The process of public debt management is a set of actions related to the preparation for the issuance and placement of state debt obligations, regulation of the government valuable papers, service and repayment of public debt, the provision of loans and guarantees.
Public debt management covers methods of both direct (institutional, technical, economic proper) and indirect regulation (impact on macro- or microeconomic levers of national economy management).
Public debt management in a broad sense refers to the formation of one of the directions of the state's economic policy related to its activities as a borrower. This process includes: formation of the state debt policy; determination of the main directions and goals of influencing micro- and macroeconomic indicators; establishing the possibility and expediency of financing nationwide programs from the public debt and other issues related to the strategic management of public debt; delimitation of debt.
Debt management in the narrow sense refers to a set of activities related to the issuance and placement of government debt obligations, servicing, repayment and refinancing of government debt, as well as the regulation of the government securities market.
The process of public debt management, both in a broad and narrow sense, requires a systematic approach from the state and determines the multifaceted nature of the regulation of existing debt. In turn, systematic debt management is impossible without a clear classification of debt.
Servicing the public debt is associated with the redistribution of income in the country. To repay the debt, the assets available to the state can be used by privatizing state property. Another approach is to increase budget revenues by expanding tax base. The burden of care is shifted to taxpayers. Central Bank loans can become another source of debt repayment. However, in the conditions of the country's main bank independent of the government, it is very difficult to use the issue to reduce debt. Servicing external debt actually means the legal export of capital, which is reflected in a separate line in balance of payments, that is, it leads to the redistribution of part of the national income through the fiscal and monetary system in the interests of non-residents.
Financing the budget deficit through internal sources also does not always contribute to the development national economy. An increase in domestic debt means an increase in the share of government borrowings in the financial market. This may lead to competition for resources in the domestic financial market, an increase in interest rates and a decrease in the capitalization of the private securities market. In addition, investments are being reduced, as they will remain unrealized investment projects with a return not exceeding the interest paid on government securities, together with a risk premium.
The mechanism of regulation of public debt in market conditions is united by the concept of "restructuring". For the purposes of this Code, debt restructuring means the termination of debt obligations constituting the state or municipal debt, with the replacement of these debt obligations with other debt obligations, providing for other conditions for servicing and repaying obligations.
Debt restructuring is carried out using various tools: refinancing, conversion, debt buyback, consolidation, unification, cancellation of public debt, securitization.
Refinancing is one of the main methods of debt repayment. Refinancing is the repayment of old debt (and interest on it) by issuing a new loan, assuming new obligations. There are three ways to refinance public debt: replacing obligations (with the consent of their holders) with expired repayments for new ones, equivalent in amount to those repaid; early replacement of one obligation for another with more long periods repayments; placement (sale) of new bonds and redemption of expired bonds at the expense of proceeds. Another way is debt redemption. In cases where debtor governments may have significant financial reserves, the borrower can be allowed to buy its own debts on its own, thus reducing the overall stock of public debt. However, world practice has a negative attitude towards early redemption of debts. This is due to the fact that, firstly, the worst borrowers, whose debts are traded at the largest discount, benefit from this, and, secondly, the principle of equality of creditors is violated.
The next way is conversion. Debt conversion is the conversion of non-interest bearing debt (or overly burdensome debt) into new debt that improves the borrower's condition, either financially or prospectively. Technically, such transactions do not result in a restructuring of existing liabilities or new borrowings.
Another way is debt redemption. In cases where debtor governments may have significant financial reserves, the borrower can be allowed to buy its own debts on its own, thus reducing the overall stock of public debt. However, world practice has a negative attitude towards early redemption of debts. This is due to the fact that, firstly, the worst borrowers, whose debts are traded at the largest discount, benefit from this, and, secondly, the principle of equality of creditors is violated.
Consolidation is a change in the term of already issued loans towards an increase (as a rule) or a decrease. It involves facilitating the terms of debt repayment in the form of deferred payments and repayment. It is possible to combine consolidation with conversion.
Unification is the combination of several loans into one, when bonds of previously issued loans are exchanged for bonds of a new loan. The goal is to reduce the number of types of securities circulating simultaneously, which simplifies work and reduces the state's debt service costs. Unification government loans usually carried out along with the consolidation, but can be carried out outside of it.
Cancellation of the public debt means the complete refusal of the state from its debt. However, this option is considered unacceptable. The authority of the state depends on its recognition of its debts and ensuring their full repayment on time.
Debt securitization is the restructuring of public debt into new marketable debt instruments money market including loan capital. Among the main types of securities circulating on international financial markets, two groups are distinguished: foreign bonds - issued by non-residents on domestic market foreign state, and Eurobonds - medium- and long-term obligations in Eurocurrencies, issued on European market among foreign investors.
Thus, among the problems of modern budget policy the problem of public debt occupies a special place. It is one of the main problems of the Russian economy, which has a direct impact both on the economic growth rates of the country as a whole and on the directions of financial and budgetary policy.
FEDERAL AGENCY FOR EDUCATION
State educational institution higher vocational education
"Pacific State University»
Department of Finance, Credit and accounting
Specialty 080105.65 "Finance and Credit"
Coursework in Finance
Subject "Finance"
On the topic: "Methods of public debt management in the Russian Federation"
Fulfilled: 2nd year student
groups Fk-91u
No. s/k 090420002
Surname Grishchenko
Name Andrey
Patronymic Sergeevich
Checked by: Kaminskaya
Name Tatyana
Middle name Evgenievna
Khabarovsk 2010
Content
Introduction 3
1 Essence and classification of public debt 5
1.1 The essence of public debt 5
1.2 Classification of public debt 6
2 State internal and external debt 11
2.1 domestic debt 11
2.2 External debt 15
3. Maintenance and methods of public debt management 23
3.1 Methods of public debt management 23
3.2 Servicing the public debt of the Russian Federation 30
Conclusion 35
References 37
Introduction
Public debt plays a significant and multifaceted role in the macroeconomic system of any state. This is explained by the fact that relations regarding the formation, servicing and repayment of public debt have a significant impact on the state of public finance, money circulation, investment climate, consumption structure and development of international cooperation between states. In most analytical works in this regard, three key factors: high share of government spending; inaccurate financial account of the budget deficit, resulting in and to its double underestimation (this is caused by: firstly, the differences between the Russian methodology for calculating the budget deficit and the methodology used by the IMF; secondly, the accumulation of current budget debt in the process of budget execution.); high yield of government securities. Thus, the relevance of this work lies in the fact that the amount of public debt (especially in relation to GDP) is important indicator development of the country's economy, since the servicing of public debt requires funds from the budget and thus dictates the need to reduce spending, usually for social needs, which affects standard of living population. Therefore, competent management of the size and structure of public debt is an important socio-economic task.
The budgetary, debt and monetary policy of the state are inextricably linked: public debt affects economic growth, money circulation, inflation, refinancing rates, employment, investment in the country's economy as a whole and real sector economy, leading to a reduction investment resources in the economy, disruption of reproductive processes, lower economic growth. Sooner or later, borrowing goes beyond the capacity of the state, which makes it necessary to reduce spending on social, investment and other purposes not related to debt repayment and servicing. Unreasonable budgetary, monetary and exchange rate policy Governments are causing uncertainty in financial markets about the investment climate, prompting investors to demand higher risk premiums. This is especially true for countries developing and shaping securities markets, where borrowers and lenders may refrain from making long-term commitments, which may adversely affect the development of financial markets and economic growth. Excessive growth of public debt poses a threat to economic security country and stability budget system.
The purpose of this course work is to study theoretical foundations public debt management. Based on the goal, the objectives of the work are: to study the history, role and significance of public debt in the Russian Federation, its types, as well as the problems of public debt management.
The work uses the methods of statistical observation and analysis, deconstruction, the axiomatic method and methods of scientific knowledge, namely: classification, generalization, description, deduction, induction.
The theoretical basis of the study in the course work was the works of domestic economists Voronin Yu. S., Chumachenko A. A., Lebedev A. I., Shenaev V. N., as well as the laws and legislative acts, Budget Code of the Russian Federation, Federal Law "On Amendments to the Federal Law "On budget classification Russian Federation, Civil Code of the Russian Federation.
1 ESSENCE AND CLASSIFICATION OF PUBLIC DEBT
1.1 The essence of public debt
It is generally accepted that public debt is overall size government debt to holders of government securities, equal to the sum of past budget deficits minus budget surpluses. To finance the budget deficit, the state resorts to external and internal borrowing, as a result of which the public debt is formed. The increase in debt occurs as a result of the capitalization of interest on previously received loans. In addition, it increases due to obligations accepted by the state for execution, but for various reasons, not financed on time.
Under present conditions, public debt has moved to the center economic problems state, which requires the closest attention to this economic category and problems associated with it. Obviously, the state can and must borrow on normal, natural and reasonable bases and conditions. Normal debt is a real evidence of confidence in the state on the part of creditors, both individuals and legal entities. In practice, in an efficient, normally developing, stable economy, public debt is not a key problem in the development and life of society. As a rule, public debt increases at the stages of active economic growth, bearing in mind that a developing economy and modernized production require certain investments, including government ones.
Chronic deficit of the state budget and high public debt are characteristic at the present stage for the majority of industrial developed countries. The state, widely using its capabilities to attract additional financial resources for timely financing budget spending, is gradually accumulating debt to both domestic and foreign creditors. This leads to an increase in public debt - internal and external.
AT modern conditions common for many countries the cause of budget deficits and the associated increase in public debt is considered economic policy, which leads to an excessively high level of public financial obligations.
1.2 Public debt classification
There are several classifications of public debt, depending on the feature underlying this classification.
The public debt is divided into capital and current.
Capital public debt- the entire amount of issued and outstanding debt obligations of the state, including accrued interest, which must be paid on these obligations. current debt includes the state's expenses for paying income to creditors and repaying liabilities that have come due.
According to the current legislation, it is necessary to allocate state and public debt. 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, local authorities.
The budgets of many states are in deficit. If the government strives to pass a deficit-free budget every year, this can exacerbate the cyclical fluctuations of the economy by reducing important spending and unnecessarily raising taxes. Therefore, when regulating the deficit, it is important to take into account not only the current tasks of budget policy, but also its long-term priorities. The state, widely using its opportunities to attract additional financial resources in order to timely finance budget expenditures, gradually accumulates debt to both domestic and foreign creditors. This leads to an increase in public debt - internal and external.
Depending on the creditor, public debt can be internal (debt to citizens and enterprises of the country) and external (debt to foreign citizens and enterprises).
Public debt can also be classified by type of debt, for example:
Target deposits and checks;
Government short-term zero-coupon bonds;
State guarantees;
Usually, classification by types of debt obligations is resorted to when determining the structure of public debt. If we talk about the structure of the state debt of the Russian Federation, then it is constantly changing. Every year, when the state budget is approved, a program of state external and internal borrowing is adopted, which leads to an increase in debt obligations. But annually, the amounts of repayment of obligations on internal and external borrowings are also included in the budget.
The debt obligations of the Russian Federation may exist in the form of:
Credit agreements and contracts concluded on behalf of the Russian Federation, as a borrower, with credit institutions, foreign states and international financial organizations;
Government loans made by issuing securities on behalf of the Russian Federation;
Contracts and agreements on the receipt by the Russian Federation of budget loans from the budgets of other levels of the budget system of the Russian Federation;
Agreements on the provision by the Russian Federation state guarantees;
Agreements and agreements, including international ones, concluded on behalf of the Russian Federation, on the prolongation and restructuring of the debt obligations of the Russian Federation of previous years.
The debt obligations of the Russian Federation may be short-term (up to one year), medium-term (over one year up to five years) and long-term (over five years up to 30 years).
The volume of the state internal debt of the Russian Federation includes:
Principal nominal amount of debt on government securities of the Russian Federation;
The volume of principal debt on loans received by the Russian Federation;
The volume of principal debt on budget loans received by the Russian Federation from budgets of other levels;
The volume of obligations under state guarantees provided by the Russian Federation.
The volume of the state external debt of the Russian Federation includes:
The volume of obligations under state guarantees provided by the Russian Federation;
The volume of principal debt on loans received by the Russian Federation from governments of foreign states, credit institutions, firms and international financial institutions.
According to the structure, the state debt of the Russian Federation consists of several groups of debt obligations:
· debts to GKO-OFZ holders;
· debts of the Ministry of Finance to the Central Bank on loans to finance the budget deficit;
· the debt that appeared as a result of the obligation assumed by the state to restore the savings of citizens;
foreign debt former USSR taken over by the Russian Federation;
the newly arisen debt of the Russian Federation to foreign states, international organizations and firms.
The classification of internal and external public debt is defined in the Budget Classification of the Russian Federation (Appendices 9 and 10 to the Federal Law "On the Budget Classification of the Russian Federation"). Among the internal debts of the Russian Federation can be distinguished:
Purpose loan 1990;
Target deposits and checks for cars;
State internal loan of the Russian Federation in 1991;
Russian domestic winning loan 1992;
Government short-term zero-coupon bonds (GKO);
Debt on centralized loans and accrued interest of organizations of the agro-industrial complex and organizations that import products to the regions of the Far North, reissued into a promissory note of the Ministry of Finance of the Russian Federation;
State guarantees;
Debt to finance the costs of the formation of the mobilization reserve, reissued into a promissory note of the Ministry of Finance of the Russian Federation;
Federal loan bonds with variable coupon income(OFZ-PK);
Federal loan bonds with a constant coupon income (OFZ-PD), and other obligations.
a) The state external debt of the Russian Federation (including obligations of the former USSR assumed by the Russian Federation):
On loans from foreign governments received by the federal budget, including related loans received under the state guarantee of the Russian Federation;
On loans from foreign commercial banks and firms;
On loans from international financial organizations;
Giving the Russian Federation the right to acquire obligations in the regime of internal and external debt, the Budget Code establishes the procedure for determining the quantitative limits of such obligations and the procedure for their implementation.
For the federal level of state debt obligations, the Budget Code establishes the upper limit of the state internal debt, the upper limit of the state external debt and separately the limit of state external borrowings for the next fiscal year. The indicated marginal indicators of debt obligations are set for all levels of the budget system. At the federal level, specific figures for the limiting volumes of the state internal and external debt, as well as separately limiting indicators for external borrowing, are established by the federal law on the budget for another year, in which the indicators of debt obligations are subject to specification by the forms of security.
The main methodological document on the basis of which budgets are compiled and executed is the budget classification. Budget classification is a grouping of incomes and expenditures of budgets of all levels, as well as sources of covering the deficit of these budgets with the assignment of grouping codes to classification objects. This classification is the same for the budgets of all levels and is approved by federal law. It is important because it is used:
for the preparation, approval and execution of the budget;
control over the allocation and use of budgetary funds;
· ensuring comparability of indicators of budgets of all levels;
drawing up consolidated budgets all levels.
2 PUBLIC DOMESTIC AND EXTERNAL DEBT
2.1 Internal debt of the state
The formation of the modern structure of public debt began in the second half of the 20th century.
Domestic public debt of the USSR since 1970. to 1990 increased by 13.1 times. At the end of 1988 when discussing the draft budget for 1989. it was about finding funds to cover its deficit in the amount of about 100 billion rubles. At the end of 1989 the state budget deficit reached 120 billion rubles. in the 1990 budget. it was planned to reduce it to 60 billion rubles. and in 1991. - up to 27 billion rubles. The volume of the state internal debt of the USSR was made public for the first time, amounting at the end of 1989. about 400 billion rubles.
In accordance with the Law “On the State Internal Debt of the Russian Federation”, the state internal debt of the Russian Federation is debentures Government of the Russian Federation expressed in the currency of the Russian Federation.
In practice, the state internal debt of the Russian Federation consists of:
Loans received by the Government RF;
Government loans;
Other debt obligations guaranteed by the Government of the Russian Federation.
Domestic debt covers debts of previous years, newly arisen debts and debt obligations of the former USSR in the part assumed by the Russian Federation.
It may take the form of loans, government loans made through the issuance of securities, other debt obligations guaranteed by the Government of the Russian Federation.
To domestic debt , usually include loans received from national banks, as well as government loans denominated in national currency and placed on the national market.
In addition to government loans, domestic government debt includes government guarantees . The government can guarantee bonded loans of local authorities and governments issued with the aim of mobilizing financial resources for capital investment, bonded loans of private corporations, specialized credit institutions financing the construction of public housing and social infrastructure. Loans are guaranteed in order to attract investors to invest in guaranteed securities in connection with an increase in their reliability. The amounts of issued guarantees are included in domestic public debt, however, they represent public debt only potentially, and not actually (in case the borrower is unable to repay its obligations). The resources attracted through guaranteed loans are directed to the implementation of specific investment projects.
As international practice shows, domestic public debt is the main source of covering the budget deficit, government borrowing in the domestic financial market has been widely developed in most foreign countries with developed market economies.
Table 1 shows the structure of the domestic public debt of the Russian Federation in 2006.
Table 1 - The structure of the domestic public debt of the Russian Federation
| Code No. |
The volume of domestic public debt as of 01.01.2005 |
The volume of domestic public debt as of 01.01.2006 |
|
| Target Loan 1990 |
|||
| Target deposits and checks for cars |
|||
| State domestic loan of the Russian Federation 1991 |
|||
| Russian domestic winning loan 1992 |
|||
| Treasury bills |
|||
| Agribusiness debt converted into a promissory note of the Ministry of Finance of the Russian Federation |
|||
| Government short-term zero-coupon bonds (GKO) |
|||
| Debt on centralized loans and accrued interest of agribusiness organizations and organizations that import products to the Far North, reissued into a promissory note of the Ministry of Finance of the Russian Federation |
|||
| State guarantees |
|||
| Indebtedness of the enterprises of the textile industry of the Ivanovo region on unpaid interest for the use of centralized loans, reissued into a promissory note of the Ministry of Finance of the Russian Federation |
|||
| Debt to finance the costs of the formation of the mobilization reserve, reissued into a promissory note of the Ministry of Finance of the Russian Federation |
|||
| government savings loan |
|||
| State internal target loan of the Russian Federation for repayment of commodity obligations |
|||
| Federal loan bonds with constant coupon income (OFZ-PD) |
|||
| Indexation of household deposits |
|||
| Bonds of state non-market loans (OGNZ) |
|||
| Debt on centralized loans and interest on them of organizations of the agro-industrial complex of the Chelyabinsk region and JSC "Chirkeygesstroy", reissued into a promissory note of the Ministry of Finance of the Russian Federation |
|||
| Federal loan bonds with fixed coupon income (OFZ-FK) |
|||
| Credit agreements and agreements concluded on behalf of the Russian Federation |
|||
| Other government securities of the Russian Federation |
|||
| Government Savings Bonds (GSS) |
|||
| Federal loan bonds with debt amortization (OFZ-AD) |
|||
| Total: |
843 231 602,0 |
995 839 991,8 |
|
The internal debt of the state, which is initially estimated as less painful for the country's economy, also continues to grow. A sharp jump in its growth occurred in the fall of 2008, when the crisis came close to Russia. In October 2008 alone, domestic public debt, denominated in government securities, increased by almost 8 billion rubles and amounted to 1 trillion. 378.500 billion rubles. As of February 1, 2009, this amount has already increased to 1 trillion. 423.268 billion rubles. In addition, in 2009 it increased by another 300 billion rubles. These financial resources will act as state guarantees for loans received strategically. important organizations and enterprises of the military-industrial complex (100 billion rubles) and enterprises selected and classified by the government among the most significant for the country's economy (200 billion rubles).
There is an increase in public debt an integral part of overcoming the consequences of the financial crisis. In the face of declining effective demand and purchasing power citizens inaction of the state can lead to a significant decline in the country's economy. Active government actions make it possible to overcome the crisis and avoid the state of economic depression, in comparison with which the growth of public debt is a relatively small price.
Russia's domestic debt denominated in government securities increased by 29.3 percent over the past year and amounted to 1.837 trillion rubles as of January 1, 2010 against 1.421 trillion rubles as of January 1, 2009. This was announced today by the Ministry of Finance of the Russian Federation. According to the agency, the growth of domestic debt has resumed since June after a three-month decline in February-April. At the beginning of 2010, most of the domestic debt was federal loan bonds. Of these, 38.45 percent, or 706.372 billion rubles, accounted for OFZ-PD and 47 percent, or 863.377 billion rubles, for OFZ-AD. Liabilities in government savings bonds GSO-PPS and GSO-FPS amounted to 135.415 billion rubles and 132 billion rubles, respectively.
Table 2 - The upper limit and the draft structure of the state internal debt of the Russian Federation as of the end of 2011, 2012 and 2013 billion rubles.
The analysis shows that in 2011-2013 the share of debt on government securities denominated in the currency of the Russian Federation will increase by 35.5% due to an increase in borrowings in international financial markets, as well as the share of debt on guarantees of the Russian Federation by 27.2% due to the provision these guarantees to support the export of Russian industrial products. The state internal debt of the Russian Federation will increase by 3677.9 billion rubles.
2.2 External debt of the state
The first external loan in the history of Russia was made by Catherine II in 1769 in Holland at 5% per annum. The Dutch were the main creditors of Russia in the second half of the XVIII - early XIX centuries By 1815, the debt to Holland exceeded 100 million guilders, and the finances upset by the war did not allow paying off creditors. During these years, the first restructuring of the country's external debt in the history of Russia took place. The debt was finally repaid only after 76 years - in 1891. In the 1950s. external borrowings were used within narrow limits: in the form of short-term and medium-term loans to finance imports in relatively favorable conditions for the growth of the country's economic potential, and the mitigation of international tension.
In the 1960s when paying for imported equipment for large facilities, direct long-term loans from Western banks were actively attracted.
In 1975-1985. the external debt of the USSR increased by 2 times, while in the shorter period of 1986-1992. - 2.5 times. In general, after 1985 the growth rate of debt doubled and amounted to 41.7% on average per year (with a fall in GDP).
Table 3 - The structure of the external debt of the USSR by type of debt (in billion dollars)
The collapse of the USSR dictated the need for a reasonable distribution of the state debt of the USSR. The result of the first stage of this work was the determination of the estimated shares of the former republics of the USSR according to a number of parameters (debt, assets, national income, export, import, population).
Approximately $81 billion should have been distributed according to estimated shares. Of this, Russia accounted for about $49 billion. However, this project of distributing external debt between the republics was not implemented. The "seven" joined the division of the debt. Not without pressure from the EU. As a result, on October 28, 1991, on behalf of the Union and eight union republics, the so-called Memorandum of Understanding was signed in Moscow, which in the EU was considered as a precondition for granting Russia financial assistance, because in the EU in the future it was seen as the assignee of the debt of the USSR. In return for Russia's "compliance", she was promised a deferral of payments on the external debt of the USSR. The document determined that the union republics assumed "joint and several responsibility" for the external debt of the USSR, that is, that all republics were responsible for repaying the entire debt of the USSR. If one of them does not pay, the rest must do it for her. If the republics do not pay, then Russia alone had to service the entire union debt.
Among the external debts of the Russian Federation can be identified:
a) The state external debt of the Russian Federation (including obligations of the former USSR assumed by the Russian Federation): on loans from governments of foreign states received by the federal budget, including related loans received under the state guarantee of the Russian Federation;
On loans from foreign commercial banks and firms;
On loans from international financial organizations;
Government securities of the Russian Federation specified in foreign currency;
On loans from Vnesheconombank provided to the Ministry of Finance of the Russian Federation at the expense of the Central Bank of the Russian Federation;
b) External debt of a constituent entity of the Russian Federation, including:
On loans from foreign commercial banks and firms;
On loans from international financial organizations;
Government securities of the constituent entities of the Russian Federation indicated in foreign currency.
Russia's external debt - obligations arising in foreign currency (Article 6 Budget Code RF).
In absolute terms, the Russian external public debt as of January 1, 2010 amounted to 37.6 billion dollars, which is one of the lowest in the world. In relative terms, the Russian external public debt is 3% of the country's GDP. As of April 2010, the volume of external debt decreased and amounted to $31.1 billion or 2.5% of GDP. At the same time, this month, after a twelve-year break, Russia again returned to borrowing on the external market, placing two tranches of Eurobonds worth $5.5 billion.
For comparison, after the 1998 crisis, Russia's external debt amounted to 146.4% of GDP. According to the adopted three-year budget for the period 2008-2010, the public debt was to be kept within 2.5% of GDP. However, due to the fall in oil prices, Russia's budget has become a deficit, and already in 2010, the deficit is planned to be covered by new loans. In the worst case, Russia's foreign debt could grow by $75 billion in the next three years. For comparison, in the countries of the Caucasus, the debt is several times less. For example, Georgia has a debt of 3.8 billion dollars, Armenia - 4.4 billion dollars, Azerbaijan - 2.5 billion dollars.
| Name |
Amount, mln USD |
Amount, EUR million |
| Debt to official creditors - members of the Paris Club |
||
| Debt to official creditors - not members of the Paris Club |
||
| Debts to former CMEA countries |
||
| Commercial debt of the former USSR |
||
| Debt to international financial organizations |
||
| Debt on Eurobond loans |
||
| OVGVZ debt (domestic government bonds) currency loan) |
||
| Debt under guarantees of the Russian Federation in foreign currency |
||
| Public external debt of the Russian Federation (including obligations of the former USSR assumed by the Russian Federation) |
In 2004-2008, on behalf of the then President V.V. Putin, given the growth in Russia's income from oil exports, associated with the rapid growth of world prices for this raw material, the public debt was rapidly declining. As a result of lengthy negotiations, by the end of August 2006, Russia had made early payments of $22.5 billion on Paris Club loans, after which its public debt amounted to $53 billion (9% of GDP).
The peak of the Russian public debt came in 1998 (146.4% of GDP). As of January 1, 2000, the external debt reached 158.7 billion dollars (and the total external and internal public debt was 84% of GDP).
For comparison, according to the IMF for 2009, the UK public debt was 68.2% of GDP, Germany - 72.5%, France - 77.4%, Canada - 81.6%, USA - 83.2%, Italy - 115.8%, Japan - 217.6%
According to the Central Bank of the Russian Federation, Russia's total external debt (private and federal sector) as of January 1, 2010 amounted to 471.6 billion US dollars. In relative terms, the external debt of the private and federal sectors is 38.2% of Russia's GDP.
Total payments in 2009 should amount to $141.0 billion (of which only $5 billion is for organs government controlled), 2010 - $91.3 billion ($4.6 billion).
The volume of the state external debt of the Russian Federation as of February 1, 2010 amounted to 37 billion 523.2 million dollars or 26 billion 890.7 million euros against 37 billion 641 million dollars or 26 billion 237.9 million euros as of January 1, 2010. This is stated in the message of the Ministry of Finance of the Russian Federation.
Thus, the volume of Russia's external debt increased over the month by $117.8 million, or 0.3 percent. In euro terms, the external debt increased over the month by 652.8 million euros, or 2.5 percent.
Table 5 - The upper limit of the state external debt of the Russian Federation as of the end of 2011, 2012 and 2013 by type of debt billion US dollars
| Type of debt |
|||
| Loans of foreign states, including targeted foreign loans (borrowings), international financial organizations, other subjects of international law, foreign legal entities in foreign currency |
|||
| Government securities of the Russian Federation, the nominal value of which is indicated in foreign currency |
|||
| State guarantees of the Russian Federation in foreign currency |
Table 6 - The upper limit of the state external debt of the Russian Federation as of the end of 2011, 2012 and 2013
broken down by individual states (billion US dollars)
Name |
|||
| Government external debt of the Russian Federation, total |
|||
| Loans from foreign states, including targeted foreign loans (borrowings) |
|||
Finland |
|||
Germany |
|||
| Japan |
|||
| Egypt |
|||
| Kuwait |
|||
| Malta |
|||
| Thailand |
|||
| Turkey |
|||
| Uruguay |
|||
| China |
|||
North Korea |
|||
| Romania |
|||
| Slovakia |
|||
| Czech |
|||
| Countries of the former Yugoslavia |
|||
| Loans to foreign legal entities |
|||
| debt to creditors of the London Club |
|||
| Loans from international financial organizations |
|||
The upper limit of the state external debt of the Russian Federation (hereinafter - external debt) as of January 1, 2012 is set by the draft law in the amount of 55.6 billion US dollars, as of January 1, 2013 65.2 billion US dollars, as of January 1 2014 75.6. Thus, as of January 1, 2014, the external debt will increase by $20 billion compared to 2012. The increase in the amount of external debt in the planned period was due to borrowings in external financial markets through the placement of government securities (Eurobond loans), as well as an increase in the volume of guarantees provided in foreign currency. The share of debt on loans from foreign governments and IFIs will decrease due to the completion of repayment of debt on previously attracted loans. At the same time, it is not planned to attract new loans.
Public debt - the result of financial borrowing by the state, carried out to cover the budget deficit. The public debt is equal to the sum of the deficits of previous years, taking into account the deduction of budgetary surpluses. Public debt is made up of the debt of the central government, regional and local governments, government organizations, enterprises.
Public debt is a component of the broader concept of "public credit"
If the state's currency is not convertible, then there are two types of public debt.
Internal - the debt of the state to the owners of government securities (GS) and other creditors, expressed in the national currency.
External - the debt of the state to other countries, international economic organizations and other persons, expressed in foreign currency. It is repaid by the export of goods or new borrowings.
In the case of a convertible currency, all creditors (bondholders), both domestic and foreign, have equal rights, and public debt is not divided into internal and external.
3 SERVICE AND PUBLIC DEBT MANAGEMENT TECHNIQUES
3.1 Public Debt Management Methods
Issues of public external debt management in last years became one of the central ones in the economic and political life of the Russian Federation. This was due to both the rapid increase in the volume of the state external debt of the Russian Federation, and a significant increase in the level of expenses for its repayment and servicing. Economic crisis August 1998 revealed the full depth of the problems that have accumulated in the field of managing the state external debt of the Russian Federation.
As the audits of the Accounts Chamber of the Russian Federation as of April 1, 2004 showed, the practice of using external loans provided for the structural restructuring of the economy, to cover the federal budget deficit, repayment and service of the external debt of the Russian Federation. As a result, the main method of managing public external debt has become the constant refinancing of debt, in particular, to international financial organizations, as well as the restructuring of debt to creditors of the Paris and London Clubs, which led to an avalanche-like increase in the external debt of the Russian Federation.
Since the late 1980s in international practice a fairly diverse set of methods for managing the external debt of sovereign borrowers has been formed. This was facilitated by the efforts of both debtors and creditors.
Let us consider the main methods of managing external debt, by applying which the Government of the Russian Federation will be able to reduce the severity of the debt burden. These methods include:
Consolidation - revision of the terms of repayment of debt, which can be implemented either by changing the terms of repayment of existing debt obligations (restructuring), or by refinancing existing debt;
· restructuring - based on an agreement, the termination of debt obligations constituting state or municipal debt, with the replacement of these debt obligations with other debt obligations, providing for other conditions for servicing and repaying obligations.
In other words, restructuring is drawing up a new debt repayment schedule that is more beneficial for the debtor than provided for by the original agreement. This usually provides Grace period, when only interest is paid, and the term for repaying the principal debt is also increased. There is a postponement of payments on short-term debts. The restructuring of external debt can be carried out with a partial write-off (reduction) of the amount of the principal debt. The basis for writing off debt obligations by a creditor in whole or in part may be a very low probability, or rather, the practical absence of opportunities to repay debt obligations due to a decrease in the value of real assets;
refinancing is the process of paying off old loans by attracting new ones;
conversion - application various mechanisms, ensuring the replacement of public debt with other types of obligations that are less burdensome for the economy of the debtor. The most common types of conversion are exchange of debt for shares (property), exchange of debt for goods, exchange of debt for environmental protection measures, repurchase of debt by the borrower on special conditions (at a discount), conversion of debt into debt obligations of third countries, and others;
· securitization - re-registration of non-market loans into securities freely circulating in financial markets;
Cancellation - renunciation of all obligations on previously issued loans. But the use of this method leads to irreparable damage to the reputation of the state as a borrower among potential investors and creditors.
The Budget Code of the Russian Federation does not contain the concept of public debt management, and out of all the variety existing methods only the method of restructuring was defined in the Budget Code of the Russian Federation. Article 101 of the Budget Code "Public Debt Management" is devoted only to the organizational aspect of public debt management. According to Article 101 of the Budget Code, the management of the state debt of the Russian Federation is carried out by the Government of the Russian Federation, and the management of the state debt of a constituent entity of the Russian Federation is carried out by the executive authority of the constituent entity of the Russian Federation. Organizationally, at present, the system for managing the state external debt is implemented on the basis of the Ministry of Finance of the Russian Federation and Vnesheconombank as an agent of the Ministry of Finance of the Russian Federation. The Russian Federation is not liable for the debt obligations of the constituent entities of the Russian Federation and municipalities if the said obligations were not guaranteed by the Russian Federation. In turn, the constituent entities of the Russian Federation and municipalities are not liable for the debt obligations of the Russian Federation.
Insufficient legislative development of issues related to public debt management, in particular, the lack of a definition of public debt management, the lack of a clear definition of the concepts of repayment and servicing of public debt obligations, creates theoretical and practical problems in the field of public external debt and its management.
The Government of the Russian Federation in its Concept unified system management of the public debt of the Russian Federation adheres to the most general formulation of the main objectives of public debt management, including
Keeping the volume of public debt at an economically safe level;
Reducing the cost of servicing public debt;
Ensuring fulfillment of obligations in full.
An important area for improving the efficiency of managing the public debt of the Russian Federation should be the completion of work on the creation of a unified system for managing the public debt of the Russian Federation, which will make it possible to implement an active debt policy, diversify the methods of managing state assets based on their inventory and performance assessment, and also make it possible to implement the policy in the field of public debt management based on the principle of correlating the total volume of both external and domestic debt Russian Federation with state resources.
The Budget Message of the President of the Russian Federation on Budget Policy for 2011-2013 noted: The manifestation of certain positive trends in the economy, a number of its sectors are showing signs of growth, the financial and banking systems are functioning smoothly. Managed to maintain social stability, mitigate social consequences crisis, to ensure even in difficult economic conditions a real growth in state support the least protected categories of citizens, primarily pensioners. The implementation of active measures in the labor market made it possible to stabilize the unemployment rate. The goals, objectives of the budget policy, the main priorities of budget expenditures,
The concept of a unified system for managing the public debt of the Russian Federation has not yet been implemented. The concept of a unified system for managing the public debt of the Russian Federation was not reflected in the Budget Code of the Russian Federation. The only element of the implementation of this concept in the Budget Code of the Russian Federation, in our opinion, was the introduction of the State Debt Book of the Russian Federation as a unified system for registering external and internal debt obligations of the Russian Federation.
Another important aspect of improving the efficiency of managing the public debt of the Russian Federation is related to the improvement of legislation in the field of public debt management, in particular certain articles and provisions of the Budget Code of the Russian Federation.
From our point of view, it is necessary to supplement the Budget Code of the Russian Federation by including the definitions of "government debt management", "government debt repayment" and "government debt servicing". It is also necessary to include in the Budget Code of the Russian Federation the concept of "public debt management method" as a separate article and provide a list of methods used in international and Russian practice of managing the public debt of the Russian Federation, in addition to the restructuring method.
Speaking about the problems of improving legal relations in the field of public debt management, it is necessary to name the problem associated with the fulfillment by the state of its debt obligations. The use of "public debt management methods" in the practice of public debt management indicates quite serious problems both in terms of respect for the rights of citizens and organizations - creditors of the state, and theoretical problems regarding conflicts between budget and civil legislation.
In particular, these include a contradiction with Art. 817 Civil Code Russian Federation, according to which it is prohibited by law to change the conditions government loan, including for the purpose of managing public debt and applying the "debt restructuring" provided for by budgetary legislation (Article 105 of the Budget Code of the Russian Federation).
Federal Law No. 116-FZ of August 5, 2000 "On Amendments and Additions to the Budget Code of the Russian Federation" amended the Budget Code, including Art. 105, according to which the provision is fixed that debt refinancing, in contrast to the previous wording, is now allowed only on the basis of an "agreement". This indicates the desire of the legislator to eliminate contradictions in legal regulation public debt management. However, this "innovation" did not eliminate the conflict between the budgetary and civil legislation until the end, because there is no legislatively fixed mechanism for reaching such an agreement between the debtor state and creditors.
The above proposals for improving the legal aspect of managing the public debt of the Russian Federation will eliminate the contradictions existing in the legislation, bring clarity to the process of planning indicators for the volume of expenses for the repayment and servicing of the public external debt of the Russian Federation, the amount of the public external debt of the Russian Federation, and objectively assess the situation in the field of public debt management. debt on the basis of real indicators of the volume of the state debt of the Russian Federation, the level of expenses for its repayment and servicing.
The Russian Federation is gradually regaining its position as one of the world's largest creditors and borrowers after the collapse of the former USSR. There is a trend towards an increase in the annual volume of government loans provided by the Russian Federation, the country's debt ratios have improved significantly, sovereign credit ratings are rising.
At the same time, there are a number of problems that need to be addressed using various political, financial and administrative resources.
The specific result of this work was a radical improvement in the debt situation in the Russian Federation. This, in particular, is evidenced by such facts as the normalization of debt ratios, as well as the elimination of the problem of the "peak" of payments on the state external debt in 2003. The Ministry of Finance of the Russian Federation, with the participation of Vnesheconombank, carried out operations to buy back state debt obligations from the secondary market in the amount of about $4 billion.
At the same time, the problem of "peak" payments in 2005 and 2008 still remains, as well as the problem of improving the structure of the state debt and increasing the efficiency of managing the portfolio of government debt obligations.
Thus, the need for a reasonable long-term policy of the state in the field of public external debt management becomes obvious. The implementation of such a borrowing policy would make it possible to carry out future debt repayments without significant burdens on available resources. This policy involves the implementation of the following measures.
1. Designation of the limits of new borrowings. Now the most important point is to reduce the amount of debt by partially abandoning new borrowings, as well as determining priority areas for financing debt from borrowed sources.
2. Particular attention should be paid to the primary conditions of borrowing, face value bonds, currency of instruments, placement schemes, procedure and frequency of income payments, etc. In this case, an illustrative example is Eurobonds, the restructuring of which is extremely difficult.
3. The borrowing structure should be optimal in terms of terms and for the portfolio itself. Borrowing optimization is about avoiding future payment peaks. But if in the practice of managing a portfolio of securities the task is to increase their profitability, then when managing a debt portfolio, they strive to reduce costs. Concerning loan portfolio it is necessary to lengthen and reduce the cost of maintenance, which requires an optimal choice of debt instruments. The annual new borrowing program presented by the government during the budget process should include, as an integral element, estimated payment and debt service schedules.
4. Refusal of the practice of attracting tied loans.
5. In order to create the prerequisites for efficient public debt management that meets world standards in this area, it is necessary to take measures to exchange non-market categories of debt for market financial instruments. A special direction is the exchange of debts to countries - members of the Paris Club for bonds. So far, the Club has not carried out such operations. For this reason, even the study this issue will require great political pressure on the delegations participating in the meetings of the Club, especially since such an exchange could be accompanied by the cancellation of part of the debt, by analogy with the London Club operation.
6. In order to improve the efficiency of the use of funds allocated for debt repayment and servicing, it is important to obtain the support of the leaders of the G7 countries in granting the Russian Federation the right to conduct conversion operations in various forms. The work of the Russian delegation in the Paris Club shows that without such support, the delegations of the member countries of the Club are not in a position to make a decision that suits the Russian Federation.
7. A separate problem is the obviously abnormal situation of a "gap" between the actual economic, financial and political situation of the Russian Federation and the values of its sovereign credit ratings. Significant changes have taken place in the country, its debt ratios have moved out of the zones of debt instability. However, current levels Russian ratings, even taking into account their recent increase, correspond to the values of 1996 - the period when the Russian Federation was only returning to the world financial markets, and its economy was characterized by qualitatively worse parameters. Without increasing the speed of revision international agencies credit ratings assigned to the Russian Federation, the influx of large volumes of investment resources into the country can be expected not earlier than in one and a half to two years.
It is necessary to stimulate more intensive support by the leaders of foreign countries, primarily members of the OECD, for transferring the Russian Federation to a risk group that corresponds to reality, as well as a qualitative improvement in work with leading international rating agencies. Restoration of the post of Special Representative of the President of the Russian Federation for Relations with International Financial Organizations can contribute to the solution of such problems.
3.2 Servicing the public debt of the Russian Federation
The ratio of public debt servicing costs to federal budget revenues in the Russian Federation is high compared to countries with a comparable level economic development.
The dynamics of changes in the volume and structure of public debt in recent years has affected the volume of federal budget allocations for its servicing.
Expenditure on public debt servicing in 2010 will increase by 57.5% compared to the expected execution of the federal budget in 2007. The share of interest expenses in the total volume of federal budget expenditures in 2008-2010 will be 2.9-3%.
Expenditure on servicing the public internal debt more than doubled in 2010 compared to the expected volume in 2007 and will amount to 170.9 billion rubles, which exceeds the amount of expenditures envisaged in 2010 for housing and communal services, environmental protection, culture, cinematography and the media.
Public debt in absolute terms for the period from the beginning of 2008 to the end of 2010 increased by 56.2%, as a percentage of GDP - from 8.5 to 9.1%. The state domestic debt increased by 102.7%, as a percentage of GDP - from 4.6 to 6.4%. Public external debt in ruble terms increased by 2%, as a percentage of GDP - will decrease from 3.9 to 2.8%.
The absolute amount of external debt in ruble terms will tend to grow and amount to 1,132.4 billion rubles by the end of 2008, or 3.2% of GDP, by the end of 2009 - 1,164.5 billion rubles (increase to 2008 year - 2.8%), or 2.9% of GDP, by the end of 2010 - 1,232.9 billion rubles (an increase compared to 2009 - 5.9%), or 2.8% of GDP.
In the structure of external debt, the share of government securities denominated in foreign currency, debt on loans from foreign governments and IFIs has decreased, and the share of state guarantees is increasing.
The trend towards an increase in the absolute size of the state external debt does not correspond to the Main Directions of the Debt Policy for 2008-2010, approved by the Government of the Russian Federation on March 22, 2007.
In combination with the ongoing process of capital flight from the financial turnover of the national economy, the withdrawal of financial resources from the budget system sharply reduces the potential for economic development. Public debt servicing costs are becoming a factor in slowing down the implementation of the policy to overcome the danger of man-made disasters, excessive depreciation of funds and, in general, ensure the transfer of the economy to the level of high technology development.
All this indicates the need to continue the negotiation process on the restructuring of the external debt. We must not only strive to get rid of external debt, but the main thing is to be able to use it effectively for the benefit of the domestic economy. This requires global and effective investment projects and a reliable credit and banking system.
Current situation in the field of government borrowing, it is characterized by a fairly balanced policy in the field of external and internal borrowing, as well as the transition to the use of active debt management methods in order to reduce the cost of servicing it.
At the same time, the emphasis in the policy of state borrowing on the steady reduction of external debt (regardless of the real financial condition and development needs) reduces the potential of this most important institution for the development of the national economy, which is especially important in the context of its active integration into the world economic community.
External debt management is one of the elements macroeconomic policy states. One side, effective use external debt can become a powerful factor in economic growth, allowing to attract additional financial resources. The stable position of the country in the international capital market, the timely fulfillment of debt obligations contribute to strengthening its international authority and provide an additional inflow of investments on more favorable terms. In addition, confidence in its currency is increasing, and foreign trade ties are being strengthened. On the other hand, the external debt crisis can become a serious negative factor not only of economic, but also of political significance.
Audits by the Accounts Chamber of the Russian Federation showed that the practice of using external loans provided for the restructuring of the economy to cover the federal budget deficit, repay and service the external debt of the Russian Federation has become widespread. As a result, the main method of managing public external debt has become the constant refinancing of debt, in particular, to international financial organizations, as well as the restructuring of debt to creditors of the Paris and London Clubs, which led to an avalanche-like increase in the external debt of the Russian Federation.
Conclusion
One of the items of expenditure of the federal budget is the cost of international activities in the general interests of the federal ( financial security implementation of interstate agreements and agreements with international financial organizations, international cultural, scientific and information cooperation federal bodies executive branch, contributions of the Russian Federation to international organizations, other expenses in the field of international cooperation, determined when approving the federal law on the federal budget for the next financial year). These costs are on the rise.
At present, the problem of foreign debt in Russia is not as acute as even five years ago. In recent years, the share of public external debt in the total public debt of the Russian Federation has been steadily declining. This was due to the implementation in 2003-2005. measures to replace external borrowings with internal ones, and its early repayment in 2005 - 2007 However, in connection with financial crisis The Russian government plans to increase the volume of external loans it receives. As a result, debt service costs are projected to rise. Growth in external debt service costs in 2010-2012 was primarily due to an increase in borrowings (issuance and placement of Eurobond loans of the Russian Federation on international financial markets), the weakening of the ruble against the US dollar and the euro, as well as an increase in the forecast values of floating interest rates for servicing loans during the planned period.
The sharp reduction in external public debt stimulated the growth of domestic borrowings used to refinance the public domestic debt accumulated in recent years. This was a factor in reducing the relative burden on the budget of debt service expenditures and increasing the share of non-interest budget expenditures.
The active position of the government in relation to obtaining and issuing government loans requires appropriate work with public debt. The existence of public debt automatically implies the existence of the obligation of the state to manage it. Public debt management is systemic and requires the formation of a special strategic program. The public debt management strategy aims to mitigate peak payments, improve the structure of debt, reduce the cost of servicing it, and bring the amount of debt in line with the country's ability to service and repay it.
The main methods of public debt management are the payment of income on loans and their repayment, which should be carried out at the expense of tax revenues in the state budget; conversion of government debt; consolidation of public debt; unification of state loans; exchange of bonds according to the regressive ratio; deferment of loan repayment; cancellation of the public debt.
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3. Kovalishin E. Public debt: Some questions of methodology // Financial control. 2003. N 2. S. 20.
5. Quoted. Quoted from: Kovalishin E. Public debt: Some questions of methodology // Financial control. 2003. N 2. S. 20.
6. Podvinskaya E.S. On external debt management // Finance. 2002. N 3. S. 23.
9. Art. 817 of the Civil Code of the Russian Federation of January 26, 1996 N 14-FZ (as amended on March 26, 2003) (Collected Legislation of the Russian Federation. 1996. N 5. Art. 410).
10. Collection of legislation of the Russian Federation. 2000. N 32. Art. 3339.
12. Stolyarov A., Some problems of servicing the state debt of Russia / A. Stolyarov / / Societies and Economics, 2008. No. 5. - P. 163-170.
13. Gavrilova N., On the issue of public debt / N. Gavrilova.-M.: The Economist, 2007. No. 4-S.45-48.
14. Voronin Yu. S. Public debt management / Yu. S. Voronin//Economist.-2006-№1-S.58-67.
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17. On Amendments to the Federal Law “On Budget Classification and the Russian Federation” and the Budget Code of the Russian Federation: Federal Law No. 176-FZ of December 22, 2005 // Rossiyskaya Gazeta - 2005-27 December
18. Chumachenko A.A. State internal debt and state internal borrowings / A.A. Chumachenko//Securities market.-2005-№16-S.
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Exists a large number of methods of solving the problem of public debt. These include both budget-export and financial-technical ones. Budget-export methods are long-term and link the solution of the problem, for example, external debt, with an increase in the country's trade balance, as well as an increase in GDP and the state budget.
Technical methods are short-term, and allow solving the problem by improving the terms of borrowing, reducing the total amount of debt, changing the time structure of payments.
Rodionova V.M. identifies the following main financial and technical methods of public debt management: consolidation, conversion, exchange of bonds according to a regressive ratio, deferral of repayment and cancellation of loans.
A conversion is usually understood as a change in the yield of loans. In order to reduce the cost of public debt management, the state most often reduces the amount of interest paid on loans. However, an increase in the yield of securities is not excluded. government papers for creditors.
Unification of government loans is usually carried out together with consolidation. Unification of loans is the combination of several loans into one, when bonds of previously issued loans are exchanged for bonds of a new loan. In exceptional cases, the government may exchange bonds on a regressive basis, that is, equating several previously issued bonds to one new bond.
The deferral of the repayment of a loan or all previously issued loans is carried out in conditions where the further development of operations to issue new loans has no financial efficiency for the state. Deferral not only delays the repayment of loans, but also stops the payment of income.
Under the cancellation of public debt is understood as a measure in which the state completely renounces obligations on issued loans. Cancellation of government securities can be carried out for two reasons: in the event of the financial insolvency of the state, i.e. his bankruptcy; due to the coming to power of new political forces, which, for certain reasons, refuse to recognize the financial obligations of the previous authorities.
In addition, debt refinancing is singled out as a method of attracting borrowings. Refinancing of public debt is the placement of new government loans to pay off debt already issued. For example, Russia used refinancing to pay off debt on the state 3% winning domestic loan of 1966. After the expiration of this loan, the bonds were exchanged within one year for bonds of a new loan - the winning domestic loan of 1982 without paying the exchange rate difference.
The minimum price of borrowed funds in the market is determined by the refinancing rate. The refinancing rate is the interest rate at which borrowing to service domestic debt occurs. Thus, the state credit regulates the market between bank loans.
Currently, when developing options for optimizing Russia's external debt, attention is mainly focused on technical means problem solving: debt restructuring, conversion of a part of debt obligations into property assets in Russia. They also offer less traditional methods- payment of compensation, repayment of debt in national currency, re-registration accounts payable for accounts receivable.
Under debt restructuring, in accordance with Art. 105 of the Budget Code of the Russian Federation, is understood as "repayment of debt obligations with the simultaneous implementation of borrowings (assuming other debt obligations) in the volume of redeemable debt obligations with the establishment of other conditions for servicing debt obligations and their maturity." To a certain extent, this term is synonymous with loan consolidation.
The main restructuring schemes include: debt cancellation, that is, cancellation of previous loans; debt redemption; debt securitization.
Currently, the theoretical direction devoted to the problem of the "debt overhang" is actively developing, which consists in the fact that the number of obligations already taken by the state inspires creditors with concerns about the country's solvency.
The solvency of the borrowing country should be understood as the ability of the state to fulfill its debt obligations. But only at the expense of resources that make up part of the country's total income (potential transfer), which the government can attract for debt payments without significant damage to the state and citizens. The potential transfer is determined solely by the country's desire to service its own obligations, which depends on the costs of default and political considerations. At the same time, the debt overhang problem arises if the expected discounted flow of future transfers is less than the total debt of the country.
The presence of a "debt overhang" can negatively affect the motivation of the borrowing country to repay debts. In this case, partial debt relief appears to be a preferred strategy for lenders compared to providing additional loans in the hope of their future repayment.
Table 1.1.
External Debt Thresholds and Russia's Position
Currently, debt relief is practiced mainly in relation to the poorest countries with "critical" debt levels. The corresponding criteria are presented in Table 1.1. Debt cancellation is considered justified if three of the last four indicators exceed the critical level.
In the general case, a country whose debts are written off automatically loses not only a significant part of its political independence, but also for a long time is deprived of access to the international capital market as an independent borrower. Since Russia is not one of the poorest countries, it is hardly worth hoping for debt relief from external creditors.
Some debtor countries have significant amounts of gold and foreign exchange reserves in their assets or can quickly increase them by stimulating export industries. At the same time, the debts of these states are traded at a large discount on the market, which indicates investors' fears about the solvency of borrowers. In such a situation, it would be possible to allow the borrower to independently redeem their own debts in the secondary securities market.
However, under standard loan conditions, the debtor is not entitled to early redemption of its debts for two reasons. Firstly, the principle of the primacy of creditors is violated, that is, their right to preferential receipt of any free funds debtor who is in arrears. Second, there are the phenomena of "moral hazard" and "reverse selection" when the worst borrowers, whose debts are traded at the largest discount, actually win.
If the buyout decision is made with the consent of creditors, then such problems can be resolved, for example, by setting maximum buyout volumes.
The mechanism of early redemption of sovereign debt is limited not only by the position of creditors, but also by the amount of foreign exchange reserves available to the country. This limitation can be overcome with the help of securitization, the basic idea of which is that the debtor country issues new debt in the form of bonds, which are either directly exchanged for old debt or sold. In the event of a sale, the funds received are used to buy back old obligations. Recently, securitization of bank debts, that is, the exchange of obligations to creditor banks for bonds, has become most widespread.
If the new securities are traded on the market at a smaller discount, such a transaction will reduce the total amount of debt.
Such a restructuring scheme can be implemented on a voluntary basis only if new obligations are recognized as priority in relation to old debts. Otherwise, the expected payments on the old debt are equivalent to payments on the new debt, which will trade at the same discount as the existing one. There is no reduction in the tax burden.
The main financial mechanism of the conversion scheme is the liquidation of a part of external debt claims by their exchange (swap) into national assets. The scheme is based on the principle of "unpaired exchange": the nominal debt is copied at a special redemption rate, which is guided by the secondary market quotes of the corresponding debt claims.
The advantage of large-scale conversion operations is that, in addition to debt relief, they can help generate direct foreign investment on the development of priority export and import-substituting industries, privatization, reforming the financial sector, as well as slowing down the outflow of capital from the country and stimulating its return.
The following swaps are possible:
- - “debt for cash”: repurchase of debt at a discount on non-guaranteed commercial debt;
- - "debt for export": this scheme is more attractive, allows you to maintain competitive domestic production, helps to increase their exports to already traditional markets and the development of new markets;
- - "debt for taxes": the implementation of this scheme requires a legislative tax incentives for investors-holders of Russia's external debt, so that the payment of tax by investors would also be possible by offsetting Russian external debt obligations in the proportion that would large sum tax was repaid with a smaller amount of external debt obligations. Permission for such a conversion should only be granted for new investments in priority sectors economy;
- - "debt into bonds": as an example, we can cite agreements on debt restructuring to the London Club of Creditors;
- - “debt for property”: within the framework of privatization, the use of a scheme for exchanging debt obligations for shares of privatized enterprises. Such a swap makes it possible to solve two problems at the same time - to reduce the state debt and ensure the inflow of capital into the real sector of the economy.
- - "debt for debt": a swap of external liabilities (for example, Soviet debts to the Paris Club) into financial assets (Russia's debts of third countries). We are talking about a kind of political offsetting, a concession of the right to claim.
The current model of borrowing by the Government of the Russian Federation in the financial market (both external and internal) is based on the rejection of such a method of public debt management as refinancing. The Government of the Russian Federation has so far refused to issue short-term government securities, as there is no certainty that revenue side of the federal budget and the financial condition of the country will make it possible to pay off all current debt at any time.
Until 2003 Russian government used purely inflationary methods to cover the state budget deficit and service the public debt by borrowing funds from the Central Bank. This was sharply opposed by the IMF, which played a major role in the transition to the use of non-emission methods of covering the deficit through internal and external loans.
Optimization of domestic debt can be carried out by either inflationary domestic financing and devaluation of the national currency, or debt restructuring.
When choosing in favor of inflation, additional budget expenditures arise to compensate salaries, pensions, benefits, higher energy prices, etc., as well as to service foreign exchange debt.
Domestic debt restructuring, especially if it is of a confiscatory nature, can have the following consequences:
undermining investor confidence in government obligations in national currency. In this case, the state is completely and permanently deprived of internal funding;
the reference point for the formation of interest rates in the national economy disappears;
there is a motivation to invest in foreign currency, which creates tension in the foreign exchange market.
These processes, as a rule, are quite lengthy and the restoration of confidence in the state as a first-class borrower is a procedure that requires significant costs from the state. Thus, after the collapse of the Soviet Union and the depreciation of the savings of the population made in savings bank until June 20, 1991, it took five years with the state fulfilling its obligations in full and high interest rates. Before the Government was able to attract the population to the public debt market and attract about 30 billion rubles to finance the budget deficit. (over 5.5 billion dollars).
If we consider the issue of money as the main instrument of debt policy, then it should be noted that in the static aspect, the issue of debt and inflation are interchangeable: for a given budget deficit, an increase in borrowing reduces the issue of money, and vice versa. In dynamics, the relationship between debt issuance and debt issuance money supply reflects the complementarity of inflation and public debt. Thus, the increase in the expansion of GKOs in 2000-2001. allowed to postpone inflation, but led to an inflationary surge in 2002-2003 as a result of the debt crisis.
If the government is unable to make additional borrowing to secure payments on the underlying debt, then the amount money issue is determined by the current budget deficit, and not by the target for reducing the debt burden. AT similar situation Russia found itself after the August crisis. If the authorities can resort to additional borrowing in the external market, then optimal size emissions in each period should depend on a long-term target for debt reduction. In this case, it is important not only to ensure minimum dimensions issue of money, but also take into account the restriction on new borrowing arising from a long-term goal. In general, with an optimal debt management policy, an increase in borrowing can be accompanied by inflationary financing of the budget deficit.
Obviously, in a situation of a debt crisis, inflationary financing of the deficit is necessary, on the one hand, to ensure payments on the underlying debt, and on the other hand, to achieve the target setting for a certain level of debt burden. At the same time, in order to prevent an increase in inflation, it is necessary to determine the boundary of economically safe inflation and set the maximum allowable increase in the monetary base.
In addition, there are certain reserves for reducing the total amount of public debt and payments on it in the area of reducing the outflow of capital from Russia. Taking into account the fact that, according to various estimates, 10-25 billion dollars were exported from Russia annually, it is clear that Russia, in principle, would be able to service its external and internal obligations.
At present, loan capital from Russia is exported mainly in the form of bank loans, trade credits and advances. cash foreign currency, etc. and entrepreneurial capital - in the form of direct and portfolio investments. At the same time, along with the classical incentives for the export of capital (development foreign markets sales, access to foreign sources of raw materials, obtaining higher profits abroad, etc.), the motives characteristic of the so-called "flight" of capital are very strong.
Theoretically, any excess of capital exports over imports can be interpreted as a "flight" of capital due to the limited opportunities for investing these funds in the domestic economy.
The flight of capital from Russia occurs both legally and illegally. Legal capital flight includes portfolio investment, accumulation of foreign currency in cash, capital transfers from emigrants and other transfers reflected in the item “Other assets” in the balance of payments. Illegal capital flight is carried out in such ways as non-receipt of export earnings on time, non-repayment of import advances on time, non-equivalent barter, smuggling exports and others, reflected in the article “Net errors and omissions”.
The emerging theory of "capital flight" indicates that it narrows the potential tax base countries, is often accompanied by an increase in external debt and the cosmopolitanization of a significant part of the national capital.
The export of capital from Russia is one of the reasons for the significant decline in domestic investment. The result of this situation is high stakes bank loans, far exceeding the rate of inflation, even taking into account possible banking risks.
The negative impact of the export of capital on the state of Russia's balance of payments and the size of its gold and foreign exchange reserves is also obvious. The volume of Russia's official gold and foreign exchange reserves continues to be slightly larger than the value calculated according to the internationally accepted criterion for the sufficiency of these reserves (three-month imports of goods and services). The maximum amount of these reserves in mid-2003 amounted to about $40 billion.
As a result, Russia is forced to resort to all new loans to finance the balance of payments deficit, delinquency in payments for servicing the state external debt and postponing these payments.
Stopping capital outflows for Russia would help restore investor and creditor confidence and boost the domestic savings needed Russian economy. There are two main ways to solve this problem: 1) strengthening administrative control over financial flows, supplemented by tightening legislation; 2) implementation of systemic institutional changes creating a favorable investment climate.
Within the framework of the first direction, measures are possible against the use of standard schemes for the illegal export of capital: underestimation of export prices and non-return of foreign exchange earnings; conclusion of fictitious import contracts with advance payment and inflated prices; corruption at customs; settlements through offshore zones.
Implementation of measures of the second direction: balance of the budget; improvement tax system and tax administration; security reliable operation banking system; protecting the rights of creditors and investors; "transparency" financial reporting all enterprises and organizations; the fight against crime and corruption, a sharp improvement in the work of the prosecutor's office and the judiciary; strict observance federal laws throughout the country, the cessation of arbitrariness on the part of regional and local authorities and the restriction of their privileges.
Efficient Management government obligations does not yet play a key role in the public finance system. Recent events show that the tightening of fiscal policy impossible to prevent the occurrence crisis situations. In 2003, the government succeeded in significantly reducing public spending, ensuring the primary surplus of the federal budget. However, it proved unable to avoid an avalanche-like increase in domestic debt service spending. The state's failure to fulfill its obligations was main reason exchange rate changes, banking crisis, threats of macroeconomic destabilization.
The expansion of domestic and foreign debt was an inevitable consequence of the abandonment of the inflationary policy and the aggravation of the crisis in the tax system. Extremely negative consequences this expansion could have been avoided by pursuing a more effective policy of managing state obligations. The rapid growth of borrowing volumes, the critical cost of servicing them in recent years, and, as a result, Russia's inability to fulfill its obligations have shown the urgency of the task of building an optimal debt management strategy.
At present, the Ministry of Finance, which is in charge of public debt management, is forced to concentrate on solving operational tasks, mainly related to the distribution of available financial resources. For this reason, the borrowing policy pursued by the Ministry of Finance is more subject to current needs, not adequately providing for the solution of strategic tasks for managing the state's obligations.
The division of public debt into external and internal is largely artificial. With further liberalization of the movement of capital, such a distinction becomes meaningless. A simplified approach to the monetary structure, with an emphasis on only two currencies: the ruble and the dollar, is also unjustified, while other currencies, including the German mark, the Japanese yen and the Italian lira, are currently used in extremely limited volumes. It is necessary to move to the management of the multicomponent currency structure of the public debt, taking into account both direct and cross-currency risks.
At present, the main task is to change currency structure public debt in order to minimize the cost of servicing and hedging currency risks. At the same time, emphasis should be placed on a more adequate reflection in the management of obligations of the structure of foreign exchange receipts to the state budget.
In order to minimize the cost of servicing debt, it is important to ensure flexible management of the structure of interest payments. It is necessary to replace current payments at a fixed and floating rate, taking into account the most attractive currency. Interest rate swaps should become the main instrument for implementing such transactions.
The public debt management system should provide for all current debt repayment and service payments. It is necessary to constantly harmonize the payment schedule with the receipts from the Ministry of Finance intended to pay off obligations. Cash flow management should minimize the risks arising from the lack of liquidity. The operational management of the flow of payments and receipts should minimize the risk of non-payment and non-financial risk.
The functions of public debt management should also include maintaining the market for internal and external government obligations. This could be a direct task of the body responsible for public debt management. Unlike the Central Bank, which dealt only with the GKO market, such a function would cover all markets for government obligations (including the external debt market), using the available liquid funds more efficiently.
In addition to traditional operations in public debt management, more attention should be paid to modern financial engineering techniques. Derivatives, interest and currency swaps, futures and options contracts, convertible bonds, puttable bonds, instruments such as squeaks, etc. The use of derivative instruments will effectively reduce not only the current, but also the prospective cost of debt, ensuring control over the level of risk. By the way, the exchange of GKOs for Eurobonds, which took place in July 1998, was, in fact, the first attempt to use one of the key instruments of financial engineering - the conversion of one obligation into another. It is recalled that as a result of this fairly large-scale operation by Russian standards, bonds totaling 27.5 billion rubles. (4.4 billion dollars at the current exchange rate). They were exchanged for two issues of Eurobonds with a length of 7 and 20 years for a total amount of $6.4 billion, including those placed for cash in the amount of $500 million.
By the way, derivatives are used in risk management by almost all financial institutions. In the context of the globalization of financial flows, the system of government obligations management faces tasks that are no less difficult in terms of risk management and financial engineering. In order to effectively perform functions with saving the cost of debt servicing and minimizing risk, the public liability management system should be fully based on modern scientific achievements and financial engineering tools available in world practice.
In conclusion of this paragraph, it should be emphasized that in terms of optimizing external debt, it is restructuring, according to most economists, that is the best tool, since it allows you to adjust the ratio of debt payments to exports - the current liquidity of the country.
Domestic debt management may involve inflationary financing, but within acceptable limits. In addition, it is advisable to build a system of internal borrowing, providing for the theoretical and practical possibility of repaying new loans in the absence of the possibility of refinancing.
In the system of actions for managing public credit, the most important is the service and repayment of public debt. All expenses of this kind are carried out at the expense of budgetary funds, creating an additional burden on the budget, and late payments lead to an increase in the amount of debt due to penalties. From the investor's point of view, timely receipt of income and repayment of the loan is most acceptable, however, in the face of a significant increase in public debt and budget deficit, the government is forced to resort to various methods of debt management.
Public debt management- activities of the state related to the servicing and repayment of public debt, the issuance and placement of new loans and the regulation of the public credit market.
Ways to regulate debt:
1) Under refinancing of the state Debt refers to the repayment of old government debt by issuing new loans.
2) conversion- change in the yield of loans, i.e. in order to reduce the cost of managing public debt, the state most often reduces the amount of interest paid on loans (however, an increase in interest is not excluded);
3) consolidation- change in the terms of loans related to the term. Through consolidation, an increase in the duration of loans already issued can be achieved;
4) unification of loans It is the combination of several loans into one. The goal is to reduce the number of securities, which simplifies the work and reduces the cost of servicing the public debt. Unification is usually carried out together with consolidation, but can also be carried out independently;
5) cancellation of the public debt- a measure, as a result of which the state completely renounces obligations under the issued loan. In some cases, the government may exchange bonds at a regressive ratio, i.e. when several bonds are equated in one new bond, which relieves the state of the need to fulfill obligations on securities placed on the market in a currency that has depreciated at the time of calculation.
Existing system public debt management helps to reduce the volume of potential credit resources for investment and the volume of domestic investment resources, i.e., it has a negative effect.
The main task of public debt management is to change the debt strategy from deferred payments to debt reduction.
The financial mechanism for regulating external debt consists in liquidating part of it by exchanging it for financial assets:
Debt in exchange for property (conducted, as a rule, as part of a privatization program) - involves the exchange of debt obligations for shares of a privatized enterprise and the attraction of investors.
Debt in exchange for exports - involves maintaining competitive production in the country, developing new markets, developing exports, etc. It is important to support industries with significant export potential.
Debt in exchange for taxes - the legislative establishment of incentives for investors that would encourage them to invest is supposed. In this case, the external debt will be repaid at the expense of future income.
Debt restructuring is the repayment of debt obligations with the simultaneous implementation of borrowings in the volume of repaid obligations with the establishment of other conditions for servicing the debt and its maturity.
State debt:
State debt of the Russian Federation
Public debt of a subject of the Russian Federation
municipal debt.
Each budget level is responsible only for its own obligations and is not responsible for the debts of another level if they were not guaranteed.
Public debt refers to the debt obligations of the Russian Federation to individuals and legal entities, foreign states, international organizations and other subjects of international law. The state debt of the Russian Federation is fully and unconditionally secured by all federally owned property constituting the state treasury.
Public debt can be classified according to several criteria:
- the place where the debt is placed;
– levels of government;
- the term of attraction of funds;
- the nature of the income paid;
- the volume of expenditures for the payment of public debt;
- the method of determining income, etc.
The most common is the classification depending on the location of the debt, in this case, public debt is divided into external and internal.
Public debt management consists in the implementation of a system of measures taken by the state related to determining the volume of borrowings, the composition of creditors, the forms and conditions for granting loans and their repayment.
The organizational structure of the public debt management system includes the authorities and administrations of the Russian Federation that perform the functions of public debt management in accordance with their competence and the tasks assigned to them. The President of the Russian Federation sets the main priorities of the budget policy for the short term and medium term. The Federal Assembly of the Russian Federation approves in the law on the federal budget for the next financial year the upper limit of the state external and internal debt. The Government of the Russian Federation determines the organizational foundations of the public debt management system and financial assets, approves the main sources and conditions for borrowing, including the government borrowing program. The Ministry of Finance of the Russian Federation manages in due course public debt. The Central Bank of the Russian Federation advises the Ministry of Finance of Russia on the schedule of repayment of the state debt, taking into account the priorities of the unified state monetary policy. The Ministry of Economic Development and Trade of the Russian Federation takes part in the analysis of the effectiveness of projects financed from external borrowings.
Public debt management is carried out using the following methods:
1) refinancing. Represents the repayment of the principal and interest on it at the expense of funds received from the placement of new loans;
2) cancellation. This is the refusal of the state to pay the principal and interest on all previously issued loans;
3) conversion. Adoption by the state of a decision to change the yield of previously issued loans;
4) innovation. An agreement between the lender and the borrower on the termination of obligations and their replacement with other obligations providing for other terms of repayment of loans;
5) unification. Consolidation of several obligations previously assumed by the state with replacement of previously issued financial instruments with new ones;
6) consolidation. Extending the duration of previously issued obligations.
public debt are debt obligations of the Russian Federation to individuals and legal entities, foreign states and international organizations.
§ External debt are liabilities to non-residents in foreign currency.
§ domestic debt- liabilities to residents in rubles.
The public debt is secured in federal ownership.
The debt obligations of the Russian Federation exist in the form of:
§ loan agreements signed on behalf of the Russian Federation with credit institutions, foreign states and international financial institutions;
§ government securities;
§ agreements on the provision of state guarantees;
§ re-registration of debt obligations of third parties into public debt.
public debt can be short-term(up to one year) medium term(one to five years) and long-term(from five to thirty years).
The public debt is repaid on time conditions loans, but these loans cannot exceed 30 years.
Public debt management is carried out by the government of the Russian Federation.
The Russian Federation shall not be liable for the debt obligations of the constituent entities of the Russian Federation and municipalities unless they have been guaranteed by the federal government.
Maximum volumes of state internal and external debt 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 state external borrowing should not exceed the annual volume of payments for servicing and repaying the state 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 of the federal budget for the next financial year, indicating the purpose, sources, terms of repayment and the total amount of borrowings. It covers all loans and government guarantees in excess of the equivalent of $10 million.
The decision to issue government securities is taken by the government, respectively, in accordance with limits budget deficit and public debt, established in accordance with the law on the budget, as well as with the Domestic Borrowing Program.
The decision on the issue of government securities reflects information about the issuer of securities, the volume and conditions of the issue.
State guarantee is a way to ensure 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 who received the guarantee of his obligations to third parties.
The law on the federal budget for the next year determines maximum size amounts of state guarantees. The total amount of government guarantees denominated in rubles is included in the public domestic debt.
The total amount of state guarantees denominated in foreign currency is included in the state external debt.
In accordance with Article 118 of the Budget Code of the Russian Federation budget institutions are not allowed to take loans from credit institutions. But they have the right to receive loans from budgets and state off-budget funds. State Debt Register unitary enterprises managed by the Treasury.
The state books of internal and external debt of the Russian Federation are maintained by the Ministry of Finance of the Russian Federation.
AT State debt book information is entered on the volume of debt obligations of the Russian Federation, constituent entities of the Federation and municipalities on 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.
To reduce the debt burden can be used debt restructuring. It is understood as the repayment of previous debt obligations with the simultaneous implementation of new borrowings in the volume of repaid debt obligations and with the establishment of new debt service conditions.
The following public debt management tools are also used:
§ consolidation- Consolidation of several loans into one longer-term one with a change in the interest rate;
§ government loan conversion- change in the initial terms of the loan, relating to profitability. Most often, in the course of the conversion, the government lowers the rate of interest;
§ foreign debt conversion- a means of reducing external debt by fulfilling debt obligations to creditors by transferring bills and shares to them in national currency;
§ innovation- replacement of the original obligation between the parties by another obligation between the same parties, providing for a different method of performance.
In 1985, the external debt of the USSR amounted to 22.5 billion dollars, in 1991 - 65.0 billion dollars. Russia's external debt, including the debt of the USSR, amounted to 124.5 billion dollars as of January 1, 2003. For its full repayment within 30 years, along with interest payments, at least 300 billion dollars will have to be paid.
Table 6 Dynamics of the public external debt of the Russian Federation (billion US dollars)
| Name | At 1.01. 1998 | At 1.01. 1999 | At 1.01. 2000 | At 1.01. 2001 | At 1.01. 2002 | At 1.01. 2003 |
| External debt of the Russian Federation, including obligations of the USSR Including: | 123,5 | 149,3 | 158,4 | 139,3 | 138,0 | 124,5 |
| on loans from foreign governments | 63,5 | 66,9 | 66,5 | 63,6 | 56,8 | 52, 7 |
| on loans from foreign banks and firms | 36,2 | 48,4 | 39,4 | 6,0 | 6,0 | 3,0 |
| on loans from international financial organizations | 18,7 | 26,0 | 19,4 | 16,2 | 15,0 | 13,4 |
| government securities of the Russian Federation in foreign currency | 26,7 | 47,1 | 48,6 | 49,2 | ||
| on loans from the Central Bank of the Russian Federation | 6,4 | 6,4 | 6,4 | 6,2 | ||
| guarantees and reserves against changes in interest rates and exchange rates | 5,1 | 8,0 | - | - | 5,2 | - |
In order to ensure its foreign policy and foreign economic interests, Russia provides loans to foreign states. 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 debt cancellation of foreign states to the Russian Federation must be ratified by the State Duma.
Domestic public debt management is a set of measures aimed at its optimization. Public debt management is a continuous process that includes three stages: determining the need for additional financial resources, attracting financial resources, paying off and servicing debt obligations.
At the first stage, the maximum size of government borrowings and guarantees for the next budget year is determined, tools are selected for attracting resources and increasing their use. At the second stage, resources are attracted in external or internal financial markets by issuing and placing government securities, obtaining a loan or providing government guarantees. The third stage is to find sources of financial resources to pay off and service the public debt, reduce overall costs, and timely fulfill debt obligations. Government debt obligations can be repaid by budget revenues, gold and foreign exchange reserves of the country, cash received from the sale of state property and new borrowings. The situation in which the debtor is unable to repay its external debt according to the schedule agreed with the creditor is called a debt crisis.
When managing public debt, the following methods can be used:
· refinancing;
restructuring;
· conversion;
Consolidation
deferred repayment;
Cancellation.
Refinancing is paying off old debt by making new commitments. There are three main ways to refinance public debt: replacement of obsolete liabilities with new ones equivalent in amount; replacement of some obligations by others with longer maturities; placement of new bonds in order to use the proceeds for settlements on maturing bonds.
Restructuring is a revision of the original schedule of repayment and servicing of the public debt. During restructuring, the debtor is given a grace period during which only interest is paid, and the maturity of the principal amount is increased.
Conversion is a change in the terms of government loans in the interests of the debtor, consisting in lowering the interest rate, a new method of repaying the debt, postponing the repayment period, changing the loan currency. The most common types of conversion of external public debt are the exchange for debt obligations of third countries, the repayment of debt by commodity deliveries, the repurchase of debt by the borrower on special conditions, the exchange of debt for property.
Consolidation is a change in the maturities of loans, usually upwards by transferring short-term liabilities in the long term. Consolidation can be combined with conversion.
Cancellation of public debt is the refusal of the state from obligations on issued loans.
When managing domestic public debt, the use of these methods is possible unilaterally forcibly. However, the regulation of the volume of foreign debt with their help is, as a rule, always the result of a negotiation process. In the presence of a debt crisis, debt to official creditors is managed on a multilateral basis by the Paris Club, and debt to banks by the London Club. The Paris Club is an informal association of economically developed countries of the world, coordinating financial policy Member States in respect of the debts of third countries. The London Club brings together banks that have provided loans to governments individual countries or legal entities these countries.
In our country, the management of public debt on behalf of the Government of the Republic of Belarus is carried out by the Ministry of Finance. One of the main tasks of the state in debt management is to limit its size, since upon reaching a certain ratio of payments for servicing the public debt and GDP, economic growth slows down. In order to prevent uncontrolled growth of public debt annually, the Law on the budget of the Republic of Belarus for the next financial year approves two indicators:
limit of external public debt;
· marginal increase in the value of domestic public debt.
Payments for the repayment and servicing of external public debt are protected items of the republican budget.
More on the topic of Public Debt Management Methods:
- 3.2 GOVERNMENT SECURITIES AS A TOOL FOR MANAGING PUBLIC DEBT
- 2.8. State and municipal credit. Public debt management
- Management of public credit and public debt.
- 62. Public debt. Methods of public debt management.
- 66. Methods of managing public domestic debt
- State and municipal credit. Management of the public debt of the Russian Federation
- Public debt content and structure. Public debt management.
- WAYS AND METHODS OF STATE CREDIT MANAGEMENT AT THE PRESENT STAGE
- Types of public loans and public debt management.
- Current Problems of Russian Public Debt Management
- Creation of the organizational structure of public debt management and the powers of public authorities
- Organizational and legal framework for managing the public debt of a constituent entity of the Russian Federation
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