VIII Международная студенческая научная конференция Студенческий научный форум - 2016

The work is devoted to the general aspects of the financial system functioning in Russian economy. Financial system takes an important place in macroeconomics, as an economic life of the Government mainly depends on its state. That is why it is crucial to realize the significance of the system, the way its mechanism works, and how it operates as a whole.

Nowadays financial system is a matter of debate. It is designed to solve numerous problems of a modern society as: lack of economic growth, disproportions of economic system development, the lag in adapting to changes in external commodity and financial markets, excessive social tensions which influence a production process, low level of individual needs and many others.

The main goal of the work is to analyze the state of the Russian financial system by evaluating its notion and sense, looking through the modern structure, revealing problems and perspectives of future development. The central subject is economic and financial relations which occur in the process of the system functioning between Government, municipalities, economic subjects and the population. Finances are an integral element of social production at all levels of management. It is impossible to ensure public and individual circuit of productive assets on an extended basis, to regulate sectoral and territorial structure of the economy, to stimulate faster introduction of scientific and technical achievements, to satisfy other social needs without finances. Such requirements of economic subject and the State cause the appearance of different types of financial relations.

For all its diversity financial relations have some common features, which allow combining them into several groups. Such grouping can be realized by different characteristics, but the most reasonable classification is due to objective criteria. Financial relations are distributive by nature, as they distribute a part of the whole sum of a social good among all subjects. The subjects form the foundation purpose in terms of their role in production. Due to the criteria the ways of finance organization are determined, the order of formation and use of financial resources and financial funds.

Grouped by a certain characteristic financial relations form a financial system. In all their diversity they could be combined in relatively isolated groups – spheres and links, which are closely related to each other. To each of them some money funds are corresponded and the appropriate financial authorities exercise administration.

The role of the financial system comes down to the legal regulation. That shows one more significant aspect, in other words with the help of financial system it is possible to control the efficiency and conformity of the legal form and the economic content. Moreover, it is possible to influence the speed and proportions of socially-economic development of the country. Such influence can be carried out in two ways: by financial provision (Governmental budget) and financial regulation (tax system). In this case, it is obvious that none system in the country takes such an important place as a financial one.^[1]

Nobody and nothing can feel dramatic changes in economy, as the financial system of the State does. It provides success or failure of the whole reorganization of the economy, causes the rise or fall of political image of a sovereign country. From the point of view of functioning approach, the notion of financial system slightly changes in terms of governmental system. Functions of the financial system remain stable, mainly unchanged and correspond to the definition of finance as a union of monetary relations.

There are various opinions on the range of main functions of the financial system. However, this assumes that the main function of any system is management. To figure it out, the whole work is divided into several parts as the sense of the financial system, financial policy of the RF in terms of marketing economy, and the main macroeconomic indicators of the development of the system itself. With the help of financial system the functions of economic category “finances” could be realized, which cause purposeful usage of finances in social production. This way, financial system is a complicated financially-economic formation within a certain country without which the State could hardly survive, not mentioning the development of a national economy and an overall level of population’s welfare.

The main elements of the financial system.

Financial system of any Government contains several interconnected links (institutions) and organs. Existence of different institutions inside the financial system can be explained in terms that finances serve the diverse needs of society, cover the impact of the whole economy of the country and the whole sphere of social activity. Hence, financial system of the Russian Federation is:

1. totality of financial institutions, each promote formation and usage of monetary funds;

2. totality of governmental organs and establishments, which realize financial activity in limits of their competence.

The totality of financial institution, which regulate the formation, redistribution, and the usage of funds, create a financial system, which reflects the development of the state in the conditions of transition to the market.

In particular, the financial system of the Russian Federation consists of the following funds and legal institutions:

1. Budget system, combined with Federal budget, budgets of the subjects of the RF, and budgets of local authorities. Budget device in Russia is based on the principles of unity, completeness, reality, publicity and independence of all budgets, which are the part of Governmental budget system.

2. Governmental extra-budgetary funds (to regulation of which the chapter 17 of the BC of RF is dedicated. So due to the article 144 BC, governmental extrabudgetary funds of the RF are: Pension fund of the RF, the Fund of social insurance, Federal fund of medical insurance, Governmental fund of employment of the population of the RF)

3. Insurance funds

4. Governmental credit

5. Finances of economic entities (resource funds)

6. Stock market

V.P.Litovchenko considers the structure of Russian financial system, which is based on the principal of financial division into national and decentralized. Main links of the financial system are shown below. (picture№1)

 

Private finances

State finances

fFinances of different forms of property

Finances of State enterprises

National finances

Finances of households

Finances of enterprises

Centralized

Decentralized

Finances

 

Picture№1 Main links of the financial system of the RF

Firstly, it is important to look through national finances. The basis of national finances are budgets of the corresponding level. Moreover, national finances are dealing with governmental social extra-budgetary funds, governmental crediting. National finances have the leading role in regulation of economic processes and distribution relations on the macro level. National finances are accumulated in orders of the Government and local municipalities, their formation and distribution have a centralized character. ^[3]

Now lets turn to decentralized finances. Finance of credit and banking systems, insurance, finances of enterprises – mainly realize the regulation of economic processes on micro level.

Throughout the financial system Government, by applying certain laws, implementing regulations, influences the creation of centralized and decentralized financial resources with the help of financial instruments: taxes, the system of crediting, the pricing mechanism. So national finances are organically connected with other links of financial system.

From one side, the main source of income budget of all levels are GDP, which is created in the sphere of production. From the other side, the process of reproduction on an enlarged scale can be done by an enterprise not only by using its private funds, but by direct assignations from the budget or by the State credit.

Finances of an enterprise are also closely related to the crediting system. With the lack of private funds, especially for the replenishment of floating capital, it is possible to use bank credits. ^[2]

Sometimes enterprises can raise funds from other economic entities in order to find solutions for their financial and economic problems. This could be carried out by different methods. For instance, in order to increase private financial resources companies resort to сorporatization, to implement loans companies bond, note of hand. This way, interconnection and interrelation of links of the financial system is due to the single entity.

The role of the Government in social and economic development of the society is determined by the necessity in centralization of its financial resources. The forms of their usage are budgets and State extrabudget funds, State credit. Throughout private funds of economic entities and population insurance and banking finances are organized. Finances of commercial enterprises are formed from their own profit and savings. Now lets consider in more details on the links, which form the financial system of the Russian Federation.

• Federal, regional and local budgets are the main component of national finances. They represent the form of creation and usage of centralized funds, which are necessary to ensure the execution of any State tasks and functions.

In terms of marketing economy budget plays a leading role in creation of economic conditions for realization of national security of a country, keeping the management bodies, fundamental researches, preservation of the environment, support and development of different forms of businesses, social and cultural spheres.

• One more link of national finances is State extrabudget funds. These are the funds, which occur beyond the budget and are to realize citizen’s rights in social and medical sphere.

• State credit reflects credit relations in terms of governmental mobilization of temporarily free funds of enterprises, organizations in order to finance State expenses. Creditors are natural persons and juridical persons, debtor is the State in terms of its executive bodies. The State credit is widely used for covering budget deficit, stabilization of monetary flow on the country.

Mobilization of financial resources creates a rather big governmental debt. Two types of debts are known – the State internal debt and external debt. Internal one means promissory note of the Government of the RF in terms of national currency to juridical entities and natural persons. The main forms of promissory notes are credits and State borrowings (by emission of securities). The external debt – is external borrowings taken from different sources.

• An important link of the financial system is an insurance fund, which provides the compensation of possible losses in terms of insurance cases.

From one side, insurance is an independent sphere of the financial system, however, from another side; it correlates with each link of the system: budgets of all levels, finances of enterprises, organizations of credit and banking systems. It has a goal to satisfy the interests of the State, businesses, and a person. The monetary guarantee of insurance security is an insurance fund, which has several forms: centralized (reserve) insurance fund, fund of self-insurance, insurance fund of assurer. The centralized is created by national reserves. Its main goal is to compensate damage and eliminate consequences of natural disasters and large accidents, which caused destructions and sacrifices. The fund has a natural form and contains reserves of goods, raw materials, foodstuff which is renewed all the time. The fund of self-insurance is formed in business entities; its size is not regulated by the law. It is created to provide the activity of an enterprise in terms of adverse situation. This kind of a fund is widely used in covering losses and bonds redemption and stock financing with the lack of any other funds, in order of acquisition of new sources of production. Insurance fund of assurer is created by a large number of members. Its formation takes part in decentralized order, and has a target characteristic. The fund allows to cover all loses of its members by redistribution of its sources, which is a very important part of any financial system.^[5]

Significance of financial control.

The sense of finances, the regularities of their development, the sphere, which is covered by their commodity-money relations, and role in the process of social reproduction – are all defined by economic system of the society, the nature, and functions of the Government. Finances – a historical category. They appeared at the same time with the State and with the division of the society into classes.

Financial control – is the control of legislative and executive bodies of all levels, and specially formed organs after the financial activity of all economic subjects (State, businesses, organizations, enterprises) with the help of specific methods. It includes the control of financial and economic legislation compliance during the process of funds formation and usage.

Financial control – is a cost control, that is why it takes part in all spheres of social representation and accompanies the whole process of funds turnover.

Concrete forms and methods of financial control organization are the practical implementation objectively inherent in the finance as an economic category. As the financial system of the State covers all types of funds, then financial control is multilevel and very detailed. Its main goal is to ensure the interests and rights of the Government, state bodies, and other economic subjects; financial violations result in sanctions and fines. ^[4]

Governmental financial control is dedicated to realization of financial policy and creation of appropriate conditions for financial stabilization. Financial control over activity of enterprises includes the control from credit institutions, shareholders and inside control: checking the efficiency and expediency of financial resources – private, borrowed; financial estimation of results of invested projects; the accuracy and validity of financial reports; control over financial condition and liquidity.

Financial manager in a large commercial structure controls the whole process of capital investment. It is a so-called «audit», which includes comparison of actual financial results of each stage of production and investing activity; then analyses and eliminates the reasons of their discrepancy; finds out the ways of expenses lowering and improvement methods of financial prediction.

The system of financial control in countries with developed marketing economy consists of such elements as: the office of the general-auditor under the control of parliament and the president. The main aim of this department is an overall control of public spending; tax department under the control of the Government or the Ministry of finances, which controls entrance of taxes; non-state controlling entities, which perform an inspection of reliability of reported documentation on a commercial basis.

Economic and political reforms in the Russian Federation at the beginning of the 90-th lead to a significant reorganization of existing financial control, by trying to adopt it to the foreign model. The system of controlling bodies was reorganized. In particular, in1990 public control bodies were abolished . A new system of political power with the president at the top established presidential control. Such organs appeared: the Federal Treasury, Governmental tax service, the Chamber, the Federal insurance supervision service, Federal service of tax police and some others. The structure of Ministry of finances of the RF was formed. Auditing control appeared. ^[7]

Public financial control acquired new forms. Appearance of commercial banks and other crediting organizations brought to life new methods of financial control as from those commercial banks after financial condition of enterprises-clients and after the activity of commercial banks from the point of Central Bank of the RF.

State budget.

State budget is an important part of national income in each country all over the world. It determines the level of economic development in a particular State. Each Government is faced with a complicated task – to choose weather it will be more beneficial to improve economic position or to direct all forces on the establishment of equality and justice; to save or to consume; to take part in the process of production or just to influence it through the market. These are the factors, which are important to deal with when creating a fiscal policy.

With the help of a budget Government may change the ratio of saving and consuming indicators of a national income. It may also stimulate the expansion of consumer demand or vice versa to poort savings and accumulation. Budgets are used to conduct social anti-inflation policy and to stimulate or restrain economic expansion factors.

The State budget – is a balance of incomes and expenses of the Government, the main financial plan of the country, which has the force of law and is to be executed after its adoption by the legislature (parliament, the State Duma, Congress). It is a centralized fund, which is under the total control of the Government in order to finance State machinery, military forces, to implement necessary social and economic functions.

In any country the State budget is the main chain of a financial system, as it is a powerful lever of state regulation of economy, impact on economic environment by anti-crisis measures. However, the budget may be a separate economic category, reflecting the monetary relations of the state with legal and physical persons in terms of redistribution of a national income due to formation of a budgetary fund. The goal of a budgetary fund is to invest in national economy, socio-cultural activities, defence and public administration.^[5]

The government meeting of the Russian Federation approved a budgetary project of the 2015 year. The main characteristics were formed basing on the budgetary rule – expenses were not enlarged. For the future three-year period the State budget deficit is planned in amount of 430, 836 billions of rubles, which is 0,6% of GDP. This indicator is 1% less than the amount of deficit in the previous year.

Incomes of the State are planned up to 15,082 trillions of rubles. Hence, expenses would compose 15,513 trillions of rubles. This year the parameter were calculated by taking into account:

• volume of GDP in 77,884 trillions of rubles (with growth 1,2%)

• inflation rate (up to 5,5%)

• planned $ rate (37,7rubles)

Upper limits of debt obligation of the State are announced:

• Internal State debt - 7 423 701 000 000 rubles;

• External debt - $64 000 000 000

Future indicators for the coming 2016-2017 years were also affirmed:

• State budget deficit - 477, 7 billion is 2016 (0,6% out of the GDP) and 544 400 000 000 rubles in 2017

• Incomes – 15 trillions 725,621 billions of rubles and 16,439 trillions of rubles

• Expenses – 16, 203 trillions and 16,983 trillions of rubles

Upper limits of debt obligation of the State are announced as 71,5 billions (in dollars)

Growth of the GDP is planned for 2,3%; 3%, what will be counted to 83,182 trillions and 90,051trillions (in rubles).

The main innovation of the governmental estimate, from the point of view of the minister, is an effective redistribution of national outlays on defense, preservation of important social aspects. Moreover, investment of Crimean, Far Eastern regions was added; provision has been made for distressed cities and Moscow transport. A.Siluanov noted that this year was not required any tax raises. ^[1]

State credit.

State credit is an important link of the financial system. It is defined as a totality of economic relations between the Government and juridical or natural persons, foreign countries, international financial organizations, in terms of money turnover on conditions of maturity, repayment and formation of additional financial resources. In such kind of relations State can play a role of a creditor, debtor or guarantor. The main reason for its appearance is a deficit in the budget.

The main characteristic of this type of credit – is the indispensable participation of the state in the person of Executive authorities of different levels. Performing the functions of the lender, Government carries out financing through the Central Bank. The objects of financing could be concrete spheres or regions, which need financial resources badly (if the budget is settled and commercial Bank loans may not be held) or commercial banks. However, Government can also be a borrower within a process of State loans placing or within realization of some operations on the market;

Basing on the parameters, established in the forecast of socially-economic development of the Russian Federation for 2013-2015 years, including planned volumes of borrowings, indicators of debt sustainability will not be damaged in the coming period. (Table1 “Indicators of debt sustainability in the Russian Federation (%)”) ^[4]

Indicators of debt sustainability in the Russian Federation (%)

№ п/п	Indicator	2012	2013	2014	2015	Limit indicator
1	Ratio of the State debt to the GDP	11,8	13,1	13,7	13,4	25
2	Share of expenses on the national debt service in terms of an overall volume of federal budget expenses	2,6	3,2	3,4	3,3	10
3	Ratio of national service payments to the federal budget income	7,9	9,9	7,1	9,3	10
4	Ratio of a State debt to the federal budget incomes	56,2	68,0	72,1	71,4	100
5	Ratio of a State external debt to an overall volume of export per year	11,5	13,2	14,8	15,4	220
6	Ratio of national external debt expenses to an overall volume of export per year	0,5	0,6	0,6	0,6	25

Financial functions in terms of market conditions.

In term of market conditions decentralization of financial resources takes place. As it was mentioned in the previous part of the work – there is a number of important links in the whole financial system of the Russian Federation. If just one of them will not operate in appropriate way then there will appear serious system failure. Nowadays large funds are redistributed through autonomous social funds (Pension funds, the Fund of social security, the State fund of population employment and other non-budgetary funds). At the same time centralized incomes have reduced (which are accumulated in the State budgetary system). Under the conditions of administrative-command system more than 70% of financial resources were concentrated in the State budget, in 1996 this level reduced to 40%. Sharply decreased the sources for capital investments. Increased subventions for production of coal sphere. Huge amounts of money are directed to social and cultural events. Now more than a half of all social expenses are covered from non budgetary funds.

It is important to take into account the fact that the development of non budgetary funds will not give an opportunity of concentration on the priority directions in economy, it is difficult to control the outlays of national sources.^[6]

In terms of the decree of the president of the RF from 22 of Decembre 1993, the majority of governmental non budgetary funds should be included in the content of republican budget.

Russian finances are under the conditions of a deep crisis, what is reflected in rather big budget deficits, high inflation, fall of the currency rate of ruble, large internal and external debts of the country.

The main goal is to calm down the slump of production, inflation process, activate investments in order to ensure structural reformation of national economy, to thread budget deficit, improve the system of taxes and all financial relations – to achieve a financial stability.

The system of financial management bodies in the Russian Federation.

In the Russian Federation the financial management is realized by the highest legislative authorities. Which are the Federal Assembly and its two chambers – the State Duma and the Federation Council. The most important administrative body of financial control is the Ministry of finance. The departments of the Ministry are: the budget one, which creates the project of the federal budget; sphere departments of production, building, transport, and connection systems financing. An important subdivision is the Main Federal Treasury Department, which is responsible for a cash execution of the budget. ^[7]

Control after the right counting, fullness and modernity of payments in the budget is the responsibility of the State tax service of the RF and its tax inspectorates.

In terms of transformation to market relations, the main methods of financial management are: forecasting, planning, taxation, self-financing, crediting, the settlement system, the system of depreciation, and the system of financial sanctions.

Conclusion.

Based on the work done, we can state that the notion of “financial system” is a derivative from a more complicated term “finances”. As it was already said, finances are the set of public economic relations. However, in each link of finances these kinds of correlations are specified and behave in different ways. Each link has a significant influence on the overall process of production, which is raised up in an overall economic state.

Finances of enterprises service the production and create an indicator of Gross Domestic Product. Through out the State budget resources are mobilized in the main centralized fund of the country; after that redistribution of funds among spheres, social groups of population takes place. Non-budgetary special funds have a strict end use. For instance, the largest non-budgetary fund – the Pension fund of the RF mobilizes money in order to pay pensions for nationals. The funds of Insurance are for recoveries of damage.

So each part of the financial system represents a particular sphere of financial relations, and the financial system as a whole is a union of different spheres (which contain specific relations). In other words, it is a system of forms and methods of formation, distribution and usage of funds, without which any kind of human activity in a modern world would have failed.

List of literature.

1.http://m.minfin.ru/ru/document/?id_38=58414&order_38=P_DATE&dir_38=DESC&page_38=1&area_id=38&page_id=2208&popup=Y

2. http://m.government.ru/department/69/numbers_and_facts/

3. http://ekonomika.snauka.ru/2014/01/3537

4. http://sibac.info/14171

5. http://www.russian-national-standards.com/russian-financial-system.html

6. http://ecobashedu.narod.ru/leksii/fin.htm

7. http://www.cis2000.ru/Budgeting/OptionC.shtml

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