Financial Journal Vol.12 No.6 2020
Kirill L. Astapov, Rasul А. Musaev, Anton A. Malakhov
Evaluating the Effectiveness of the Budget Expenditure Policy, p. 9-24
The article discusses opportunities for improving fiscal policy in order to ensure macroeconomic stability and sustainable growth of the Russian economy. Budget expenditures have several key macroeconomic goals, the quality of which determines the effectiveness of budget spending policies. The authors developed a methodology that allows evaluating changes in the efficiency of budget expenditures based on a set of indicators. The estimates are based on the Russian Federation as the example, with special attention paid to the implementation of a balanced budget policy over the past decade. In Russia, significant progress has been made in ensuring macroeconomic stability through the introduction of flexible mechanisms for macroeconomic regulation (budget rules and floating exchange rates). However, when planning budget expenditures, additional attention should be paid to ensuring long-term economic growth and inclusive development, the structure of expenditures adjusted in accordance with these priorities. In the final part of the article, we consider changes in budget policy that have become a response to the crisis situation caused by the coronavirus pandemic. It is concluded that an increase in public debt may be appropriate in the current economic conditions in the event of a qualitative improvement in the budget spending policy.
Keywords: fiscal policy, fiscal stability, stabilization policy, long-term development, inclusive growth, fiscal stimulus, anti-crisis measures.
JEL: E61, E62, E63
For citation: Astapov K.L., Musaev R.А., Malakhov A.A. Evaluating the Effectiveness of the Budget Expenditure Policy. Financial Journal, 2020, vol. 12, no. 6, pp. 9–24 (In Russ.). DOI: 10.31107/2075-1990-2020-6-9-24.
Vladimir V. Vagin, Irina V. Petrova
The Role of Public Participation in Ensuring the Efficiency of Budget Expenditures, p. 25-38
The article is devoted to the relation between public participation and the effectiveness of budget expenditures. Studying the effectiveness of budget expenditures is one of the most relevant topics of public finance. At the same time, the question of whether civil participation has an impact on improving the efficiency of public spending is not often considered in the scientific literature. The authors analyze the development of the system of civil participation in the implementation of projects of state programs and national projects of the Russian Federation, and conclude that civil participation is important for improving the efficiency of budget expenditures. The results of citizens’ participation in the implementation of "Formation of a comfortable urban environment" federal project are chosen as the basis for the empirical analysis of this article. The authors attempt to determine the main approaches to forming indicators of the effectiveness of public participation in state programs and federal projects. The article also contains recommendations aimed at encouraging event organizers to engage citizens at the regional and local levels.
Keywords: civil participation, efficiency of budget expenditures, participatory budgeting, allocation efficiency, “Formation of a comfortable urban environment” federal project.
JEL: H72, H76, H79
For citation: Vagin V.V., Petrova I.V. The Role of Public Participation in Ensuring the Efficiency of Budget Expenditures. Financial Journal, 2020, vol. 12, no. 6, pp. 25–38 (In Russ.). DOI: 10.31107/2075-1990-2020-6-25-38.
Boris I. Alekhin
Vertical Fiscal Imbalance and Regional Economic Growth, p. 39-53
This study examines the impact of fiscal decentralization on regional economic growth using panel data for 82 subjects of the Russian Federation for the period 2005-2018. General theoretical framework was drawn from the second-generation theory of fiscal federalism, and panel data econometrics suggested the appropriate empirical model and estimation method. The pooled mean group method was used to estimate an autoregressive distributed lags model based on Solow-Swan theory of economic growth. The results indicate that vertical fiscal gap has a negative and significant long-term impact on regional economic growth while vertical fiscal imbalance has a positive and significant long-term effect. The study is consistent with the modern theory of fiscal federalism, W.E. Oates’ matching hypothesis and previous empirical work using Russian data. The study also found evidence of conditional convergence of regional economies.
Keywords: fiscal decentralization, regional economic growth, conditional convergence
JEL: E13, H71, H72, H77, C23
For citation: Alekhin B.I. Vertical Fiscal Imbalance and Regional Economic Growth. Financial Journal, 2020, vol. 12, no. 6, pp. 39–53 (In Russ.). DOI: 10.31107/2075-1990-2020-6-39-53.
Igor Yu. Arlashkin
Intergovernmental Fiscal Instruments for Stimulating Regional Economic Growth in Russia, p. 54-68
The article examines the instruments used in intergovernmental fiscal relations in order to promote economic growth of the regions of the Russian Federation. The task of stimulating regional economic growth is relevant in the need for the Strategy of Spatial Development of the Russian Federation until 2025 to be implemented. The article deals with various instruments of tax decentralization as well as three main types of fiscal transfers: “grants” (primarily equalization or balancing transfers), “subsidies” (earmarked co-funding transfers), and “other intergovernmental transfers” (other earmarked transfers). All these instruments are assessed from the standpoint of stimulating economic growth with special attention being paid to the tools used by regional governments to promote local economic growth. The article summarizes the results of the main econometric studies on the topic. As a result of the present study, it is shown that the main instruments for stimulating regional economic growth are earmarked transfers (primarily capital transfers) and decentralization of taxes on income (primarily corporate income tax). At the same time, since 2015 “other intergovernmental transfers” have been playing a more significant role in stimulating economic growth than “subsidies”, which is associated with an increase in the equalizing effect of the latter. Decentralization of property taxes has most likely not had a significant impact on regional economic growth, and the negative effect of equalizing transfers (“grants”) is smoothed out by special clauses built into the methodology for their distribution.
Keywords: regional economic growth, tax decentralization, fiscal decentralization, intergovernmental relations, intergovernmental transfers, fiscal equalization, fiscal grants.
JEL: H71, H77
For citation: Arlashkin I.Yu. Intergovernmental Fiscal Instruments for Stimulating Regional Economic Growth in Russia. Financial Journal, 2020, vol. 12, no. 6, pp. 54–68 (In Russ.). DOI: 10.31107/2075-1990-2020-6-54-68.
Аnna A. Mikhaylova, Evgeny N. Timushev
Creditworthiness of Russian Regions: What Needs to Be Considered, p. 69-86
The paper explores the main factors that affect the creditworthiness of Russian regions. Knowledge of credit rating factors can help manage debt sustainability more effectively, implement a countercyclical policy, diversify debt instruments, and strengthen the fiscal sustainability of the Russian budgetary system. To determine the main factors, the credit ratings assigned by ACRA credit rating agency are analyzed. A set of economic and fiscal indicators is formed based on the analysis of press releases, the critical values are calculated, and their relationship with the current criteria of assessing the quality of regional financial management is analyzed. We found that fiscal indicators play the primary role in rating, but the institutional setting (for example, the amount of mandatory expenditures) is much less considered. The main factors of a credit rating are the share of tax and non-tax revenues in total revenues, the share of capital expenditures in total expenditures, and the amount of the regional debt. The approximate values of revenues and debt that are most likely to change a region's rating are calculated. The current criteria of the quality of regional financial management are valid due to the signs of their direct correlation to the credit rating and its factors.
Keywords: credit rating, debt sustainability, financial quality criteria, own revenues, capital expenditures, debt, ordinary least squares, multinomial logit regression.
JEL: H74, H77
Acknowledgements: The article has been prepared within the framework of the study "Theoretical foundations for assessing regions' budgetary sustainability and its application in the public administration system", carried out as part of the implementation of the 2020 RANEPA state task.
For citation: Mikhaylova A.A., Timushev E.N. Creditworthiness of Russian Regions: What Needs to Be Considered. Financial Journal, 2020, vol. 12, no. 6, pp. 69–86 (In Russ.). DOI: 10.31107/2075-1990-2020-6-69-86.
Makar I. Kudelich
Financial Participation of Public Partners in Public-Private Partnership, p. 87-99
This article attempts to identify and analyze the problems of forms of financial participation of public partners in PPP agreements, which may be solved by legislation improvement. The article presents a comparative analysis of Russian and international practice and legislation in the field of types and procedures for choosing forms of state financial participation in PPP projects. Conclusions are made about the absence of formal criteria for choosing the form of financial participation of a public partner in the PPP agreement and the rules for determining their volume, about the uncertainty and shortcomings of legislative regulation of “financial provision” in relation to a public partner, about the refusal from using the provision of debt financing and budget investments in share capital of project companies, on the establishment of high security budgetary requirements for regressive rights of the state in relation to the principal, which make the use of state (municipal) guarantees unclaimed in Russian practice of PPP projects.
Keywords: Public-Private Partnership, Public Partner, Budget, State Financial Participation, Financial Support, Subsidies, State and Municipal Guarantees.
For citation: Kudelich M.I. Financial Participation of Public Partners in Public-Private Partnership. Financial Journal, 2020, vol. 12, no. 6, pp. 87–99 (In Russ.). DOI: 10.31107/2075-1990-2020-6-87-99.
Viktor N. Ageyev, Andrey V. Vlasov
Potential Applications of Digital Financial Asets, p. 100-112
The purpose of the article is to analyze the future state of legal issues connected to the use of digital assets after the adoption of the Federal Law “On digital financial assets, digital currency ...” in the Russian Federation. Results: The main areas of application are highlighted for digital financial assets in the form of shares on blockchain and digital bills of exchange. The authors conclude that the new Law introduces significant restrictions, but at the same time opens up certain opportunities for business development in operations with digital financial assets. It is seen that the terminology used in the Law does not always correspond to the concepts and standards established in international legal and business practice. Practical significance: Recommendations made in this article may be useful in practice for the exchange operator of digital financial assets, the operator of the information system, and other subjects working in the innovative infrastructure when planning activities in the field of regulation of the Law and in dealing directly with digital financial assets. To harmonize activities with digital financial assets, the legislator and the regulator, represented by the Bank of Russia, can also use the practice-oriented approaches described by the authors.
Keywords: digital financial assets, digital currency, digital rights, information system, distributed ledger, blockchain, cryptocurrency, digital financial assets exchange operator, digital bills of exchange
JEL: E59, F31, G23, K19, K22, K33
Acknowledgements: The authors thank the experts of Technical Committee № 159 “Hardware and software of distributed ledger and blockchain technologies” and the participants of the webinar “New law of the Russian Federation on digital financial assets and digital currency” for their comments and discussion of the provisions set out in this article.
For citation: Ageyev V.N., Vlasov A.V. Potential Applications of Digital Financial Asets. Financial Journal, 2020, vol. 12, no. 6, pp. 100–112 (In Russ.). DOI: 10.31107/2075-1990-2020-6-100-112.
Olga V. Bogacheva, Oleg V. Smorodinov
Disbalance in Pay Structure of Employees in Federal Budgetary Institutions, p. 113-125
Among other things, the introduction of new pay systems in Russian federal institutions (2008) resulted in rapid growth of the variable part of wages. In the early 2010s, in numerous institutions this figure exceeded 50 %, and it still remains at an unreasonably high level. It is known, from the history of labor relations, that violation of balance between fixed (salary) and variable parts of wages leads to a reduction in motivation levels of employees and, as a consequence, to deterioration in productivity indicators and labor quality. In OECD countries, at the legislative level, the concepts of base and full rates of pay are introduced, and the number and size of incentive and compensation payments are optimized. The rates of base pay are regularly reviewed, taking into account changes in consumer prices and the cost of living. This practice allows a reasonable balance to be maintained between fixed and variable parts of wages. At the level of institutions, competency standards are being developed that ensure optimal differentiation in the size of the fixed part of wages and minimize the possibility of making incentive payments to employees simply for the performance of their job duties. The purpose of the article is to develop proposals for solving the problem of imbalance in the structure of wages of employees at Russian federal institutions, based on modern foreign practice in this area.
Keywords: new pay systems, fixed and variable pay, base pay, incentive rewards, standards of professional competencies.
JEL: J30, J31, J38
For citation: Bogacheva O.V., Smorodinov O.V. Disbalance in Pay Structure of Employees in Federal Budgetary Institutions. Financial Journal, 2020, vol. 12, no. 6, pp. 113–125 (In Russ.). DOI: 10.31107/2075-1990-2020-6-113-125.
Ekaterina A. Panova
The Role of Trade Credit in Activities of Small and Medium-Sized Enterprises, p. 126-135
Trade credit has a special meaning for small and medium-sized enterprises (SMEs). When they act as a supplier, it allows them to increase sales and cash flows, and helps establish and maintain permanent relationships with clients. Deferred payment provision is a tool for non-price competition, giving a client time to make sure of product quality. Trade credit as a financial source is an important alternative to bank lending. The article is devoted to studying the determinants of accounts payable in Russian industrial SMEs. It is based on the financial indicators calculated using the SMEs’ accounting statements for the period 2010–2018, published by Rosstat. The statistical data analysis has led to the conclusion that accounts payable are the main borrowed financial source for Russian industrial SMEs. The results of the regression analysis demonstrate a direct dependence of the accounts payable amount on sales growth and a reverse dependence of the former on the liquidity both in small and medium enterprises. Small businesses are also characterized by a negative relationship between return on sales and the accounts payable amount.
Keywords: small and medium-sized enterprises (SMEs), trade credit, accounts payable, borrowed funds, capital structure, regression analysis.
JEL: G32, L14, L60
For citation: Panova E.A. The Role of Trade Credit in Activities of Small and Medium-Sized Enterprises. Financial Journal, 2020, vol. 12, no. 6, pp. 126–135 (In Russ.). DOI: 10.31107/2075-1990-2020-6-126-135.