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Finance and Statistics - Ковалева А.М.

3. GOVERNMENT DEBT MANAGEMENT

3.1 ESSENCE AND IMPORTANCE OF THE STATE DEBT

The state receives the bulk of the monetary resources intended for financing the nation-wide needs in the form of taxes and compulsory payments. In the conditions of destabilization of the financial state of the national economy, reduction of state revenues, the state is forced to attract funds from other sources to cover its expenditures. The main form of state borrowing is a state loan.

The state credit is a set of credit relations in which the state is the borrower in the lime of its bodies, and the creditors are physical and legal persons. In the sphere of international relations, the state acts both as a creditor and as a borrower.

As one of the types of credit, state credit is granted on the basis of repayment and pay; However, state credit differs from bank and commercial loans.

First, additional financial resources accumulated through state credit do not participate in the cycle of productive capital, in the production of material values, but are used to cover budget deficits.

A bank loan is a movement of loan capital provided by banks to enterprises and organizations to ensure the continuity of the process of expanded reproduction and increase its effectiveness. The purpose of granting such a loan is to receive profit in the form of loan interest, so the lender is interested in the effective use of loaned funds. In addition, the productive use of credit ga-

Returns the borrowed resources. Thus, the mobilization of temporarily idle resources by the creditor because of its economic interests is productive.

Secondly, when granting a bank loan, certain tangible and financial values-goods (documents of title), securities, etc., can serve as collateral. When borrowing funds from the state, all property in its ownership is the collateral for the loan.

The functioning of public credit leads to the formation of public debt. Public debt is the amount of arrears on issued and outstanding government debt, including interest accrued on them. State debt is divided into the main and current, depending on the maturity. The main state debt is the entire amount of debt of the state, for which the time for payment has not come and which can not be presented for payment during this period. The current state debt is the debt of the state for the obligations for which the maturity date has come.

Under present-day conditions, the executive branch does not have enough tax revenues to cover huge government expenditures, and money emission leads to inflation. The government's refusal to use credits from the Central Bank of Russia for this purpose led to borrowing at home and abroad. As a result of the sharp increase in the budget deficit and growing borrowings, Russia's public debt, both internal and external, has significantly increased. In July 1996, its value was 1001.0 trillion rubles, and by 2000 it increased almost 4 times.

Significant amounts of public debt reflect the crisis state of the Russian economy. The increase in borrowings in the financial market and from foreign creditors leads to an increase in the costs of servicing and repaying the public debt and reducing government spending in other areas.

Thus, for the servicing of the public debt in the federal budget for 1999, it was planned to allocate 166.84 billion rubles, or 29% of the total expenditure1. In 2000, 220.0 billion rubles were allocated for this purpose, which is 25.7% of the total expenditure.

'Rossiyskaya gazeta. 1999.-4 March.-C. 13.

Such a scale of public debt also requires proper management of it. One of the methods of regulation is the approval by the legislature of its upper limits. The federal law "On the Federal Budget for 2000" sets the upper limit of the state domestic debt of the Russian Federation as of January 1, 2001: for debt obligations - in the amount of 593.2 billion rubles, for target debt obligations - in the amount of 30 billion rubles. The same law also establishes the maximum amount of state external borrowings of the Russian Federation (unrelated financial loans) for 2000 in the amount of up to $ 9.0 billion.

Servicing the state domestic debt is entrusted to the Central Bank of Russia.

The federal debt does not include debt obligations of national-state and administrative-territorial entities of the Russian Federation. Municipal loans, if they are not guaranteed by the Government of the Russian Federation. The responsibility for municipal loans is borne by the bodies that issued them.

State domestic debt is provided by assets held by the Government of the Russian Federation.

Payment of income on loans and their repayment are one of the main items of budget expenditures. In conditions when the public debt reaches a level at which the country is unable to meet its debt obligations in a timely manner, the government is forced to resort to their prolongation, i. Extension of maturity, or conversion - reduction of interest payments on loans.

The main purpose of issuing loans in today's Russia is to cover the budget deficit and refinance previous loans. This means that the amount of debt that must be repaid in a given year, new loans are issued. The growth of government spending entails an increase in loans and debt, so the public domestic debt is closely linked to the state budget as a fact of its origin.

The leading methods of financing public debt are monetary emission and issuance of government loans.

"Rossiyskaya Gazeta.-2000.-Jan. 5-S.C. 18; 18 Jan.-C. 15.

The most appropriate is the issue of government securities, but in this case the state faces a very serious task related to the search for the optimal combination of types of government securities by maturity, yield levels and other qualities. Even in countries with a stable economy, different approaches are used. So, for a long time in the US preference was given to long-term securities; In Germany, Japan, France, England - medium-term. The share of short-term securities in these countries is insignificant.

In Russia, since 1993, the federal government has seen the solution of important macroeconomic tasks (primarily the reduction of inflationary financing of the budget deficit), mainly, in creating a broad market for short-term government securities. To increase the interest of individuals and legal entities, government securities were issued at fairly high interest rates, which in turn led to an increase in the volume of public debt. In addition, due to their high profitability, government bonds pumped free financial resources from the economy, inflating the rates of bank loans.

The external debt of the Russian Federation, including the debt of the former USSR, is 150 billion rubles.1

Under Russian law, the debt obligations of the Russian Federation can exist in the form of:

• Credit agreements and contracts concluded on behalf of the Russian Federation with credit institutions, foreign states and international financial organizations in favor of these creditors;
• State securities issued on behalf of the Russian Federation;
• Agreements on the provision of state guarantees of the Russian Federation, contracts of guarantee of the Russian Federation for ensuring the fulfillment of obligations by third parties;
• Re-registration of debt obligations of third parties in the public debt of the Russian Federation on the basis of adopted federal laws;

Sarkisyants A.G. System of international debts. - Moscow: Publishing company 'Deka' consulting company, 1999.-C. 81.

• Agreements and contracts, including international ones, concluded on behalf of the Russian Federation, on the prolongation and restructuring of the debt obligations of the Russian Federation in the past.

In this regard, Russia's foreign debt on debt instruments can be divided into the following groups: loans of the former USSR and interest bonds on them; Loans on a multilateral basis (IMF, IBRD, EBRD, IIB, MFER, Nordic Jnvest Bank); Loans from foreign governments, loans from foreign commercial banks and firms; Eurobonds; Bonds of the domestic state currency loan (non-residents).

There are different criteria for assessing external debt. In particular, they compare the amount of debt and the need for its repayment and payment of interest with the value of exports, on which the potential capacity of loans depends.

The limit of danger is the excess of the debt as compared to exports in 2 times, increased risk - 3 times.

When comparing the ratio of interest payments to exports, the danger boundary is considered to be 15-20%, the heightened danger boundary is 25-30%.

In Russia, the ratio of the total amount of external debt to exports in 1995 was 137.5%, and by 2000 it had reached 200%, i.e. Border of danger.

The most comprehensive is the indicator of external debt as a percentage of GDP. The lowest figures are in France (about 1%), in the USA (9%), Germany (13.5%). Until 1996, Russia was on a par with countries such as Sweden and Belgium (30-40%), but by 2000 its external debt was 85% of GDP, i.e. On this indicator, Russia is approaching countries such as Ecuador (91.2%), Panama (97.8%).

At present, the country can not fully service its foreign debt. Refusal of payments would mean insolvency of the state, which would paralyze imports, causing great damage to the domestic market. At the same time, a significant part of domestic industry and the social sphere need to purchase imports of equipment and medicines not produced in Russia and other CIS countries.

This situation requires, first, the organization of practical work on the return of interstate debts, as Russia continues to be the world's largest creditor. According to estimates, various countries owe Russia $ 140 billion.1

Sarkisyants AG. System of international debts. - P. 87.

Secondly, it is necessary in the near future to abandon the international financial loans that are used to cover the current budget needs, but to direct them to the implementation of targeted federal programs related to the revival of production.

Thus, under the management of public debt is understood the totality of the state's financial measures related to the establishment of annual limits of the state debt, the issuance and repayment of loans, the organization of payments of income on them, the conduct of conversion and consolidation of loans.