Theoretical aspects and the basic provisions of the state financial policy

 

In economic theory, a single view of the finance function is no single point of view. Most scholars identify such functions as the control, regulatory and distribution.

 

The distribution function is carried out in all spheres of public life: the immaterial sphere of material production, circulation. At the micro level, the distribution of the subjects of legal entities and physical persons act, at the macro level - the state. Distribution subject to the GDP and ND.

 

 

This function covers three successive and interrelated stages: formation, further distribution and use of funds. By the formation of funds means the financial resources of economic agents, households and the centralized state funds. These funds are distributed through financial instruments. Using the Treasury provides an expanded production and the lives of individual members of society, as well as improving the national needs of the population.

 

The control function is connected with the movement of funds the cost of GDP. With the help of the reproduction process displayed by financial resources. Financial monitoring reports to society about the problems of economic and monetary relations in the country. This function signals a deviation in the proportions of ND and GDP, the need for the formation of the trust funds of funds, a provision of the resources of production.

 

The control function is manifested before the allocation process, in the use of funds, in summarizing and evaluating performance of funds of funds. Function is realized through the financial and economic, financial, fiscal, credit and banking supervision.

 

Objects of the control functions - the financial performance of enterprises, companies and organizations. In this regard, much depends on the activities of the Chief Accountant, Finance Department staff, the adequacy of financial information, and discipline in the field of finance.

 

Regulatory function associated with state participation in the processes of reproduction. At the micro level, this feature stimulates the activity of enterprises (creating a fund to help improve the quality of the production process), at the macro level - adjusts state spending, state loan and taxes.

 

This is the basic function of finance, which reveal the essence of the sphere of relations.

There is a whole system, which founded and built the basic principles of finance and government organizations that provide a basis for the establishment, operation and development of enterprises in the country, as well as state and other funds.

 

This system consists of the following elements:

1. the principle of unity;

2. the principle of balance;

3. goal orientation;

4. principle of responsibility;

5. the principle of self-financing;

6. the principle of diversification.

7. etc.

All of the above principles of finance influence, both in private finance, and in the field of public finance, which indicates the close relationship of public and private financial instruments and levers.

The principle of unity is based on the relationship between the regulatory framework right, the introduction of the principles of accounting and other reports, the current monetary, fiscal and credit system in the country. If this principle is violated, then the country's entrepreneurs and business entities are not able to efficiently conduct financial transactions and reporting.

Principle of balance suggests that the loan funds they need to be paid at the time and repay the debt borrowed and borrowed funds.

 

To state this principle plays a stabilizing role in the expenditure and revenue side of the country and in each budget for local government and state funds. If the principles of finance are not met, for example, the principle of balance, it is not paid within the period of debt on loans, the company can lead not only to fines, and increased debt, but also in bankruptcy. For the state not the fulfillment of the principle of balance will lead to the possibility of default, which means do not match the volume of GDP and the debt of the state.

 

Goal orientation as one of the principles of finance, serves as a matching set to finance and real walking cases. For example, if the goal is reckless and will not provide the business entity required amount of funds for loan repayment and interest charges for his services, then this funding would not be appropriate and could lead to many negative consequences for the subject business. Small businesses should be responsible and considered approach to the issue of taking the credit, because its value at any given time be at peak capacity.

 

The principle of diversification tells us that the creditor must give credit to multiple borrowers, so that when the return is not one or more of the loans have a point of profitability at the expense of many loans. In addition, this principle means that the amount of income should be more than one, according to a successful business income of an entrepreneur should be about seven species (funds are not deposited, the Central Bank, the business itself, minor surgery business, etc.). This principle is called the principle of development, as it aims at the constant search for alternative sources of income.

The principle of self-funding means that their business plan or financing facility to pay off on their own, and not only exist through debt or borrowed funds.

 

Chapter 2. Analysis of the Financial Policy of the Republic of Kazakhstan

 

2.1 The financial mechanism as an instrument of fiscal policy

 

History shows that the policy and mechanism for its implementation, grass-economic interests of the people to stimulate their activity with a maximum aggregate of commodity-money relations, initiative and creativity of every worker to produce better results.

 

The mechanism of functioning of the financial policy of the beginning of the period of independent development of Kazakhstan characterized by inconsistencies and contradictions.

 

On the one hand, the policy choice was influenced by factors of instability in post-Soviet space, and financial activities were forced to follow conducted in other countries, especially Russia. This is determined by common economic relations, the interdependence of economies, a common currency, common borders, prevailing mentality of the population of the CIS countries. This group of factors caused by the changing socio-economic structure, which was accompanied by a radical break-established relations, systems and mechanisms. The economy performed so-called "shock therapy" in order to accelerate the transition to a market formation: the liberalization of prices and markets, failure of the plan began, the removal of exchange restrictions, the state monopoly on the key economic activities, the weakening of control over the work of grassroots structures of the national economy.

 

On the other hand, were hasty, unprepared activities that society is not perceived as objectively necessary in Kazakhstan. Among them - the strong-willed decisions on emergency transformation of production relations, the desire for centralization of finance, an incorrect division of property in the course of privatization, ignoring the interests of subjects of the sphere of material production, the priority sectors of service sector and, consequently, the main social groups in society, the frequent changes and additions laws and regulations. In this case, there was no sound economic strategy, and tactical financial policy measures directed at addressing emergencies, interrelated cause and effect, as a result - the elimination of negative phenomena in one link led to their emergence in the other.

 

In general, this has led to considerable destruction of the productive forces and the deepening of structural imbalances, long crisis of the economy and society, a sharp drop in living standards of the main mass of the population. This is the price breach the criteria of the evolutionary development of society, in which a large proportion of non-compliance related to the basic principles of economic and financial policy.

 

Therefore, the task of financial policy in Kazakhstan is to develop measures and their implementation through the financial mechanism to shift the economy on a trajectory of economic growth, stability and economic life on the basis of further restructuring of the national economy, business development, reforming the property with the optimization of the share of state, expansion and intensification foreign trade, financing of social programs. Worked through the mechanism of integration of the economy in the world economy. At the same time fiscal policy and a mechanism must provide social protection to the extent of entering into the market economy from inflation, unemployment, loss of income.

 

In the Republic of Kazakhstan continues to implement programs to deepen market reforms, including directions referred to the formulation of appropriate financial policies and mechanisms for its implementation.

 

In the Western theoretical concepts and practice, the term "fiscal policy", which implies a complex notion of government fiscal policy and its implementation mechanism in economic processes. Fiscal policy covers the distribution and redistribution of the withdrawal of tax payments, allocation of resources in the production of "public goods", their distribution and movement of transfer of cash flows, and other actions of the government and local authorities on the use of finance in economic and social spheres.

 

Fiscal policy is a discretionary, that is, as a conscious manipulation of government taxes and spending to changes in real national output, employment, control inflation and economic growth. Depending on the nature of the business cycle can be stimulating or restraining fiscal policy. Non-discretionary fiscal policy action involves automatic or "automatic stabilizers" ("built-in stability"), which refers to variation in government spending and tax exemptions in proportion to the volume of national product in different phases of the economic cycle - the rise or decline.

 

The content of the financial policy of the state is the systematic organization of finances, taking into account the economic laws and in accordance with the objectives of social development. The financial policy of each stage of social development has its own characteristics, solves various tasks, taking into account the state of the economy, the urgent needs of the material and social life and other factors.

 

Despite the diversity of financial instruments in Kazakhstan, their content is reflected in the consistent implementation of these steps:

 

1) development of evidence-based concept of development finance in the country based on economic laws, the study of the economy, the prospects for socio-economic development of society;

 

2) the formulation of strategic and tactical activities of financial policies on the basis of the relevant goals and objectives of economic policy;

 

3) the practical implementation of the actions through the financial mechanism of its reconstruction or adjustment depending on the radical economic transformation.

 

The problems solved financial policy:

 

a) providing conditions for creating the greatest possible amount of financial resources based on specific characteristics of each stage of development;

 

b) the rational allocation and use of financial resources between the spheres of social production, the sectors of national economy, the direction of resources to specific purposes;

 

c) develop an appropriate financial mechanism for implementation of the planned areas of economic development, its continuous improvement.

 

The programs of economic development and deepening of market reforms in Kazakhstan includes a set of measures for financial recovery and revitalization of monetary policy, the development of the consumer market with the expansion of the share of domestic producers, production stability, strengthening economic ties. The main directions of the transition to a market economy are keeping inflation at a minimum, de-monopolization of the economy, entrepreneurship and competition, market infrastructure (commodity and stock exchanges, investment funds, commercial network of wholesalers and retailers to merchandise trade, commercial banks, insurance companies, warehouse , transportation, packaging, agriculture, the centers of commercial information, advertising firms, network service, repair, consulting and legal services, etc.).

 

Under these programs, financial policies and activities of the financial system during the transition to a market focused on obtaining the necessary financial resources, complete and timely mobilization of the budget, uninterrupted funding provided by government programs of social and economic development, and greater control over the targeted and efficient use of state of material, labor and financial resources. These goals stem from the need to ensure that the financial strategy for socio-economic development based on sustainable economic growth.

 

As a next goal - to achieve a balanced state budget and solve the problem of financial recovery of national economy on the basis of economic stabilization.

 

In conducting monetary policy is important, the following principles of financial policy:

 

• the interests of all participants in social production, social, ethnic and professional groups in the preparation, approval and execution of budgets based on the actual availability of funds;

 

• provision of orderly organization of financial relations;

 

• balance between revenues and expenditures in all areas and levels of the financial system;

 

• creation of financial reserves (excess of income over expenditure in the budget system and financial reserves to finance sector);

 

• optimal allocation of financial resources between the state and enterprises.

 

2.2 Policy of financial stabilization in Kazakhstan

 

Financial stabilization in the Republic of Kazakhstan provide ways of government regulation of economic processes. The main objectives of state regulation in Kazakhstan are creating conditions for increasing investment activity due to the completion of trials and small mass privatization, infrastructure, financial market, improve the banking and credit system, the regulation of exchange rate reform of the manufacturing sector and overall macroeconomic balance.

 

According to many experts, Kazakhstan already overcome the most painful after reaching the peak of the financial stabilization of structural economic reforms and has achieved notable success by implementing its own strategy and tactics of economic reforms.

 

n Kazakhstan, during the years of independence has completely changed the system of economic and social relations. Since its inception in 1994 the global economic reforms largely achieved financial stabilization, is nearing completion of the privatization of all state property, there has been a rise in production.

 

Conducting a rational policy of public spending provides a reduction in the budget deficit.

 

In turn, it is possible to establish a solid foundation to ensure the financial stability of the economy: real prerequisites are created to attract investments to promote moderate economic growth, recovery and restructuring the national economy and to improve on this basis, the quality of life.

 

One of the main sections of the government program to deepen the reform is to reform the management of financial resources of the country and its adaptation to market conditions. In this regard, in recent years, the government's efforts were aimed primarily at streamlining the budget expenditures, strengthening financial discipline of the real owner of the establishment and promotion of investment in the development of the economy, the improvement of intergovernmental relations and the formation of an effective mechanism for managing internal and external public debt strengthening and developing the market for government securities and other instruments of market infrastructure.

 

In recent years, from the national budget allocated significant funds to support domestic producers, sanitation and rehabilitation of state-owned enterprises, finance and social investment projects of small and medium businesses

 

However, as in other transition economies, the development of public sector over the past few years we have held back a reduction in government revenue as a result of severe crisis and high inflation in previous years, the deteriorating financial condition and fiscal discipline, especially in public enterprises , a weak tax administration and the growing complexities of the taxation of the private sector.

 

The main priorities of the government investment program are the development of social and industrial infrastructure, as well as intensification of the housing build. In list of investment projects include projects for the rehabilitation of the education system, development of road network, rehabilitation of irrigation systems and water systems. Provides funding for projects from the state budget and from funds provided by foreign donors.

 

Kazakhstan is currently quite perfect legal and institutional framework for effective engagement and use of foreign investment. We are now the most liberal tax regime compared to other CIS countries, a limited number of taxes - they are only 11 to 45, existing in the old tax law. Equally important is the fact that reforms in the country move forward. According to the World Bank, Kazakhstan was the initiator and leader among the CIS countries in implementing reforms.

 

In the near term fiscal policy of our state be achieved against a background of economic and financial stabilization. The overall improvement in the economic, social and investment environment will benefit the implementation of more effective options for fiscal policy.

 

As the foundations of financial stability we consider methods of dealing with inflation and exchange rate adjustment.

 

Money - a key element of a market economic system and the stability of the monetary system of the state - an indispensable condition for the normal functioning of the entire national economy. The disorder causes significant monetary inflation, undermining market mechanisms, the overall economy. Therefore, the primary method to fight inflation is to regulate the monetary circulation by the National Bank of the Republic of Kazakhstan. [6, 85]

 

A significant place in the state regulation of monetary circulation belongs to the National Bank due to its key position in the domestic monetary relations. His ability to control the growth of money supply are significant: indirect effects on the monetary base (the amount of cash balances in reserve accounts of commercial banks in the National Bank), through the provision of its resources, changes in the rate of interest, conduct of open market operations, refinancing, changes in the level of bank Liquidity - the direct way to achieve the desired results.

 

The economic and financial stabilization in the country associated with the search strategy and the elaboration of an effective monetary policy in modern conditions, which should be directed to limit and control monetary and credit issue. The policy of tight monetary restriction is associated with an increase in disparities in production and in circulation, rising prices and inflation.

 

In these circumstances, the Government and National Bank have chosen the basic directions of its policy on the stabilization period: reducing the rate of decline of production and inflation, strengthening the purchasing power of currency, etc. These areas are mainly based pa regulation of money in circulation with the help of an active monetary policy pursued by the government and National Bank of the Republic.

 

Its functions of control of money circulation National Bank may take several forms.

 

First, it is subject only to the emission of money. It should be noted that for effective implementation of the National Bank of its mission to eliminate the possibility of any pressure from the government or other government agencies to implement its policies, or conduct other transactions, as such interference may cause the uncontrolled increase in the liquidity of the banking system. But, of course, the activities of the National Bank of RK carried out in coordination with the Government and within the overall national policy.

 

Secondly, the National Bank carries out indirect control over the money supply through its impact on the interest rate - the rate of minimum required reserves on accounts with the National Bank for commercial banks, which is carried out by law, by the kind of deposits and lending institutions.

 

To understand this, you need to dwell on such terms as banking liquidity, ie the ability to turn into cash. The aggregate liquidity of the banking system is provided by the National Bank through the exchange of payment of claims to himself for long-term assets of commercial banks (in actual practice as collateral). Thus, the National Bank acts as a "lender of last resort situation." This operation allows commercial banks to holders of illiquid assets to meet the demands of depositors for funds.

 

The high level of liquidity at a low rate of interest, above all, expanding the demand for loans and government securities from the private sector, and also stimulates the growth of private spending on goods and services, causes an increase in the level of economic activity, that is putting pressure on prices, level of price inflation. Therefore, increasing the rate of minimum required reserves way to reduce the liquidity of the banking system, restricting credit transactions and, as a final result, causes a reduction in the rate of monetary growth.

 

To control the total liquidity National Bank in accordance with national policy objectives, except for changes in interest rates, has resorted to a number of other methods, carrying out direct financing of government spending, buying securities, conducting open market operations.

 

It should be noted, however, that the response to such measures will vary depending on the ratio of supply and demand for credit at the time of their implementation. The rate of interest rate also depends on the overall development of production, market price fluctuations, the state budget deficit, and even on many external factors. Therefore, such measures are indirect effects of producing tangible results only in the long run.