a regulator with negative feedback, and therefore should play a leading role in the system of indicators of economic security of the Republic of Belarus at the beginning of the third millennium. However, we note that at the same time, the budget deficit itself may not be something extremely negative for the development of the economy and the dynamics of the living standards of the population. Even the most economically developed countries, as a rule, constantly have a budget deficit of 10 to 30%. It all depends on the reasons for its occurrence and the directions of expenditure of public funds. If the financial resources that make up the excess of expenses over income are directed to the development of the economy, used for the development of priority industries, i.e., they are used effectively, then in the future the growth of production and profits in them will more than compensate for the costs incurred and society as a whole from such a deficit only will win. If the government does not have a clear program for economic development, and allows expenses to exceed revenues in order to patch up “financial holes” and subsidize unprofitable production, then the budget deficit will inevitably lead to an increase in negative aspects in economic development, the main one of which is the strengthening of inflationary processes.

In this regard, the problem of public debt again comes to the fore.

There is a reduction in external debt due to the clarification of commercial debt, a reduction in the volume of debt growth due to changes in exchange rates unfavorable for Russia and a reduction in the volume of expected loans from international financial organizations. But domestic debt is growing due to this (due to federal loan bonds).

In general, we can say that the situation in our country is difficult, but not hopeless. But still, the issue of public debt and budget deficit (albeit to a lesser extent) remains open; it requires a solution and a stable revival of the economy, not for a short period, but for a much longer period.

BIBLIOGRAPHY

Budget Code of the Russian Federation.

Alexandrov I.M. Budget system of the Russian Federation: Textbook. - M.: UNITI, 2008. - 486 p.

Budget system of Russia. Textbook. // Ed. G. B. Polyak. M.: 2006, p. 201.

Galkin M. Debts of Russia // Securities Market. - 2007. - No. 5.

Lusnikov A. External debt of the Russian Federation: an export version of the pyramid or a resource for the economic revival of the country? // Stocks and bods market. - 2006. - No. 5.

Russian debt prices continue to rise. // RCB 2006 No. 8, pp. 27-29.

Illarionov A. Burden of the State // Questions of Economics, No. 1, 2007.

Economic theory [Text]: textbook for university students / Scientific. ed. and hands auto Team V.D. Kamaev. - 4th ed., revised. and additional - M: Humanite. Ed. VLADOS center, 1999. - 640 pp.: ill.

Blikanov A.V. Budget deficit as an indicator of the state of public finances [Text] / A.V. Blikanov // Finance and credit. - 2008. - No. 5.

Guseinov R.M. Economic theory [Text]: textbook / R.M. Guseinov, V.A. Semenikhin - M: Omega-L, 2008. - 440 p.

Martyanov A.V. Possibilities of using the achievements of the new orthodox theory in modern debt strategy [Text] / A.V. Martyanov // Financial analytics: problems and solutions. - 2008. - No. 4.

Myslyaeva I.N. State and municipal finance [Text]: textbook / I.N. Myslyaeva - 2nd ed. - M: Infra-M, 2008. - 360 p.

1 Budget system of Russia. Textbook. / Ed. G. B. Polyak. M.: 2006, p. 201.

2 Galkin M. Debts of Russia // Securities market. - 2007. - No. 5.

3 Economic theory [Text]: textbook for university students / Scientific. ed. and hands auto Team V.D. Kamaev. - 4th ed., revised. and additional - M: Humanite. Ed. VLADOS center, 1999. - 640 pp.: ill.

4 Budget Code of the Russian Federation dated July 31, 1998 No. 145-FZ (with amendments and additions dated December 31, 1999, August 5/27, 2000, August 8/30, 2001, May 29/10/07/24/07/24/12 2002 )

5 Illarionov A. Burden of the State // Questions of Economics, No. 1, 2007.

6 Economic theory [Text]: textbook for university students / Scientific. ed. and hands auto Team V.D. Kamaev. - 4th ed., revised. and additional - M: Humanite. Ed. VLADOS center, 1999. - 640 pp.: ill.

Debt State

Article 119. Service of state (municipal) debt

(as amended by Federal Law No. 63-FZ dated April 26, 2007)

1. Service of state (municipal) debt refers to operations for the payment of income on state and municipal debt obligations in the form of interest on them and (or) discount, carried out at the expense of the corresponding budget.

2. The performance by the Central Bank of the Russian Federation, a credit organization or other specialized financial organization of the functions of a general agent (agent) of the Government of the Russian Federation for servicing debt obligations of the Russian Federation, as well as their placement, redemption, exchange and repayment is carried out on the basis of agency agreements concluded with the Ministry finance of the Russian Federation.

3. The Central Bank of the Russian Federation performs the functions of the general agent specified in paragraph 2 of this article free of charge.

4. Payment for the services of agents for the implementation of their functions provided for in agency agreements concluded with the Ministry of Finance of the Russian Federation is made from the federal budget.

5. The performance by a credit organization or other specialized financial organization of the functions of a general agent (agent) of the executive body of state power of a constituent entity of the Russian Federation for servicing debt obligations of a constituent entity of the Russian Federation, as well as their placement, redemption, exchange and repayment is carried out on the basis of agency agreements concluded with the executive a government body of a constituent entity of the Russian Federation that carries out government borrowings on behalf of the constituent entity of the Russian Federation.

6. Payment for the services of agents for the implementation of their functions provided for by agency agreements concluded with the executive body of state power of a constituent entity of the Russian Federation, carrying out government borrowings on behalf of the constituent entity of the Russian Federation, is made from the budget of the constituent entity of the Russian Federation.

7. The performance by a credit organization or other specialized financial organization of the functions of a general agent (agent) of the local administration for servicing municipal debt obligations, as well as their placement, redemption, exchange and repayment is carried out on the basis of agency agreements concluded with the local administration.

8. Payment for the services of agents for the implementation of their functions provided for in agency agreements concluded with the local administration is made from the local budget.

The servicing of the state internal debt of the Russian Federation is carried out by the Bank of Russia and its institutions through operations for the placement of debt obligations of the Russian Federation, their repayment and the payment of income in the form of interest on them or in another form.

The performance by the Bank of Russia of the functions of the general agent of the Government of the Russian Federation for the placement of debt obligations, their repayment and the payment of income in the form of interest on them is carried out on the basis of special agreements concluded with the federal executive body authorized by the Government of the Russian Federation to perform the functions of an issuer of government securities.

The Bank of Russia performs the functions of a general agent for servicing government internal debt free of charge.

Payment for the services of agents for placement and servicing of public debt is carried out at the expense of federal budget funds allocated for servicing public debt.

Servicing of the state internal debt of a constituent entity of the Russian Federation and municipal debt is carried out in accordance with federal laws, laws of a constituent entity of the Russian Federation and legal acts of local governments.

Information on debt obligations is entered by authorized bodies into the State Debt Book of the Russian Federation, the state debt book of a constituent entity of the Russian Federation or the municipal debt book within a period not exceeding 3 days from the moment the obligation arises.

Information entered into the municipal debt book is subject to mandatory transfer to the body maintaining the state debt book of the corresponding subject of the Russian Federation, then this information is transferred to the body maintaining the State Debt Book of the Russian Federation in the manner and within the time limits established by this body. The State Debt Book of the Russian Federation contains information about the volume of debt obligations of the Russian Federation, the date of occurrence of obligations, forms of securing obligations, the fulfillment of these obligations in whole or in part, and other information.

The state debt book of a constituent entity of the Russian Federation includes information on the volume of debt obligations of a constituent entity of the Russian Federation for all state borrowings of a constituent entity of the Russian Federation, the date of borrowing, forms of securing obligations, the fulfillment of these obligations in whole or in part, as well as other information, the composition of which is established by the executive authority of the constituent entity RF.

The municipal debt book contains information about the volume of debt obligations of municipalities, the date of borrowing, forms of securing obligations, the fulfillment of these obligations in whole or in part, as well as other information, the composition of which is established by the representative body of local self-government.

Public debt are debt obligations of the Russian Federation to individuals and legal entities, foreign states and international organizations.

• External debt— these are obligations to non-residents in foreign currency.
• Domestic debt— obligations to residents in rubles.

The national debt is secured by federal ownership.

Debt obligations of the Russian Federation exist in the form of:

• credit agreements signed on behalf of the Russian Federation with credit organizations, foreign states and international financial organizations;
• government securities;
• agreements on the provision of state guarantees;
• re-registration of debt obligations of third parties into public debt.

The national debt may be short-term(up to one year), medium term(from one year to five years) and long-term(from five to thirty years).

The public debt is repaid within the terms established by the terms of the loans, but these loans cannot exceed 30 years.

Public debt management is carried out by the Government of the Russian Federation.

The Russian Federation is not responsible for the debt obligations of the constituent entities of the Russian Federation and municipalities if they were not guaranteed by the federal government.

Maximum volumes of government internal and external debts are determined by the law on the federal budget for another year. In accordance with Article 106 of the Budget Code of the Russian Federation, the maximum volume of government external borrowings should not exceed the annual volume of payments for servicing and repaying government external debt.

The Law on the Federal Budget for the next financial year approves the Program of State External Borrowings. This program is a list of external borrowings from the federal budget for the next financial year, indicating the purpose, sources, repayment deadlines and the total volume of borrowings. It covers all loans and government guarantees that exceed the equivalent of $10 million.

The decision to issue government securities is taken by the government accordingly in accordance with the maximum volumes of the budget deficit and public debt established in accordance with the budget law, as well as the Domestic Borrowing Program.

The decision on the issue of government securities reflects information about the issuer of the securities, the volume and conditions of the issue.

State guarantee is a method of ensuring legal obligations, by virtue of which the Russian Federation, as a guarantor, gives a written obligation to be responsible for the fulfillment by the person receiving the guarantee of his obligations to third parties.

The law on the federal budget for the next year determines the maximum amount of state guarantees. The total amount of government guarantees expressed in rubles is included in the government internal debt.

The total amount of government guarantees denominated in foreign currency is included in the government external debt.

In accordance with Article 118 of the Budget Code of the Russian Federation, budgetary institutions do not have the right to take loans from credit organizations. But they have the right to receive loans from budgets and state extra-budgetary funds. The register of debt of state unitary enterprises is maintained by the Treasury.

State books of internal and external debt of the Russian Federation are maintained by the Ministry of Finance of the Russian Federation.

IN State debt book information is entered on the volume of debt obligations of the Russian Federation, constituent entities of the Federation and municipalities for issued securities.

Information on borrowings is entered by the issuer into the State Debt Book of the Russian Federation within a period not exceeding three days from the moment the corresponding obligation arises.

Can be used to reduce debt burden debt restructuring. It means the repayment of previous debt obligations with the simultaneous implementation of new borrowings in the amount of repaid debt obligations and the establishment of new debt service conditions.

The following public debt management tools are also used:

• consolidation- combining several loans into one longer-term loan with a change in the interest rate;
• government loan conversion— change in the initial terms of the loan regarding profitability. Most often, during the conversion, the government reduces the interest rate;
• external debt conversion— a means of reducing external debt by fulfilling debt obligations to creditors by transferring to them bills and shares in national currency;
• innovation- replacement of the original obligation between the parties with another obligation between the same parties, providing for a different method of execution.

In 1985, the external debt of the USSR amounted to 22.5 billion dollars, in 1991 - 65.0 billion dollars. The external debt of Russia, including the debt of the USSR, amounted to 124.5 billion dollars as of January 1, 2003. To fully repay it within 30 years, along with interest payments, at least $300 billion will have to be paid.

In order to ensure its foreign policy and foreign economic interests, Russia provides loans to foreign countries. The program for providing such loans is approved by the law on the federal budget for the next year. This program consists of a list of loans indicating the purpose of their provision, recipients and amount. Agreements on debt restructuring or write-off of debt of foreign states to the Russian Federation must be ratified by the State Duma.

Concept and structure of external financing and external debt

External financing of the state is a consequence of the objective need to attract additional sources to finance government spending and the state budget deficit when all possible sources of mobilizing monetary resources within the country have been exhausted.

External funding attracted by the state to finance its expenses and the state budget deficit when it is impossible to mobilize these funds within the country. In other words, international financing is used when public finances have high deficits and need to finance expenditures. External financing is attracted in two directions: state And private (according to sources)(Fig. 50).

External funding also varies by form. It is carried out both in the form of free financing, and in the form of a return lending(Fig. 51).

International financing is structured and by timing(in terms of lending) for short-term (up to 1 year), medium-term (from 1 to 7 years) and long-term.

Public debt management

The system creates public debt system: internal and external

System debt service requires the creation of a system debt management.

The public debt system requires the creation of a debt management system. Servicing public debts, internal and external, includes in stages: repayment of interest; repayment of the capital amount of the debt and its refinancing if necessary.

If the conditional debt of the state is 100 thousand units. and it is presented at 20% per annum (the usual percentage on the international loan capital market for states - dubious borrowers) for 4 years with a one-year grace period (the period when only interest is repaid), and the amount of the debt is not repaid, then to the real amount of the debt (100 thousand units) you need to add 80 thousand units. percent (80% per annum multiplied by 4 years). Then the schedule for servicing such a debt will look like this (Fig. 52): 180 thousand. units in 4 years.

Rice. 52. State debt servicing schedule (with a term of 4 years at 20% per annum)

Thus, the simplest scheme for servicing public debt illustrates the sufficient complexity of managing it. Due to the high cost of public debts, the debt management system includes negotiations on changing the terms of debts, the mechanism of debt refinancing itself, and monitoring indicators of the volume and level of debt, and comparing them with other indicators of public finances (GDP, state budget, etc.).

Debt refinancing is a whole mechanism (another name is restructuring) (Fig. 53).

Public debt management is one of the main directions of state financial policy.

Debt refinancing is a system of measures to change the terms of loans: terms, volumes, cost (interest).

Cancellation implies a complete cancellation of the debt (applies only in the event of complete bankruptcy of the state as a debtor).

Prolongation- This is an extension of debt terms and interest repayments.

Securitization is the resale of government bonds on the open market (stock exchange).

Capitalization— this is the restructuring of government bonds into private shares through their resale on the stock exchange.

Public debt and methods of public debt management

The government internal debt of the Russian Federation consists of debt from past years and newly arising debt. The state internal debt of the Russian Federation is secured by all assets at the disposal of the Government of the Russian Federation.

Debt obligations of the Russian Federation can be in the form of:

• loans received by the Government of the Russian Federation;
• government loans carried out through the issue of securities on behalf of the Government of the Russian Federation;
• other debt obligations guaranteed by the Government of the Russian Federation.

The procedure, conditions for issuing (issuing) and placing debt obligations of the Russian Federation are determined by the Government of the Russian Federation. This activity is called: public debt management.

The servicing of the state internal debt of the Russian Federation is carried out by the Central Bank of the Russian Federation and its institutions, unless otherwise established by the Government of the Russian Federation, and is carried out through operations for the placement of debt obligations of the Russian Federation, their repayment and the payment of income in the form of interest on them or in another form.

Control over the state of public debt is carried out by representative and executive bodies of state power.

Under government internal debt management refers to the totality of government measures to pay income to creditors and repay loans, as well as the procedure, conditions for issuing (issuing) and placing debt obligations of the Russian Federation.

To the main public debt management methods should include:

• Refinancing— repayment of old government debt by issuing new loans.
• Conversion- a change in the size of the loan's profitability, for example, a decrease or increase in the interest rate of income paid by the state to its creditors.
• Consolidation— increasing the validity period of already issued loans.
• Unification- combining several loans into one.
• Deferment of loan repayment is carried out in conditions where further active development of operations to issue new loans is not effective for the state.
• Debt cancellation- refusal of the state from debt obligations.
• Debt restructuring— repayment of debt obligations with the simultaneous implementation of borrowings (assuming other debt obligations) in the amount of repaid debt obligations with the establishment of other conditions for servicing debt obligations and the timing of their repayment. The Budget Code of the Russian Federation states that debt restructuring can be carried out with a partial write-off (reduction) of the principal amount.