The consequence of government borrowing is public debt. According to the Budget Code, the public debt of the Russian Federation includes debt obligations of the Russian Federation to individuals and legal entities of the Russian Federation, constituent entities of the Russian Federation, municipalities, foreign states, international financial organizations, other subjects of international law, foreign individuals and legal entities arising as a result of government borrowing of the Russian Federation, as well as debt obligations under state guarantees provided by the Russian Federation.

Public debt refers to the entire amount of issued but not repaid debt obligations, with accrued interest that must be paid on them by a certain date.

Public debt servicing refers to operations for the payment of income on government debt obligations in the form of interest on them and (or) discount, carried out at the expense of the corresponding budget.

Depending on the level of management, public debt is divided into public debt of the Russian Federation and public debt of a constituent entity of the Russian Federation.

The security of Russia's national debt is all property that makes up the state treasury.

The structure of the public debt of the Russian Federation is a grouping of debt obligations of the Russian Federation, which include the following types of obligations:

· loans attracted on behalf of the Russian Federation as a borrower from credit organizations, foreign states, including targeted foreign loans from international financial organizations, other subjects of international law, foreign legal entities;

· government securities issued on behalf of the Russian Federation;

· budget loans attracted to the Federal budget from other budgets of the budget system of the Russian Federation;

· state guarantees of the Russian Federation

· other debt obligations.

By maturity, debt obligations can be:

· short-term – up to one year;

· medium-term – from one to five years;

· long-term from five to thirty years inclusive.

From the perspective of management accounting, obligations are divided into direct and conditional.

Direct obligations include:

· credit agreements and contracts;

· government loans;

· contracts and agreements on obtaining budget loans

· overdue accounts payable of budgetary institutions.

To contingent liabilities:

· state guarantees for obligations to third parties.

When adopting the budget for the next financial year and planning period, the following are determined:

· upper limit of government internal debt;

· upper limit of external debt to the Russian Federation;

· limit of provision of guarantees to third parties.

The structure of the public debt of a constituent entity of the Russian Federation is a grouping of debt obligations of a constituent entity of the Russian Federation, which, in accordance with budget legislation, include:

· government securities of a constituent entity of the Russian Federation;

· budget loans attracted to the budget of a constituent entity of the Russian Federation from other budgets of the budget system of the Russian Federation;

· loans received by a constituent entity of the Russian Federation from credit organizations, foreign banks and international financial organizations;

· state guarantees of the constituent entity of the Russian Federation.

Public debt is classified according to the following criteria:

1. According to the period of formation and repayment:

· capital debt – includes the entire amount of debt obligations as of a certain date;

· current debt – consists of payments on obligations that the borrower is obliged to repay in the reporting period.

2. By loan currency (Article 6 of the Budget Code of the Russian Federation):

· external debt – obligations arising in foreign currency, with the exception of obligations of constituent entities of the Russian Federation and municipalities to the Russian Federation, arising in foreign currency as part of the use of targeted foreign borrowing loans);

· internal debt - obligations arising in the currency of the Russian Federation, as well as obligations of constituent entities of the Russian Federation and municipalities to the Russian Federation, arising in foreign currency as part of the use of targeted foreign loans (borrowings).

One of the important directions of the state budget policy is public debt management.

Public debt management is understood as a set of actions by the state represented by its authorized bodies to regulate the size, structure and cost of servicing public debt, or these are state activities aimed at repaying the debt.

Public debt management can be viewed in a broad and narrow sense.

In a broad sense, public debt management involves:

· policy formation regarding public debt;

· determination of the main indicators and maximum values ​​of public debt;

· determination of priority areas for using attracted resources.

In a narrow sense, public debt management involves determining the conditions for the issue, circulation and redemption of specific securities.

The public debt management system consists of the following elements:

· concepts of public debt management and debt policy;

· subjects of public debt management;

· legal and regulatory support;

· management methods and principles;

· accounting and registration of debt obligations;

· risk management;

· programs of government internal and external borrowings and other elements.

The goal of public debt management is to find the optimal balance between the state's needs for additional financial resources and the costs of attracting, servicing and repaying them. The main condition for successful debt management is to ensure economic growth and, on this basis, increase the total amount of income in the country, including budget revenues. With significant debt levels, it is necessary to solve the contradictory problem of limiting the consumed part of GDP to pay off external debts and service them.

In the process of managing public debt, the following tasks are solved:

· the maximum possible reduction in costs for its servicing and repayment, taking into account global market conditions;

· ensuring timely fulfillment of debt obligations for the repayment and servicing of internal and external debts;

· minimizing debt for the borrower;

· effective use of borrowings and others.

Management of the public debt of the Russian Federation is carried out by the Government of the Russian Federation or the Ministry of Finance of the Russian Federation authorized by it. Management of the public debt of a constituent entity of the Russian Federation is carried out by the highest executive body of power of a constituent entity of the Russian Federation or the financial body of a constituent entity of the Russian Federation in accordance with the law of the constituent entity of the Russian Federation. The Bank of Russia and Vnesheconombank take part in the management of public debt within their competence, defined by regulatory legal acts. Control over the state of the state internal debt is carried out by the Parliament of the country.

The Ministry of Finance of the Russian Federation is entrusted with the responsibility to ensure the unity of planning and accounting of all operations to attract, repay and service external and internal government borrowings.

Debt policy must comply with certain principles such as:

· maintaining the volume of debt obligations at an economically safe level, taking into account all possible risks;

· timeliness and completeness of fulfillment of debt obligations;

· transparency of debt management;

· minimizing the cost of debt obligations and other tasks.

When managing public debt, based on the set goal, various methods can be used.

Public debt management methods

Method name	Contents of the method	Interest in using the method
conversion	Changing the initial conditions relating to the profitability of the loan	By reducing interest on bonds, the government sets a goal to reduce debt servicing costs
consolidation	Changes in loan terms related to their terms	The state is interested in obtaining loans for long periods
unification	Combining several loans into one, when bonds of previously issued loans are exchanged for bonds of a new loan	The number of securities at a time is reduced, which simplifies work and reduces government expenses
refinancing	Repayment of part of the public debt using newly raised funds	Typically used to pay interest and in times of financial crisis
innovation	Agreement between the borrower state and creditors to replace obligations under the same loan agreement	Government spending is being reduced
deferment	Not only are loan repayment terms postponed, but also, as a rule, income payments are stopped	Further active development of operations to issue new loans is not effective for the state
Cancellation of public debt	Refusal of the state from debt obligations	Declared in the event of the financial insolvency of the state or is a consequence of the coming to power of political forces that do not recognize the financial obligations of the previous authorities.

The Budget Code of the Russian Federation provides for debt restructuring, which is understood as an agreement-based termination of debt obligations that constitute state or municipal debt, with the replacement of these debt obligations with other debt obligations that provide for other conditions for servicing and repaying obligations. Debt restructuring can be carried out with a partial write-off (reduction) of the principal amount.

Together with consolidation, loan unification can also be carried out.

Conversion, consolidation, unification of government loans and exchange of bonds are usually carried out in relation to domestic loans only.

Restructuring of external debt can be carried out on the basis of one or more measures:

· postponement of payments - postponement of payment terms, interest on debt or all debt service payments to a later date than originally agreed upon;

· reduction of the principal amount - a reduction in the amount of outstanding debt by either directly writing off part of the debt, or selling at a discount on the secondary market, or converting into any national assets of the debtor's country;

· debt forgiveness - applied in a very limited manner on a bilateral and multilateral basis, mainly in relation to those countries and those debts that cannot be paid in the medium term under any, even the most favorable conditions;

· debt recapitalization - exchanging debts for bonds of debtors or providing new loans with the purpose of paying off past debts;

· debt for shares – creditors agree to waive their contractual rights against a defaulting debtor in exchange for a specified share of shares.

Accounting and registration of state debt obligations of the Russian Federation are carried out in the state debt books of internal and external debt of the Russian Federation. The state debt book of the Russian Federation is maintained by the Ministry of Finance of the Russian Federation. The book contains information about the volume of debt obligations, the date of occurrence of obligations, the fulfillment of these obligations in whole or in part, as well as other information.

To measure public debt and international comparison of the debt dependence of individual countries, a number of indicators and indicators of public debt are used in world practice:

1. External debt/gross domestic product;

2. External debt/export of goods and services;

3. Cost of servicing external debt/export of goods and services

4. Interest payments/GDP

5. Short-term external debt/external debt

The most common is the “external debt to GDP ratio”. It determines the possibility of servicing external debt and repaying payments using the produced product of a given year. If there is growth in GDP, then growth in external debt is not scary either. The main thing is that the growth rate of GDP does not lag behind the growth rate of external debt. The limit value of this indicator is not higher than 80% (some consider 50% to be a critical level).

An important role is also played by the indicator “external debt per capita”, which more accurately reflects the degree of foreign economic dependence of the country than the absolute value of external debt.

Thus, all the indicators presented are of great importance for analyzing the economic situation in a particular country.

More on the topic: Public debt content and structure. Public debt management:

1. 1.3. Structures of the financial system and governing bodies of the financial system
2. 5.1. Market institutional transformations in the region as a prerequisite for improving state property management
3. 4.4. Reengineering of business processes in the process of restructuring the management structure
4. 2.8. State and municipal credit. Public debt management
5. Lectures 10-11. Contents and features of the organization of enterprise finances
6. 10. “The problem of state regulation of the economy (GRE). The state budget"
7. Characteristics of the public debt of the Republic of Belarus
8. 12.2 State budget deficit. Public debt problems
9. 16. Economic content and functional purpose of budget expenditures.
10. Public debt content and structure. Public debt management.
11. 1. 1. Main directions of development of the theory of public debt
12. Current problems of managing public debt in Russia
13. 1.1. State credit as an economic category. State regulation of the economy and state credit

- Copyright - Advocacy - Administrative law - Administrative process - Antimonopoly and competition law - Arbitration (economic) process - Audit - Banking system - Banking law - Business - Accounting - Property law - State law and administration - Civil law and process -

Public debt is the debt obligations of the Russian Federation to individuals and legal entities, foreign states and international organizations.

External debt is obligations to non-residents in foreign currency. Domestic debt - obligations to residents in rubles.

The national debt is secured by federal ownership.

Debt obligations of the Russian Federation exist in the form of:

Credit agreements signed on behalf of the Russian Federation with credit organizations, foreign states and international financial organizations;
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 (from one to five years) and long-term (from five to thirty years).

The public debt is repaid within the terms established by the terms of the loans, but these loans cannot exceed 30 years.

Public debt management is carried out by the government of the Russian Federation.

The Russian Federation is not responsible for the debt obligations of the constituent entities of the Russian Federation and municipalities if they were not guaranteed by the federal government.

The maximum volumes of state internal and external debt are determined by the law on the federal budget for the next year. In accordance with Article 106 of the Budget Code of the Russian Federation, the maximum volume of government external borrowings should not exceed the annual volume of payments for servicing and repaying government 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 from the federal budget for the next financial year, indicating the purpose, sources, repayment deadlines and the total volume of borrowings. It covers all loans and government guarantees that exceed the equivalent of $10 million.

The decision to issue government securities is taken by the government accordingly in accordance with the maximum volumes of the budget deficit and public debt established in accordance with the budget law, as well as the Domestic Borrowing Program.

The decision on the issue of government securities reflects information about the issuer of the securities, the volume and conditions of the issue.

A state guarantee is a way of ensuring 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 receiving the guarantee of his obligations to third parties.

The law on the federal budget for the next year determines the maximum amount of state guarantees. The total amount of government guarantees expressed in rubles is included in the government internal debt.

The total amount of government guarantees denominated in foreign currency is included in the government external debt.

In accordance with Article 118 of the Budget Code of the Russian Federation, budgetary institutions do not have the right to take loans from credit organizations. But they have the right to receive loans from budgets and state extra-budgetary funds. The register of debt of state unitary enterprises is maintained by the Treasury.

State books of internal and external debt of the Russian Federation are maintained by the Ministry of Finance of the Russian Federation.

Information on the volume of debt obligations of the Russian Federation, constituent entities of the Federation and municipalities on issued securities is entered into the State Debt Book.

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.

Debt restructuring may be used to reduce the debt burden. It means the repayment of previous debt obligations with the simultaneous implementation of new borrowings in the amount of repaid debt obligations and the establishment of new debt service conditions.

The following public debt management tools are also used:

Consolidation - combining several loans into one longer-term loan with a change in the interest rate;
conversion of a government loan - a change in the original terms of the loan regarding profitability. Most often, during the conversion, the government reduces the interest rate;
conversion of external debt - a means of reducing external debt by fulfilling debt obligations to creditors by transferring to them bills and shares in national currency;
novation is the replacement of an original obligation between the parties with another obligation between the same parties, providing for a different method of execution.

In order to ensure its foreign policy and foreign economic interests, Russia provides loans to foreign countries. 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 write-off of debt of foreign states to the Russian Federation must be ratified by the State Duma.

External financing of the state is a consequence of the objective need to attract additional sources to finance government spending and the state budget deficit when all possible sources of mobilizing monetary resources within the country have been exhausted. External financing is attracted by the state to finance its expenses and the state budget deficit when it is impossible to mobilize these funds within the country. In other words, international financing is used when public finances have high deficits and need to finance expenditures. External funding is attracted in two directions: public and private (by source).

External financing also varies in form. It is carried out both in the form of gratuitous financing and in the form of repayable lending. International financing is structured by terms (in terms of lending) into short-term (up to 1 year), medium-term (from 1 to 7 years) and long-term.

A debt servicing system requires the creation of a debt management system.

The public debt system requires the creation of a debt management system. Servicing public debts, internal and external, includes in stages: repayment of interest; repayment of the capital amount of the debt and its refinancing if necessary.

Thus, the simplest scheme for servicing public debt illustrates the sufficient complexity of managing it. Due to the high cost of public debts, the debt management system includes negotiations on changing the terms of debts, the mechanism of debt refinancing itself, and monitoring indicators of the volume and level of debt, and comparing them with other indicators of public finances (GDP, state budget, etc.).

Debt refinancing is a whole mechanism (another name is restructuring).

Public debt management is one of the main directions of state financial policy.

Debt refinancing is a system of measures to change the terms of loans: terms, volumes, cost (interest).

Cancellation implies the complete cancellation of the debt (applies only in the event of complete bankruptcy of the state as a debtor).

Prolongation is the extension of debt terms and interest repayments.

Securitization is the resale of government bonds on the open market (stock exchange).

Capitalization is the restructuring of government bonds into private shares through their resale on the stock exchange.

The government internal debt of the Russian Federation consists of debt from past years and newly arising debt. The state internal debt of the Russian Federation is secured by all assets at the disposal of the Government of the Russian Federation.

Debt obligations of the Russian Federation can be in the form of:

Loans received by the Government of the Russian Federation;
government loans carried out through the issue of securities on behalf of the Government of the Russian Federation;
other debt obligations guaranteed by the Government of the Russian Federation.

The procedure, conditions for issuing (issuing) and placing debt obligations of the Russian Federation are determined by the Government of the Russian Federation. This activity is called: public debt management.

The servicing of the state internal debt of the Russian Federation is carried out by the Central Bank of the Russian Federation and its institutions, unless otherwise established by the Government of the Russian Federation, and is carried out through operations for the placement of debt obligations of the Russian Federation, their repayment and the payment of income in the form of interest on them or in another form.

Control over the state of public debt is carried out by representative and executive bodies of state power.

The management of public internal debt is understood as a set of government measures to pay income to creditors and repay loans, as well as the procedure, conditions for issuing (issuing) and placing debt obligations of the Russian Federation.

The main methods of managing public debt include:

Refinancing is the repayment of old government debt by issuing new loans.
Conversion is a change in the yield of a loan, for example, a decrease or increase in the interest rate of income paid by the government to its creditors.
Consolidation is an increase in the validity period of already issued loans.
Unification - combining several loans into one.
Deferment of loan repayment is carried out in conditions where further active development of operations to issue new loans is not effective for the state.
Debt cancellation is the state's refusal of debt obligations.
Debt restructuring is the repayment of debt obligations with the simultaneous implementation of borrowings (assuming other debt obligations) in the amount of repaid debt obligations with the establishment of other conditions for servicing debt obligations and the timing of their repayment. The Budget Code of the Russian Federation states that debt restructuring can be carried out with a partial write-off (reduction) of the principal amount.

External public debt

External debt is the part of the total debt of economic entities in the country attributable to foreign creditors.

External debt is divided into state and corporate. In addition, in countries with freely convertible currencies, it is possible for citizens to receive loans abroad, that is, private debt is allocated to a separate category, but for our country this is rare.

The state external debt of Russia, according to Art. 6 of the Budget Code of the Russian Federation are “obligations arising in foreign currency, with the exception of obligations of constituent entities of the Russian Federation and municipalities to the Russian Federation, arising in foreign currency as part of the use of targeted foreign loans (borrowings).”

The maximum size of Russia's public external debt reached almost 160 billion. However, most of this amount fell specifically on the USSR and was subsequently restructured and paid off.

Thus, today the amount of government borrowing by Russian authorities on the foreign market is considered small.

Public debt servicing

Servicing of the state internal debt of the Russian Federation is carried out by the Bank of Russia and its institutions through operations for the placement of debt obligations of the Russian Federation, their repayment and the payment of income in the form of interest on them or in another form.

The performance by the Bank of Russia of the functions of the general agent of the Government of the Russian Federation for the placement of debt obligations, their repayment and the payment of income in the form of interest on them is carried out on the basis of special agreements concluded with the federal executive body authorized by the Government of the Russian Federation to perform the functions of an issuer of government securities.

The Bank of Russia performs the functions of a general agent for servicing government internal debt free of charge.

Payment for the services of agents for placement and servicing of public debt is carried out at the expense of federal budget funds allocated for servicing public debt.

Servicing of the state internal debt of a constituent entity of the Russian Federation and municipal debt is carried out in accordance with federal laws, laws of a constituent entity of the Russian Federation and legal acts of local governments.

Information on debt obligations is entered by authorized bodies into the State Debt Book of the Russian Federation, the state debt book of a constituent entity of the Russian Federation or the municipal debt book within a period not exceeding 3 days from the moment the obligation arises.

Information entered into the municipal debt book is subject to mandatory transfer to the body maintaining the state debt book of the corresponding subject of the Russian Federation, then this information is transferred to the body maintaining the State Debt Book of the Russian Federation in the manner and within the time limits established by this body. The State Debt Book of the Russian Federation contains information about the volume of debt obligations of the Russian Federation, the date of occurrence of obligations, forms of securing obligations, the fulfillment of these obligations in whole or in part, and other information.

The state debt book of a constituent entity of the Russian Federation includes information on the volume of debt obligations of a constituent entity of the Russian Federation for all state borrowings of a constituent entity of the Russian Federation, the date of borrowing, forms of securing obligations, the fulfillment of these obligations in whole or in part, as well as other information, the composition of which is established by the executive authority of the constituent entity RF.

The municipal debt book contains information about the volume of debt obligations of municipalities, the date of borrowing, forms of security for obligations, the fulfillment of these obligations in whole or in part, as well as other information, the composition of which is established by the representative body of local government.

The servicing of state (municipal) debt refers to operations for the payment of income on state and municipal debt obligations in the form of interest on them and (or) a discount, carried out at the expense of the corresponding budget.

The performance by the Central Bank of the Russian Federation, a credit organization or other specialized financial organization of the functions of a general agent (agent) of the Government of the Russian Federation for servicing debt obligations of the Russian Federation, as well as their placement, redemption, exchange and repayment is carried out on the basis of agency agreements concluded with the Ministry of Finance of the Russian Federation Federation.

The Central Bank of the Russian Federation performs the functions of the general agent specified in paragraph 2 of this article free of charge.

Payment for the services of agents for the performance of functions provided for by agency agreements concluded with the Ministry of Finance of the Russian Federation is made from the federal budget.

The performance by a credit organization or other specialized financial organization of the functions of a general agent (agent) of the executive body of state power of a constituent entity of the Russian Federation for servicing debt obligations of a constituent entity of the Russian Federation, as well as their placement, redemption, exchange and repayment is carried out on the basis of agency agreements concluded with the executive body of the state authorities of the constituent entity of the Russian Federation carrying out government borrowings on behalf of the constituent entity of the Russian Federation.

Payment for the services of agents for the performance of functions provided for by agency agreements concluded with the executive body of state power of a constituent entity of the Russian Federation, carrying out government borrowings on behalf of the constituent entity of the Russian Federation, is made from the budget of the constituent entity of the Russian Federation.

The performance by a credit institution or other specialized financial organization of the functions of a general agent (agent) of the local administration for servicing municipal debt obligations, as well as their placement, redemption, exchange and repayment is carried out on the basis of agency agreements concluded with the local administration.

Payment for the services of agents to perform the functions provided for in agency agreements concluded with the local administration is made from the local budget.

The commented article, in accordance with Law No. 63-FZ, is fully presented in a new edition. One of the changes is that paragraph 1 of the commented article defines the concept of “servicing state (municipal) debt”: operations to pay income on state and municipal debt obligations in the form of interest on them and (or) discount, carried out at the expense of funds corresponding budget.

In accordance with paragraph 2 of Art. 113 of the Code, all expenses for servicing debt obligations, including the discount (or the difference between the placement price and the redemption (redemption) price for state or municipal securities), are taken into account in the budget as expenses for servicing state or municipal debt.

As established in Art. 23 of the Law on the Bank of Russia:

The Bank of Russia carries out operations to service Russia's public debt without charging a commission;
- the powers of the Bank of Russia to service Russia’s public debt are determined by federal laws;
- The Bank of Russia and the Ministry of Finance of Russia, if necessary, enter into agreements on carrying out the above operations on behalf of the Government of the Russian Federation.

Article 21 of the Law on the Bank of Russia provides that the Bank of Russia advises the Ministry of Finance of Russia on the issues of the schedule for issuing Russian government securities and repaying Russia's government debt, taking into account their impact on the state of the banking system and the priorities of the unified state monetary policy.

The exercise of the function of the general agent for government securities of Russia is enshrined as a budgetary authority of the Bank of Russia in clause 3 of Art. 155 of the Code. The performance by the Bank of Russia of the functions of a general agent for government short-term zero-coupon bonds, federal loan bonds and government federal bonds is regulated by the Regulations on the servicing and circulation of issues of federal government securities, approved by the Bank of Russia N 219-P. For the purposes of the said Regulations, the Bank of Russia in the bond market performs the functions of the issuer's general agent for servicing bond issues, dealer (primary dealer), regulatory body, organizer of cash settlements for bond transactions, market regulator, and other functions provided for by current legislation.

According to paragraph 4 of the commented article, payment for the services of agents other than the Bank of Russia (i.e., credit institutions or other specialized financial organizations that, on the basis of an agreement with the Ministry of Finance of Russia, carry out the functions of servicing Russian debt obligations, as well as their placement, redemption, exchange and repayment) is carried out at the expense of the federal budget.

In the previously valid version of clause 5 of the commented article (i.e., before the amendments to N 63-FZ), it was provided that payment for the services of agents for placement and servicing of public debt is carried out within the limits of the norms approved by the Government of the Russian Federation, at the expense of federal budget funds allocated to service the public debt. As an example of the implementation of this provision, it is advisable to cite the Decree of the Government of the Russian Federation N 771 “Issues of the issue and circulation of state savings bonds”, which approved the General conditions for the issue and circulation of state savings bonds.

Thus, in paragraph 2 of the Government of the Russian Federation No. 771 it is determined that payment for the services of an agent for the placement and servicing of government savings bonds cannot exceed:

In relation to services for conducting an auction for the placement of government savings bonds - 0.025% of the amount of government savings bonds actually placed at the auction based on their nominal value;
- in relation to services for the payment of income on government savings bonds and their redemption - 0.025% of the amount of income paid on government savings bonds and the amount of funds allocated for their redemption.

Paragraph 5 of the commented article provides for the possibility of attracting, on the basis of agency agreements, credit organizations and other specialized financial organizations by the executive state government of a constituent entity of the Russian Federation, carrying out government borrowings on behalf of the constituent entity of the Russian Federation, to service the debt obligations of the constituent entity of the Russian Federation, as well as their placement, redemption, exchange and repayment.

According to paragraph 6 of the commented article, payment for the services of agents for the performance of functions provided for by such agency agreements is made from the budget of the constituent entity of the Russian Federation.

Paragraph 7 of the commented article provides for the possibility of the local administration of a municipality to attract credit organizations and other specialized financial organizations on the basis of agency agreements to service municipal debt obligations, as well as their placement, redemption, exchange and repayment.

In accordance with paragraph 8 of the commented article, payment for the services of agents to perform the functions provided for in such agency agreements is made from the local budget.

State and municipal debt

Debts of budgets at different levels differ due to the characteristics of borrowing.

The public debt of the Russian Federation is the debt obligations of the Russian Federation to individuals and legal entities, foreign states, international organizations and other subjects of international law, including obligations under state guarantees provided by the Russian Federation.

The government debt of the Russian Federation is fully and unconditionally secured by all federally owned property.

The public debt of the Russian Federation, in accordance with the budget classification, is divided into external debt and internal debt.

External debt is the debt obligations of the Government of the Russian Federation for loans received from other states, international financial organizations, for example from the International Monetary Fund or the World Bank, and from foreign financial organizations.

Domestic debt – debt obligations of the Government of the Russian Federation, expressed in the currency of the Russian Federation, which include:

Debt obligations under loans received by the Government of the Russian Federation from Russian financial institutions;
- debt obligations for government loans carried out by issuing securities on behalf of the Russian Federation;
- obligations under state guarantees provided by the Government of the Russian Federation.

The essence of a state loan is that the creditors of the state are the owners of the loan capital, who voluntarily lend funds to the state.

The source of repayment of government loans and payment of interest on them are funds mobilized by the state in the form of taxes. Lenders receive income in the form of interest.

The public debt of a constituent entity of the Russian Federation is the totality of debt obligations of a constituent entity of the Russian Federation. This public debt is fully and unconditionally secured by all property owned by a constituent entity of the Russian Federation.

The volume of public debt of a subject includes: the principal nominal amount of debt on government securities of constituent entities of the Russian Federation, the volume of principal debt on loans received by a constituent entity of the Russian Federation, the volume of obligations under state guarantees provided by a constituent entity of the Russian Federation.

Municipal debt is the totality of debt obligations of a municipality. The structure of debt obligations included in municipal debt, as well as its collateral with municipal property, are similar to the obligations of a constituent entity of the Russian Federation.

Information on debt obligations is entered by the relevant authorized bodies into the State Debt Book, the state debt book of a constituent entity of the Russian Federation or the municipal debt book.

The debt book of each level of the budget system contains information about the volume of debt obligations for all borrowings, the date of borrowing, forms of securing obligations, the fulfillment of obligations in whole or in part, as well as other information determined by the executive body of the corresponding level.

Information entered into the debt book of a municipal entity is transferred to the body maintaining the debt book of the constituent entity of the Russian Federation. Information entered into the debt book of a subject of the Russian Federation is sent to the body maintaining the debt book of the Russian Federation. Thus, the federal government has information both about the state of debt in individual territories and in the Russian Federation as a whole.

Government debt deficit

The state budget, like any balance sheet, involves equalizing income and expenses. However, as a rule, when a budget is adopted, planned revenues and expenses do not coincide. The excess of income over expenses forms a budget surplus (or surplus), the excess of expenses over income means a budget deficit (or deficit). Typically, the budget deficit is expressed as a percentage of gross domestic product (GDP).

There are cyclical and structural government budget deficits. A cyclical deficit is associated with an automatic decrease in tax revenues and an increase in government spending as a result of a downturn in the economy. The structural deficit of the government budget is the difference between budget revenues and expenditures under conditions of full employment (full employment is achieved by special discretionary government policies).

The actual size of the budget deficit is the sum of the cyclical and structural deficits.

Public debt is the result of financial borrowings by the state 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 budget surpluses, and consists of the debt of the central government, regional and local authorities, government organizations, and enterprises.

Public debt is part of the broader concept of “public credit” and is a passive form of government lending: the state acts as a borrower, and creditors are individuals purchasing government securities (bonds and treasury bills).

The totality of government-issued securities determines the amount of government debt, which can be:

Current - its repayment and interest payment occurs within the established period;
capital – debt payments are postponed to a later date (debt restructuring, default, etc.).

Government securities can be classified according to a number of criteria:

According to the form of organization of the issue: documentary and non-documentary;
by terms of circulation: short-term (imply circulation for a period of up to one year), medium-term (from one to five years), long-term (apply for more than five years);
by method of income payment: interest, discount, winning, mixed;
by method of circulation: market (freely circulated on the secondary market) and non-market (traded only between the issuer and the investor).

The set of government actions to manage public credit includes:

Servicing and repayment of public debt;
issue and placement of new bond issues;
maintaining the secondary debt market;
regulation of the public credit market;
development of procedures, conditions and forms for the provision of loans by the state.

The main government bodies responsible for managing public credit are the Ministry of Finance and the Central Bank. The goals of public credit management are to achieve economic, social and political goals, which are determined by the current state of the country’s socio-economic development, trends and prospects for its development.

Significant government debt

Having clarified the economic nature of the government budget deficit, we come close to analyzing the government debt, which is the debt accumulated by the government as a result of borrowing money to finance previous budget deficits. The government debt is equal to the sum of past budget deficits minus budget surpluses.

Analysis of the impact of the budget deficit on the economy in the short term allows us to move on to considering the long-term impact on the state of its public debt. To do this, it is necessary to highlight the consequences arising from internal and external debts. Domestic debt is what a country owes to its citizens, while external debt is what it owes to foreigners. It involves a drain of resources from the debtor country, which narrows the possibilities for consumption and investment in the national economy.

Economically developed countries tend to have significant public domestic debt. On the one hand, this is “a loan from the nation to itself.” It does not cause an outflow of funds from the country and does not directly lead to a direct reduction in the wealth of the nation, while the positive effects from the mobilization of additional financial resources, which led to the stabilization of economic growth rates and their increase, can significantly cover the costs of servicing domestic public debt.

On the other hand, one cannot ignore a number of possible negative consequences of domestic public debt:

1. When repaying debt at the expense of budgetary funds, and in fact, at the expense of taxpayers, there is an outflow of income to the owners of securities, and therefore to the wealthy sections of society, which leads to increased differentiation of income.
2. The need to service debt may cause an increase in taxes and, as a result, a decrease in business activity in the economy.
3. With a large domestic debt, the effect of “crowding out private investment” may appear and intensify. The state's entry into the loan market leads to increased competition on it, as a result of which the interest rate rises, which reduces the number of profitable investment projects, reduces investment activity in the economy, and hence the rate of economic growth. Bonds and shares of private enterprises, on the one hand, and government bonds, on the other, are interchangeable for economic entities. The latter may be even more attractive for certain groups of the population, since they have greater reliability compared to private sector securities. Funds that could be productively used in the economy, invested in the development of the real private sector, are spent on the purchase of government securities and ultimately can turn largely into unproductive expenditures of the state. Even if a certain proportion of these funds are used productively by the state, there will still be a transfer of resources from the private sector to the public sector, which is less efficient by nature, which can lead to a general decrease in efficiency in the economy. The intensity of the erosion of private capital depends on many factors, including the scale of the increase in public debt, the trust of economic entities in the current government and the associated propensity to save and hold financial assets in one form or another.
4. Modern theories of inflation pay attention to the relationship between the rate of inflation in a country and the amount of its public debt. The mechanisms of this connection are varied. In particular, economic agents can expect that the government will finance debt payments in the future through the issue of money, and this will lead to an increase in prices, which, through the mechanism of rational expectations, will lead to an increase in prices in the present. By increasing domestic public debt, the state stimulates inflation. Paying off domestic government debt by increasing the supply of money based on its emission can lead to an avalanche-like increase in inflation rates, destructive for the economy.

As for the impact of external debt on the economy, I would like to note the following. The presence of a country's external debt is a common normal global practice. Many countries with developed market economies have large external debts.

However, the following objective negative consequences are possible:

1. Servicing external public debt involves a drain of resources from the debtor country, which narrows the possibilities for consumption and investment in the national economy.
2. Large external debt can lead the national economy to a serious economic crisis. The country is forced to export more than it imports in order to pay interest on the debt and part of the debt on its obligations.
3. A rapid increase in external debt can place a country in an unfavorable position of dependence on creditors, reduces the country's international authority and undermines public confidence in the policies of its government.

Public debt management is carried out through the effective use of public borrowing funds, raising funds to pay off the debt, as well as neutralizing its negative impact on the country's economy.

The amount of public debt should not exceed the size of GDP by more than twice, otherwise too many resources will be allocated to servicing it, which will negatively affect economic development. For the same reason, it is undesirable to attract new loans if payments on external obligations account for more than a quarter of the country’s foreign trade turnover.

If investments of government borrowing funds generate income that exceeds the amount of debt and interest payments on it, then this means that these funds are used effectively. The minimum criterion for the efficiency of using borrowed funds is the amount of interest on the debt. If this condition is not met, then it is necessary to attract other sources to pay interest on the debt in order to avoid penalties for delayed payments.

If the proceeds from the placement of public debt are insufficient to repay it, then the state can:

Refuse the debt completely or partially;
use new borrowing to pay off existing debts;
roll over debt;
resort to debt conversion;
sell bad debts.

Each of these measures has certain consequences. If debts are waived, the state will not be able to count on loans in the future. The use of new borrowing to pay off old debts leads to a further increase in public debt. The use of prolongation extends the terms of payment of public debt, but the amount of interest increases, since interest will have to be paid not only on the amount of debt, but also on the amount of unpaid interest. When restructuring, the debt is transferred to the rank of long-term, interest payments do not increase, which is why this measure is considered preferable to the previous one.

Conversion of government debt involves its transfer into long-term foreign investments when creditor countries purchase domestic real estate, shares of domestic enterprises, etc. as debt.

Bad debts arise because a country has previously provided loans to other countries that are now unable to repay them. Although bad debts are sold by a given country at a much lower cost, their sale allows some funds to be raised to pay off the national debt.

The dynamics of government debt affects the situation in the money market. The growth of debt is accompanied by an expansion of the money supply due to the operation of the printing press, the consumption of savings of economic entities and excess reserves of commercial banks, which increases the rate of inflation. Reducing debt leads to a contraction in the money supply, which reduces economic growth. In order to neutralize these negative consequences, the state must tighten monetary and tax policies during the period of increasing public debt, and soften it as the latter decreases.

Large public debt generated by large budget deficits can negatively affect the state of the national economy, therefore, currently in most developed countries, governments have abandoned the deficit financing of the economy recommended by Keynesian theory and are pursuing fiscal policy based on the recommendations of neoclassical theory. According to this approach, the growth rate of budget revenues and expenditures is reduced, and the scale of redistribution of national income through the budget is reduced. In contrast to the Keynesian concept, which emphasizes stimulating investment through increased government spending, supply-side theory assumes an increase in investment activity primarily due to an increase in savings, which must be stimulated, in particular, by reducing the degree of progressivity of taxation or by replacing progressive taxation with proportional taxation.

Structure of public debt

Debt obligations of the Russian Federation may exist in the form of:

Credit agreements and agreements concluded on behalf of the Russian Federation, as a borrower, with credit organizations, foreign states and international financial organizations;
- government loans made by issuing securities on behalf of the Russian Federation;
- treaties and agreements on the receipt by the Russian Federation of budget loans from budgets of other levels of the budget system of the Russian Federation;
- agreements on the provision of state guarantees by the Russian Federation;
- agreements and treaties, including international ones, concluded on behalf of the Russian Federation, on the prolongation and restructuring of debt obligations of the Russian Federation of previous years.

Debt obligations of the Russian Federation can be short-term (up to one year), medium-term (over one year to five years) and long-term (over five years to 30 years).

Debt obligations of the Russian Federation are repaid within periods determined by the specific terms of the loan and cannot exceed 30 years.

Changing the terms of a government loan issued for circulation, including the terms of payment and the amount of interest payments, the circulation period, is not allowed.

The volume of 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 public 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 foreign governments, credit organizations, firms and international financial organizations.

Internal and external;
- capital and current.

Capital public debt includes the entire amount of debt obligations accepted but not repaid by the Russian Federation, with interest accrued on the amount of debt. Current public debt assumes the amount of expenses incurred by authorized federal bodies on debt obligations accepted by the Russian Federation, the due date of which has already arrived.

Subjects of public debt

The public debt of a constituent entity of the Russian Federation is the totality of its obligations to repay debts. State debt in full and without any conditions is secured by property owned by a constituent entity of the Russian Federation. The property constitutes the subject's treasury.

The public debt of a constituent entity of the Russian Federation arises for two reasons:

1) the debt arises as a result of taking a loan from the state on a contractual basis;
2) the debt is the result of a guarantor for the obligations of third parties.

This makes up the types of debt obligations.

When taking a loan from the state, debt obligations can take the form of:

Conclusion of agreements and agreements on loans;
government loans of funds by the entity, which are carried out using securities;
receipt by the entity of loans and credits from the budget on a contractual basis.

The agreement on obligations has a state basis. In addition, the debt obligation may have a contractual basis at the international level. An agreement is also concluded to renew obligations on debts for previous years.

The Budget Code also provides for the fact that debt obligations cannot take a form other than those indicated above. This is stated in the Budget Code of the Russian Federation.

The volume of public debt of the constituent entities of the Russian Federation includes the following concepts:

Loans area;
par value of debt on securities;
the amount of the principal debt, based on budget loans received by the entity from budgets of other levels.

Only the payment of the principal debt on a government loan is provided.

The following debts are not included in the concept of a subject’s public debt:

A) the amount accrued on the loan with unreimbursed interest;
b) the amount of monetary commissions associated with the payment of debt;
c) the amount of penalties accrued for the delay in repaying the public debt, as well as the fine accrued for the subject’s incorrect implementation of the debt repayment scheme.

One way or another, there is some degree of uncertainty that the listed types of debt payment obligations, although not included in the state debt of a constituent entity of the Russian Federation, must still be paid when the obligation is fulfilled.

The concept of state guarantees for the state debt of a subject includes obligations under state guarantees.

The state guarantee of the subject recognizes the security of civil obligations. In this case, the subject must draw up an obligation in writing, in which he guarantees that the person holding the guarantee at the state level will fulfill his obligations to the third party. Obligations must be fulfilled in full or in part. The state guarantee of the subject has a contractual basis.

Based on the rules provided by the state guarantee, the subject (guarantor) of the Russian Federation gives, at the request of a second person, called the principal, an obligation to pay the creditor (beneficiary) the debt, taking into account the obligations set forth by the guarantor. There are two parties to the contract; subject of the Russian Federation (principal) and legal entities, as well as municipal structures.

State guarantees are given to other entities or legal entities with the understanding that obligations will be fulfilled to third parties. An agreement on the provision of a guarantee at the state level must take into account the obligation secured by this guarantee.

The state guarantee must be documented. This is a requirement. Failure to comply with this rule makes the state guarantee unofficial.

Guarantees at the state level should include:

Information about the guarantor. This includes the name of the subject, as well as the name of the body that issued the guarantee.
The scope of obligations must be determined.
The warranty period depends on the period of fulfillment of obligations.
Guarantees are usually implemented on a competitive basis.

Under a government guarantee, the guarantor is liable for subsidies in addition to the liability of the debtor under the guarantee obligation. The state guarantee, which is provided for by the obligation to the beneficiary, is limited to the payment of the amount specified in the guarantee obligation. The guarantor, who has fulfilled the principal's obligation, has the right to demand from the principal reimbursement of funds paid to a third party under the obligations of the state guarantee of a constituent entity of the Russian Federation to the beneficiary. The amount must be reimbursed in full, as provided for by the civil legal code of the Russian Federation.

In civil law, such an action received the term “regressive claim of the guarantor against the principal.” The fulfillment of the subject's guarantees on a state basis is subject to expression in the amount of expenditure of the budgets of the constituent entities of the Russian Federation as the provision of a credit loan. If guarantee payments do not lead to the emergence of equivalent claims on the part of the guarantor to the debtor who has not fulfilled his obligation, the fulfillment of state guarantees is taken into account in the sources of payment of the budget deficit of the constituent entity of the Russian Federation.

The law on the budget of a constituent entity of the Russian Federation for the next financial year provides for the provision of a list of guarantees to individual entities, municipal organizations and legal entities in an amount of more than 0.01% of the expenditure of these budget funds. The amount of guarantees provided is included in the debt of a constituent entity of the Russian Federation as a type of obligation to repay the debt. When the recipient of the guarantee fulfills the obligations under the amount of debt specified in the guarantee, the liability of the subject of the Russian Federation is reduced.

It should be noted that the provision by a subject of the Russian Federation of a state guarantee for the obligations of the principal does not create a debt on the part of the subject itself. A guarantee presupposes that the subject has obligations set forth in legal documentation. Debts should be repaid provided that the principal has not fulfilled his obligations to the lender. And only if this condition is met, the obligation of the subject becomes its specific obligation to the creditor - the person to whom the guarantee was provided by the subject. It is also important to know that the indicated amount of the subject’s debt is of some unofficial nature, since there may not be an obligation to pay debts.

Guarantees issued by constituent entities of the Russian Federation, accounting for the fulfillment by the principals of all these guarantees, as well as tracking payments under guarantees are the functions of the financial authority. The results of this accounting are presented to the government authority.

Management of the public debt of a constituent entity of the Russian Federation may be entrusted to the appropriate executive bodies representing state power. The budget of the recipient (principal) must be reviewed by the financial authority.

The relevant government authority has the right to entrust the control body with checking the financial solvency of the principal. For example, based on the provisions of the law in force in St. Petersburg, guarantees must be provided by the administrative center of the city. Namely: the function of the authorities is to draw up and implement the budget of St. Petersburg. All this takes place with the permission of the city Legislative Assembly, which is taken into account by the resolution of the assembly.

In the event that a state guarantee of St. Petersburg is presented, then the obligation of the city Administration body is to be responsible for finances and conducting an audit of the financial condition of the principal specified in the guarantee agreement.

The right of the city legislative assembly remains to instruct the Chamber of Control and Accounts to conduct an audit of the recipient's budget under the state guarantee. At the same time, a maximum amount is provided for the public debt of a constituent entity of the Russian Federation. Namely: there is a provision that for the next financial year the upper limit on the debt of a given entity must be indicated. The amount of the maximum amount of obligations under the state guarantee must also be fixed.

The public debt of a constituent entity of the Russian Federation has its limits. The state's debt should not be higher than its budget revenues, without any financial injections from budget funds. The limits of monetary spending on servicing and repaying government loans have also been established.

The implementation of government borrowing by an entity, as well as guarantees provided by this entity at the state level to other borrowers, are possible only if the budget law for the current financial year specifies the following points:

Raising funds from sources of financing the budget deficit;
designation of the national debt limit.

In this case, the limit of expenses for servicing a Great Dane on a state basis is considered to be an amount not exceeding 15% of the amount of expenses from the budget. The right of subjects of the Russian Federation remains to specify the parameters of public debt.

For example, indicators of public debt of a constituent entity of the Russian Federation and debt-related indicators:

1) The maximum figure for public debt should not be more than 50% of the city’s revenue, not taking into account financial revenues from budget sources at other levels.
2) The maximum limit for state guarantees of the city should not exceed 20% of budget revenues without financial assistance from other levels.
3) The limit on expenses for servicing the city’s public debt should not be higher than 15% of the amount of city budget expenditure during the current year.
4) The level of deficit in the city budget should not be higher than 15% of budget revenues excluding cash subsidies from the federal budget.

All these points are provided for by the law of St. Petersburg on budget revenues for the current year.

In addition, the law on the budget of St. Petersburg provides for the following provisions:

A) a list of guarantees, the volume of which is higher than 0.01% of the city budget;
b) the amount of funds raised from sources to cover the city budget deficit.

The Budget Code also regulates the excess of the maximum amount of public debt, the maximum amount of expenditure on servicing the public debt and the associated consequences.

The volume of public debt of the constituent entities of the Russian Federation has its own legislative restrictions. If an excess of the maximum limit of the public debt, which is established for the subject, is recorded, but at the same time the subject can pay off its debts, then the subject’s acceptance of new obligations to pay off the debt can only clarify the budget parameters in accordance with the requirements for the maximum limits of the expenditure part for servicing and paying off the debt to the state, with the exception of loans taken for the purposes of restructuring and repayment of the subject’s debt.

There is also an excess of the upper limit of public debt, which is established for the subject. With all this, the subject cannot pay off his debts.

In this case, the official representative office has the right to apply sanctions:

Check the execution of the budget of the constituent entity of the Russian Federation;
budget execution may be transferred under the control of the Ministry of Finance of the Russian Federation;
may resort to other measures included in the budget legislation of the Russian Federation.

The debt of a constituent entity of the Russian Federation is repaid within a certain time period provided for by the terms of the loan, and cannot be more than 30 years.

The Budget Code establishes that the executive bodies of a constituent entity of the Russian Federation have all the powers to generate cash receipts to the budget of the subject and in order to pay off their debts and funds for debt servicing.

The public debt is managed by the executive body of the constituent entity of the Russian Federation. This provision is provided for by the Budget Code of the Russian Federation. The Budget Code does not clearly define the concept of debt management.

If we rely on the theory that reveals the content of this concept, then the structure of the public debt of a constituent entity of the Russian Federation includes the following actions:

1) The current state and forecast for the upcoming period of public debt are assessed, taking into account the determination of indicators according to which the amount of debt repayment and servicing is determined.
2) The volume, form and conditions for borrowing funds from the state by a constituent entity of the Russian Federation are determined. Registration of loans is carried out in a certain order.
3) Establishing the volumes and conditions for providing state guarantees to a constituent entity of the Russian Federation in a certain order.
4) Establishing financial control over the receipt of government loans, repayment and servicing of public debt.
5) Preparation and implementation of actions to improve the structure of public debt, including government-owned securities, restructuring of public debt, risk management of government loans.

The Budget Code of the Russian Federation is structured taking into account that the Russian Federation is not responsible for the debt obligations of the constituent entities of the Russian Federation if a guarantee for these obligations was not given by the Russian Federation. Subjects of the Russian Federation and municipal structures are not responsible for their debt obligations if they did not issue a guarantee for them. Repayment and servicing of an internal loan taken from the state is carried out in accordance with the federal laws of the constituent entity of the Russian Federation.

Repayment of public debt includes the following provisions:

A) return of the amount of money borrowed from the city;
b) return of the amount of money borrowed on loans;
c) return of the principal debt on budget loans and budget lending received by the city from financial sources at other levels.

Servicing the public debt is carried out at the expense of reimbursable expenses of the city’s budget funds associated with the fulfillment of debt obligations.

Current expenses include:

A) payment of interest in accordance with the government loan agreement;
b) payment of tax for transactions with valuable government securities;
c) other expenses covering the organization, support of the occurrence and fulfillment of obligations to repay the debt.

Repayment and servicing of public debt is carried out in accordance with financial authorities.

The repayment of public debt is taken into account in the sources of financing deficit budget funds by reducing the amount of financial revenues to repay the deficit. The exception is the fulfillment of obligations under state guarantees, for which the guarantee payments lead to the emergence of equivalent claims on the part of the city in relation to the debtor who has not fulfilled the obligation given in the guarantee.

Fulfillment of obligations under state guarantees, for which payments lead to the emergence of equivalent claims on the part of the city to the debtor, are identified as part of the expenditure of budget funds as the provision of budget lending. All expenses associated with covering the debt to the state are identified in the city budget as expenses for servicing the city's debt.

The structure of the public debt of a constituent entity of the Russian Federation involves establishing an order and reflecting in the budgets the receipt of funds from loans and other debts. They are reflected in the budget as sources of covering the budget deficit.

All expenses for payments on debt obligations, including the discount (the difference between the placement cost and the redemption cost of government securities of a constituent entity of the federation) are reflected in the budget as debt servicing expenses.

The state debt of a constituent entity of the Russian Federation involves a process of restructuring and termination of debt obligations by mutual agreement of the parties. Restructuring is carried out through partial write-off or reduction of debt.

The problem of public debt

An unbalanced budget leads to public debt.

Public debt is the amount of state debt on credit operations, which is the result of borrowing during a state budget deficit. Can be internal and external.

In recent years, all countries have shown a tendency towards a significant increase in public debt, as well as an increase in the share of public debt attributable to foreign creditors, i.e. external debt. This is a cause for serious concern for state governments.

Repaying the debt requires annual interest payments.

Payment of interest and debt amounts imply the transfer of part of real GNP at the disposal of creditors. On the one hand, this leads to a decrease in the real standard of living. On the other hand, it leads to a reduction in investment, which determines the reproduction process with reduced production potential, which means transferring the burden of public debt onto the shoulders of future generations, slowing down growth in the long term.

An important negative of external debt is the increasing dependence of economies on external factors beyond the control of national mechanisms, etc.

In conditions of interaction and interdependence, for a significant number of developing countries, the main source of repayment of external debt is the sale of raw materials, which largely determines the specifics of their budgetary regulation.

Any state strives, if not to cover completely, then to partially reduce the budget deficit.

When developing strategies with a budget deficit, it is advisable to be guided by the following principles:

The budget deficit is evil, but an even greater evil for the economy and finances of the country is its imaginary elimination through purely mathematical operations, so in this case, instead of “treating” the economy, its illness turns into a hidden formula, which is much more difficult to combat.
- Budget balance and even the excess of budget revenues over expenses should not be considered as an integral feature of a healthy, dynamically developing economy. World experience convincingly shows that at certain stages of social development, under conditions specific to each country, a budget deficit is quite acceptable.
- The size of the budget deficit, as evidenced by world experience, should not exceed the maximum permissible size, determined by 2-3% of the gross national product. The presence of a deficit exceeding the maximum permissible size requires the implementation of measures that would lead to its rapid reduction.
- To determine the budget deficit, it is necessary to improve the economy itself, since ensuring dynamism in its development and really tangible efficiency is impossible to achieve the financial stability of the country, no matter what progressive measures are applied.

To cover the budget deficit, methods such as government loans can be used; tightening of taxation; emission of money. The program of specific measures to reduce the budget deficit should include measures that, on the one hand, would stimulate the flow of funds into the country's budget fund, and on the other, would help reduce government spending.

These include:

A) changing the directions of investment of budget funds in sectors of the national economy in order to significantly increase the financial return from each budget ruble;
b) wider use of financial benefits and sanctions, which make it possible to fully take into account specific economic conditions and stimulate the growth of social production;
c) a sharp reduction in government funding, termination of government assistance to foreign countries;
d) reduction in military spending;
e) maintaining funding for only the most important social programs; a moratorium on the adoption of new social programs that require significant budget funding;
f) prohibiting the country's central bank from providing loans to government agencies at any level without proper registration of debt in government securities;
g) attracting foreign capital to the country.

World practice knows four main ways to cope with the state budget deficit:

1) reduction of budget expenditures;
2) finding sources of additional income;
3) release (emission) of unsecured money used to finance government spending;
4) government borrowing (borrowing money from citizens, banks, business organizations, other states and foreign financial organizations).

Let's look at each of these methods in more detail.

Reducing budget expenses. This way of overcoming the budget deficit is superficially the simplest, but in fact the most painful. That is why Russia is unable to follow it, although the opportunities here are enormous, since the domestic economy is served by the state budget to an incredibly high degree.

The reason is simple: the state usually finances those needs of society that no one else wants or can finance, so cutting budget expenditures inevitably entails very undesirable consequences.

For example, if various types of social spending and transfers are cut, public schools and hospitals will no longer receive money to renovate their premises and purchase teaching aids, libraries and museums will be deprived of the opportunity to expand their funds and renovate halls, and large families will not be able to buy new clothes for their children. And if you cut spending on the army, this will lead to early retirement of career officers and the closure of military factories.

Cutting social programs and transfers usually leads to increased tension in society and undermines its political stability, so governments take such a step as a last resort if they fail to implement other ways to overcome the budget deficit.

Finding sources of additional budget revenues. Of course, the best way to cover the budget deficit is to attract additional revenues, but it is extremely difficult to actually solve such a problem. Of course, you can try to increase taxes or duties, but this is a dangerous path. Economic science has long discovered that an excessive increase in the tax burden leads not to an increase, but to a reduction in state tax revenues.

There are two reasons for this:

1) people lose interest in work if too much of their earnings go to paying taxes;
2) they begin to hide their income from taxation, and then the shadow economy quickly develops in the country, and economic relations are criminalized.

Issue (issue) of unsecured money. The easiest and most dangerous way to “plug holes” in the budget is to issue (emission) money by the state in excess of the real needs of the economy. Of course, it is not difficult for a state that has monopolized the right to issue money to print additional banknotes and pay increased salaries to its employees, officers, teachers, and doctors.

But the national market immediately determines the true value of this money. This money is redundant, there is too much of it, it is easily accessible - after all, the state puts it into circulation not in response to the needs of real transactions for the purchase and sale of goods, but simply by paying salaries to its employees. Naturally, the country's economy reacts to the appearance of such excess money with a jump in prices or the disappearance of goods from shelves (if the state tries to set restrictions on price increases).

Excessive emission of money always leads to inflation, and because of this, the budget gain is short-lived. The entire world economic experience shows that the budget always loses the race against inflation. The reason is simple: budget expenditures usually increase faster than the amount of tax revenues, which depend on the inflationary growth of taxpayers’ incomes: expenditures must be made today and at current prices, and taxes are always taken from yesterday’s income, formed at the old price level. As a result, the deficit not only will not decrease, but will even increase.

Government borrowings. Like a citizen or an economic organization, when there is a shortage of money, the state can temporarily borrow (borrow) it in order to turn budget inequality back into identity.

The state can borrow money primarily from its own, i.e. state bank. But the possibilities for lending to the state by a national bank are usually quite limited. In addition, by withdrawing money from the central bank, the state loses the income that it, as the owner of this bank, could receive from lending to private banks.

And therefore it is more profitable to borrow money from citizens and economic organizations of the country. The forms of such lending can take many different forms, but most often it is done through the sale of government securities (the government's obligation to repay the amount borrowed plus interest on the use of that money).

It is not difficult to understand that borrowing money to solve the problem of lack of money today immediately gives rise to another problem - the need to get money to pay off debts tomorrow. The point is that borrowing money creates public debt.

So, if the public debt has reached enormous proportions, it needs to be optimized.

Public debt management must be systematic and requires the formation of a special strategic program. The public debt management strategy should be aimed at mitigating payment peaks, improving the structure of the debt, reducing the cost of servicing it, and bringing the size of the debt into line with the country’s ability to service and repay it.

Public debt management is understood as a set of government measures to pay income to creditors and repay loans, change the terms of already issued loans and issue new ones.

The main objectives of public debt management are:

Maintaining the volume of public debt at an economically safe level;
ensuring the fulfillment of state obligations in full;
optimization of the cost of servicing public debt.

In the process of managing public debt, the following tasks are solved:

1) maintaining the amount of internal and external public debt at a level that ensures the preservation of the economic security of the country, the fulfillment by authorities of their debt obligations without significant damage to the financing of socio-economic development programs;
2) minimizing the cost of debt by extending the borrowing period and reducing the yield of government securities;
3) maintaining the reputation of the Russian state as a first-class borrower based on the impeccable fulfillment of financial obligations to investors;
4) maintaining stability and predictability of the government securities market;
5) achieving effective and targeted use of borrowed funds, government creditors and guaranteed loans;
6) ensuring timely repayment of state creditors and payment of interest on them;
7) diversification of debt obligations by borrowing terms, profitability, forms of income payment and other parameters to meet the needs of different groups of investors;
8) coordination of actions of federal bodies, bodies of constituent entities of the federation and local governments in the government debt market.

The public debt management system is a set of rules and procedures for attracting, using, servicing and repaying (return of government internal and external borrowings as well as regulating the size, cost and structures of state obligations, monitoring borrowings and debt of entities, municipalities and the non-public sector of the economy) .

In managing public debt, measures such as conversion, consolidation, exchange of bonds under a regressive agreement, deferment of repayment and cancellation of loans are used. Conversion is a change in the yield of loans, both towards a decrease and towards an increase in the yield of government securities. Loan consolidation is a change in their terms, usually upward. It is possible to combine consolidation with conversion. A bond exchange under a recourse agreement means that several previously issued bonds are equivalent to one new bond. This measure is effective when repayment of previously issued bonds and payment of interest on them must be carried out in new, full-fledged money. Deferment of loan repayment is used by the government in cases where issuing new loans does not bring economic benefits, since most of the proceeds from new loans are used to repay and pay interest on old loans. By deferring loan repayments, not only are the terms delayed, but income payments are also stopped. This differs from deferment of repayments from loan consolidation, in which bondholders continue to receive income payments. Cancellation of public debt is an extreme measure, as a result of which the state completely abandons its obligations on issued loans; this usually occurs as a result of new political forces coming to power.

The difficulties of many countries in repaying external debt have given rise to new methods of covering obligations to creditor countries. Among them are repayment of debt with commodity supplies, exchange of debt obligations for shares and bonds of companies of the debtor country, payment of debt in local currency with its subsequent conversion into investments or property, exchange for debt obligations of third countries, etc. These methods of managing public external debt are usually combined into the concept of external debt conversion. In this case, conversion refers to the implementation of all mechanisms that ensure the replacement of external debt with other types of obligations that are less burdensome for the economy and finances of the debtor country.

Types of government debt

Clause 1 of the commented article of the Budget Code of the Russian Federation provides for five main forms of existence of public debt (debt obligations) of the Russian Federation. This list is complete, but does not say anything about the inadmissibility of a broad interpretation.

The legislator provided that the debt obligations of the Russian Federation may arise as a result of:

1) concluding loan agreements and agreements between the competent authorities of the Russian Federation, on the one hand, and credit institutions, foreign states or specialized international financial organizations (IBEC, IIB), on the other hand; in these contracts (agreements), the Russian Federation acts as the borrower of financial resources, and the contract (agreement) itself is concluded in favor of the lender;
2) issue of government securities for free or limited circulation. Government securities are subject to the Law on the Securities Market, Art. 114 of the Book Code of the Russian Federation, however, there are certain features of the issue and circulation of state and municipal securities. These features are enshrined in the Law on the specifics of the issue and circulation of state and municipal securities;
3) conclusion of loan agreements and agreements between federal government bodies (representing the interests of the Russian Federation), on the one hand, and authorized government bodies of a constituent entity of the Russian Federation or local government bodies, on the other hand; the content of this type of contracts (agreements) is the receipt of the Russian Federation for budget loans from the budgets of lower levels - the budget of a constituent entity of the Russian Federation or the local budget;
4) concluding agreements on the provision of state guarantees to the Russian Federation. In this case, the legislator does not directly indicate such a form of existence of debt obligations of the Russian Federation as a surety agreement concluded by the Russian Federation in order to ensure the fulfillment of obligations by third parties. However, this form of public debt directly follows from the general provisions of civil and budget legislation;
5) conclusion by the competent authorities of the Russian Federation of domestic or international treaties and agreements on the extension or restructuring of debt obligations of previous years. According to the theory of public international law, extension is an extension of the validity of a domestic or international agreement, provided that the original validity period at the time of extension has not yet expired. Debt restructuring is the termination or partial write-off (reduction) of the size of debt obligations, achieved bilaterally.

In addition to the forms of existence of debt obligations of the Russian Federation, types of public debt are also distinguished:

Internal and external;
- capital and current.

Capital public debt includes the entire amount of debt obligations accepted but not repaid by the Russian Federation, with interest accrued on the amount of debt. Current public debt assumes the amount of expenses incurred by authorized federal bodies on debt obligations accepted by the Russian Federation, the due date of which has already arrived.

In paragraph 2 of the commented article of the Budget Code of the Russian Federation, a distinction is made between the debt obligations of the Russian Federation depending on their validity period, i.e. deadline. According to the general rules, there are three types of debt obligations of the Russian Federation - short-term, medium-term and long-term, but, in any case, the period for fulfilling a debt obligation of the Russian Federation cannot exceed 30 years. If the terms of the loan agreement (agreement) concluded by the Russian Federation provide for a period exceeding 30 years, then the maximum execution period of 30 years applies.

The terms of a loan for a short-term, medium-term or long-term debt obligation of the Russian Federation are necessarily indicated in the text of the loan agreement (agreement); these conditions cannot contradict the general provisions on debt obligations of the Russian Federation specified in Chapter. 14 BC RF. The legislator specifically stipulates that the terms of the signed loan agreement (agreement) are binding on both parties and can only be changed by their mutual consent. Thus, unilateral refusal to fulfill a debt obligation is not allowed.

Paragraphs 3 and 4 of the commented article of the Budget Code of the Russian Federation respectively reveal the structural content of the state internal and state external debt of the Russian Federation and list their constituent elements. The state internal debt of the Russian Federation consists of four indicators, and the state external debt of the Russian Federation - of two indicators. These lists are exhaustive. At the same time, the components of the public debt of the Russian Federation indicated in paragraphs 3, 4 of the commented article are directly related to the forms of existence of debt obligations.

Public debt methods

The public debt of the Russian Federation is the debt obligations of Russia to individuals and legal entities, foreign states, international organizations and other subjects of international law, including obligations under state guarantees provided by the Russian Federation. In Russia, there is a unified system of accounting and registration of government borrowings in the debt book, which is maintained by the Ministry of Finance of Russia (requirements for the structure of the debt book, as well as the procedure for its maintenance and storage, are determined by the Procedure for maintaining the State Debt Book of the Russian Federation in the Ministry of Finance of the Russian Federation).

Public debt must be distinguished from subfederal debt, which is the public debt of a constituent entity of the Russian Federation, which is a set of debt obligations of the corresponding region.

The Russian Federation is not liable for the debt obligations of the constituent entities of the Russian Federation if these obligations were not guaranteed by the Russian Federation. In turn, the constituent entities of the Russian Federation are not liable for the debt obligations of the Russian Federation, as well as for each other’s subfederal debts, if these obligations were not guaranteed by them.

Public debt is a direct consequence of the state's credit policy, and its composition depends on the forms of public credit used to attract temporarily free funds at the disposal of public authorities. In this regard, Art. 98 BC reasonably includes in the volume of public debt of the Russian Federation only the amounts of the principal debt on loans, the nominal amount of debt on government securities and the volume of obligations under guarantees issued by Russia. The payment of interest and non-interest income on government borrowings does not form part of the public debt, since according to Art. 69 BC they are an independent form of federal budget expenditures. Consequently, the composition of the state debt is not formed by all debt obligations of the Russian Federation, but only by those that have become the objects of legal relations under the state loan.

The guarantor of the state's solvency for its credit obligations is the state treasury, from whose property the state debt is fully and unconditionally secured. The public debt of a constituent entity of the Russian Federation is fully and unconditionally secured by all property owned by the constituent entity of the Russian Federation and constituting the treasury of the constituent entity of the Russian Federation.

Despite the fact that the state's credit relations are provided by its treasury, the repayment of debt obligations and their servicing are carried out at the expense of federal budget revenues. The Budget Code instructs federal government bodies to use all powers to generate federal budget revenues in order to repay debt obligations and service the public debt of the Russian Federation.

Public debt is classified on several grounds.

Depending on the maturity of government debt obligations, government debt is divided into:

Capital, representing the total amount of the state's debt on outstanding debt obligations and unpaid interest on them;
- current, representing the sum of government expenses on all debt obligations that have already matured.

Depending on the period of attraction, government debt obligations are divided into:

For short-term (engaged for a period of up to one year);
- medium-term (engaged for a period from one to five years);
- long-term (engaged for a period from five to 30 years).

Russia's debt obligations cannot exceed a maturity of 30 years.

Depending on the currency of liabilities, public debt is distinguished:

Domestic (expressed in the currency of the Russian Federation, i.e. in rubles; the volume of government internal debt includes: the principal nominal amount of debt on government securities of the Russian Federation; the volume of the principal debt on loans received by the Russian Federation; the volume of the principal debt on budget loans and budget credits received by the Russian Federation from budgets of other levels; the volume of obligations under state guarantees provided by the Russian Federation);
- external (expressed in foreign currency; the volume of public external debt includes the volume of obligations under government guarantees provided by the Russian Federation, as well as the volume of the principal debt on loans received by the Russian Federation from foreign governments, credit organizations, firms and international financial organizations).

In some cases, an additional criterion for distinguishing public debt into external and internal may be the subject composition. The provision of credit funds to the state by residents indicates the formation of internal debt; Borrowing money from non-residents leads to the formation of external debt.

Modern lending activity in Russia indicates an increased interaction between external and internal debt. Thus, part of the domestic debt on short-term government bonds was transformed into short-term external debt, while to repay the external debt, new government securities were issued and placed on the domestic stock market.

Being a consequence of the state's credit activity, which has a legal form, public debt can only exist in certain forms developed by economic practice and fixed by law.

Consequently, the form of public debt is a legally formalized economic relationship that forms the debt obligations of the Russian Federation.

According to Art. 98 BC, the structure of public debt of the Russian Federation is a grouping of debt obligations of the Russian Federation by type of debt obligations.

Debt obligations of the Russian Federation may exist in the form of obligations:

1) for loans attracted on behalf of the Russian Federation as a borrower from credit organizations, foreign states, including targeted foreign loans (borrowings) of international financial organizations, other subjects of international law, foreign legal entities;
2) government securities issued on behalf of the Russian Federation;
3) budget loans attracted to the federal budget from other budgets of the budget system of the Russian Federation;
4) state guarantees of the Russian Federation;
5) other debt obligations previously classified in accordance with the legislation of the Russian Federation as the state debt of the Russian Federation.

Public debt is a complex economic and legal entity, a special mechanism of financial relations that requires regulation by a system of various methods.

Management of state internal and external debt falls within the competence of the Government of the Russian Federation.

The functions of managing public debt are directly carried out by the Ministry of Finance of Russia, whose main tasks are the development of government borrowing programs and their implementation on behalf of the Russian Federation, as well as management of the state internal and external debt of the Russian Federation. In accordance with the tasks assigned to it, the Ministry of Finance of Russia, together with the Bank of Russia, carries out operations to service public debt, takes the necessary measures to improve its structure and optimize the costs of servicing it.

Management of public debt is included in federal legislation and in the responsibilities of the Bank of Russia, which advises the Ministry of Finance of Russia on the schedule for issuing government securities and repaying public debt, taking into account their impact on the state of the Russian banking system and the priorities of a unified monetary policy. The Bank of Russia carries out operations to service public debt without charging commissions.

The main methods of regulating public debt are: restructuring, conversion, innovation, extension and assignment of claims.

In a debt crisis, debt restructuring becomes one of the primary mechanisms for managing public debt, since it provides the debtor with the opportunity to defer debt payment, change the repayment schedule or service issued securities. The intermediate result of the restructuring is to provide the debtor with a grace period, during which only interest on debt obligations is paid. Providing a grace period is beneficial not only to the debtor, but also to the creditor, since during this time the borrower can mobilize additional financial resources to boost the domestic economy and thereby create favorable conditions for repaying public debt. In particular, Russia’s internal debt in foreign currency was reissued into government bonds (see Decree of the President of the Russian Federation No. 126 “On some measures to streamline work with the external and internal foreign currency debt of the Russian Federation”).

The conditions for restructuring the internal debt are determined by the BC and consist in repaying debt obligations by issuing new debt obligations in the amount repaid while simultaneously establishing new service conditions and repayment terms for the placed debt. For example, Art. 23 of the Budget Law provides for the restructuring of monetary obligations (debt) to the Russian Federation, which is carried out by consolidating monetary obligations with the simultaneous write-off of debt for accrued penalties and fines and the provision of equal installments for the payment of consolidated debt. Restructuring as a method of managing public debt is used when re-registering internal monetary obligations to the Russian Federation (see, for example, Resolution of the Government of the Russian Federation No. 366 “On the restructuring of monetary obligations to the Russian Federation assumed by the constituent entities of the Russian Federation”).

Restructuring of external debt is possible, as a rule, with the consent of international financial organizations - creditors, subject to the conditions developed by international financial and credit practice. As part of the International Development Association, a special fund has been created to reduce debts in the amount of $100 million - Debt-Reduction Facility Fund, which provides countries with preferential loans to repay high external debt.

One of the main conditions for restructuring external debt is that the debtor state is on the verge of bankruptcy. In particular, external creditors may invite the debtor state to accept a financial stabilization program developed and financed by the International Monetary Fund, a program to improve the public administration system, and a program to improve the efficiency of economic policy, developed and financed by the International Bank for Reconstruction and Development.

Conversion of public debt means a set of financial and legal mechanisms aimed at reducing debt. As a result of conversion, external debt is replaced with other types of obligations, both financial and legal and civil. Thus, it is possible: transfer of public debt into investment in the industry of the creditor state; debt repayment with commodity supplies; redemption of your own debt on special terms; exchange of debt for debt obligations of states that are not the original parties to the loan agreement; offset of financial claims, etc. (see, for example, the order of the Ministry of Finance of Russia “On approval of the Regulations on servicing state savings bonds”; Decree of the Government of the Russian Federation No. 169 “On the procedure for carrying out conversion operations “debt in exchange for goods and (or) services”, related to the repayment and servicing of the state external debt of the Russian Federation").

Unlike restructuring, conversion is not aimed at deferring payments, but at reducing the monetary volume of public debt. Regarding loans issued by Russia to other countries, conversion is one of the most optimal ways to manage public debt, since it creates the opportunity for preferential treatment for the export of profits, investment in the most profitable sectors of the economy, access to closed markets, etc. For example, Ukraine is currently partially repaying its debt to Russia by not charging rent for the use of Sevastopol bays.

At the same time, it is necessary to take into account that with excessive conversion of public debt using the above methods, there may be a loss of control over the flow of foreign currency and cheap imported goods into Russia, which can lead to inflationary processes.

Novation of public debt means the termination of an obligation by agreement of the parties to replace the original loan agreement with another obligation. The new obligation provides for a different subject or method of execution. The main condition for innovation is the preservation of the subject composition of the obligation. Thus, on the basis of the Decree of the Government of the Russian Federation No. 506 “On limiting the period of novation of bonds of the domestic state currency bond loan of the III series,” the novation of the bonds of the domestic government loan of the named series into bonds of the state currency bond loan was carried out.

Novation may also affect other elements of the obligation, including its very essence. Thus, it is possible to convert a debt arising from any other basis into a loan obligation, for example, purchase and sale, lease of property and vice versa. In particular, the states - former republics of the USSR repaid their public debts to the Russian Federation in property form: supplies of goods, transfer of property, stakes in key production facilities. Russia's national debt to the member countries of the former Council for Mutual Economic Assistance was repaid by supplies of Russian goods (Resolution of the Supreme Council of the Russian Federation No. 5301-1 "On state loans to the governments of states - former republics of the USSR"; Decree of the Government of the Russian Federation No. 1527-r "On the procedure for repaying public debt Russian Federation to member countries of the former CMEA with goods supplies"). Obligations under the bonds of the domestic state currency bond loan were terminated by concluding compensation agreements with the owners of these obligations (Resolution of the Government of the Russian Federation No. 387 "On the procedure for concluding compensation agreements with the owners of bonds of the domestic government currency bond loan of the III series, who have not carried out the novation on these bonds and redemption of the said bonds").

An assignment of a claim is the replacement of one creditor with another. This method of regulating public debt can be expressed in the sale by the state of its receivables to third parties.

The Budget Code establishes requirements for the maximum volume of public debt and the maximum volume of government borrowing in Russia. As a general rule, the maximum amount of government external borrowings should not exceed the annual volume of payments for servicing and repaying Russia's government external debt. Specific maximum volumes of state internal debt and state external debt, as well as limits on external borrowing, are approved by the federal law on the federal budget for the next financial year.

Failure to comply with the maximum amounts of public debt and the costs of servicing it is the basis for the application of coercive measures for violation of the budget legislation of the Russian Federation.

Public debt management methods

The maximum volume of borrowings by constituent entities of the Russian Federation and municipal borrowings in the current financial year should not exceed the amount allocated in the current financial year to finance the deficit of the corresponding budget and (or) repay debt obligations of the corresponding budget.

The maximum volume of public debt of a constituent entity of the Russian Federation should not exceed the approved total annual volume of budget revenues of the constituent entity of the Russian Federation without taking into account the approved volume of gratuitous revenues.

For a constituent entity of the Russian Federation in which the share of interbudgetary transfers during two of the last three financial years exceeded 60%, the maximum debt volume should not exceed 50% of the approved total annual budget revenues of the constituent entity of the Russian Federation without taking into account the approved volume of gratuitous revenues.

The maximum amount of municipal debt should not exceed the approved total annual volume of local budget revenues without taking into account the approved volume of gratuitous revenues or tax revenues according to additional deduction standards.

For a municipality in which the share of interbudgetary transfers during two of the last three financial years exceeded 70%, the maximum amount of municipal debt should not exceed 50% of the approved total annual local budget revenues without taking into account the approved volume of gratuitous revenues and (or) tax revenues according to additional deduction standards.

Public debt management is a set of actions by the state represented by its authorized bodies to regulate the size, structure and cost of servicing public debt.

Public debt management is based on the following principles:

Unconditionality - ensuring accurate and timely fulfillment of the state’s obligations to investors and creditors without imposing additional conditions;
unity of accounting - accounting in the process of managing public debt of all types of securities issued by federal authorities, authorities of constituent entities of the Russian Federation and local governments;
unity of debt policy - ensuring a unified approach in the policy of managing public debt on the part of the federal center in relation to the constituent entities of the Russian Federation and municipalities;
consistency - ensuring the maximum possible harmonization of the interests of creditors and the borrower state;
risk reduction - performing all necessary actions to reduce the risks of both the lender and the investor;
optimality - the creation of such a structure of government loans so that the fulfillment of obligations under them is associated with minimal costs and minimal risk, and also has the least negative impact on the country’s economy;
transparency - provision of reliable and timely information about loan parameters to all users interested in it.

Debt restructuring is an agreement-based termination of debt obligations constituting state or municipal debt, with the replacement of these debt obligations with other debt obligations that provide for other conditions for servicing and repaying obligations. Debt restructuring can be carried out with a partial write-off (reduction) of the principal amount.

The concept of public debt management can be considered in a broad and narrow sense.

Public debt management in a broad sense involves:

Formation of policy regarding public debt;
determination of the main indicators and maximum values ​​of public debt;
determination of the main directions of influence on micro- and macroeconomic indicators;
determining priority areas for using attracted resources, etc.

The determination of policy regarding public debt and the establishment of its upper limit are carried out by the legislative authorities, and its operational management is carried out by the executive branch.

The financial reputation of the borrowing country is important for managing public debt. Currently, the reputation of borrowers in the global financial market is expressed in ratings assigned to the corresponding countries by special agents in accordance with international rating rules. Public debt management in the narrow sense involves determining the conditions for the issue, circulation and redemption of specific government securities.

An even narrower interpretation of public debt management involves regulating the composition and structure of the total public debt while keeping its value constant.

Public debt management methods:

Refinancing public debt, i.e. repaying principal and interest using funds received from the placement of new loans;
innovations - agreements between the borrower and creditors to replace obligations under the specified loan with other obligations;
unification - a state decision to combine several previously issued loans, while bonds and certificates of previously issued loans are subject to exchange for bonds and certificates of a new loan;
conversions - unilateral changes in the profitability of loans, i.e., announcements by the state about a reduction in the profitability for lenders on loans received by the state;
consolidation - changes in the terms of circulation of loans in terms of their repayment period, i.e., the state’s decision to postpone the date of payment of obligations to a later date;
deferment of loan repayments - consolidation with the simultaneous refusal of the state to pay loan income;
cancellation of public debt - the state's refusal of all obligations on previously issued loans.

Thus, the goal of managing public debt is to find the optimal balance between the state’s needs for additional financial resources and the costs of attracting, servicing and repaying them.

Public debt policy

Policy in the field of public debt is aimed at strengthening the position of the Russian Federation as a borrower, ensuring guaranteed access to international financial markets on favorable terms, reducing the debt burden on the budget; optimization of the debt structure, positive impact on the macroeconomy.

For Russian policy in the field of public debt, the following circumstances are most significant:

High share of external debt in the form of debt to foreign governments and international financial organizations;
uneven nature of external debt repayment, presence of payment peaks;
quite high cost of servicing public external debt;
uncontrollable risks of corporate and regional borrowings;
the presence of an unsettled part of the debt of the former USSR;
high cost of so-called “tied” loans;
significant indirect costs of loans from international and financial organizations;
the use by individual creditor countries of the debt of the former USSR as leverage over the Russian Federation.

The Russian Federation has an overdue (unsettled) debt of the former USSR to Kuwait, Oman, Thailand, Turkey, South Korea, Greece, Malta and unresolved mutual financial claims in relations with China and the republics of the former SFRY.

The USA, Great Britain, Germany and France are showing their readiness to solve the problem of part of the debt of the former USSR by implementing politicized conversion repayment schemes, including elements of “development assistance”, which presuppose as an indispensable condition the preliminary implementation by the debtor of an agreed program of action and control by the creditor over the order use of debt payments as part of conversion.

States such as Italy, Spain, Finland, Austria and Portugal are very receptive to the debt swap schemes proposed by the Russian side and are ready not to condition their implementation on political demands.

Causes of public debt

Public debt is the amount of debt a country owes to other countries, its own or foreign legal entities and individuals. In countries with market economies, it consists of the total amount of budget deficits and the amount of financial obligations to foreign creditors as of a certain date.

The main reasons for the steady increase in public debt are:

1. increase in government spending in wartime or during periods of other social conflicts;
2. cyclical economic downturns;
3. tax cuts to stimulate the economy;
4. the increased influence of the political business cycle in recent years, associated with the policy of increasing government spending and lowering taxes before the next elections;
5. increasing long-term tensions in the fiscal sphere.

Government debt accumulates and becomes national debt. It has to be repaid with interest. Some taxpayers own government securities. They receive interest on these securities and at the same time pay taxes, which are partially used to pay off government loans. As a rule, it is not possible to pay interest in full from current budget revenues and repay government loans on time. Constantly in need of funds, governments resort to ever new loans: while covering old debts, they make even larger new ones.

Thus, government debt represents the total amount owed by a country's government to holders of government securities, equal to the sum of past budget deficits.

Public debt is divided into internal and external. Domestic government debt is the debt of a government to citizens, firms and institutions of a given country that are holders of securities issued by its government. External debt is the debt of the state to foreign citizens, firms and institutions.

In countries with hard and freely convertible currencies, there is no division into external and internal debts. In these countries there is the concept of national debt.

Public debt is also divided into short-term (up to one year), medium-term (from one year to five years) and long-term (over five years). The most difficult are short-term debts. They soon have to pay off the principal amount with high interest. Such debt can be rolled over, but this involves paying interest on the interest. Government authorities are trying to consolidate short- and medium-term debt, that is, turn it into long-term debt, postponing the payment of the principal amount for a long period and limiting it to annual interest payments.

Typically, the governments of debtor countries take all possible measures to avoid becoming hopeless debtors, as this limits access to foreign financial resources.

There are several possible ways to do this:

First. The traditional way is to pay off debts for accounting for gold and foreign exchange reserves. For hardened debtors, this path is usually excluded, since their reserves are exhausted or very limited.
Second. Consolidation of external debt, which is possible only with the consent of creditors. Creditors create special organizations - clubs, where they develop a solidarity policy towards countries that are unable to fulfill their international financial obligations. The most famous are the London Club, which includes creditor banks, and the Paris Club, which unites creditor countries. Both of these clubs have repeatedly met requests from debtor countries (including Russia) to defer payments, and in some cases, partially wrote off debts.
Third. Reducing the size of external debt through conversion, i.e. turning it into long-term foreign investment, practiced in some countries. In exchange for the debt, foreign creditors are offered to purchase real estate, securities, participation in capital, and rights in the debtor country. One of the options for converting external debt into foreign investment is the participation of economic entities of the creditor country in the privatization of state property in the debt-ridden country. In this case, interested firms of the creditor country buy out the obligations of the debtor country from their state or bank and, with mutual consent, use them to acquire property.
Fourth. An appeal from a debtor country in a difficult situation to international banks - regional, the World Bank. Such banks, as a rule, provide preferential loans to overcome a crisis situation, but condition their loans on strict requirements for emission and credit policies, encouraging competition, and minimizing the state budget deficit.

Forms of public debt

Public debt is divided into capital and current. Capital debt is the sum of the government's issued and outstanding debt obligations, including the interest that must be paid on them. The current debt consists of expenses for paying income to all creditors of the state and expenses for repaying obligations that have come due.

The Law of the Russian Federation “On the State Internal Debt of the Russian Federation” was an act that established the legal foundations of state credit and public debt. Small in volume (only 6 articles), this act concentrated all the most important provisions of financial law in this area.

According to its second article, debt obligations can be expressed in three forms:

Loans received by the state represented by the Government of the Russian Federation.
- Government loans carried out through the issue of securities on behalf of the Government of the Russian Federation.

Other debt obligations guaranteed by the Government. Debt obligations can be short-term - up to 1 year, medium-term - from 1 to 5 years, and long-term - from 5 to 30 years. All debt obligations are repaid within the terms determined by the terms of the loan, and these terms cannot exceed 30 years. The Russian Federation is not liable for the debt obligations of the constituent entities of the Federation if they were not guaranteed by the federal government. The forms of debt obligations of the entities and the conditions for their issue are determined by the authorities of these entities.

After the adoption of the Law of the Russian Federation “On Amendments and Additions to the Law of the RSFSR “On the Central Bank of the RSFSR (Bank of Russia)”, the first of these forms lost its priority practical significance. The fact is that, according to this act, the Central Bank in normal practice “does not have the right to provide loans to the Government of the Russian Federation to finance the budget deficit,” and before that it was the Central Bank of the Russian Federation that was actually the main source of credit for the state represented by the Government.

Likewise, the Central Bank of the Russian Federation does not have the right to provide loans to finance deficits in the budgets of constituent entities of the Russian Federation, local budgets and extra-budgetary funds. However, legally, loans received by the state through the Government, as a form of debt obligation, were not completely abolished.

In reality, the main form of public internal debt is government loans. Government loans are credit relations between the state (represented by the Government) and its creditors - legal entities and individuals, which are formalized by the issue and placement of government securities among these creditors.

It is important to note that the principle of voluntary issuance of securities is enshrined in the Constitution of the Russian Federation (clause 4, article 75). The consolidation of this principle in an act of supreme legal force is evidence of the rejection of Soviet socialist methods of financial policy. The same principle is reflected in the Civil Code of the Russian Federation (Article 817).

The most common type of government loan securities is domestic government loan bonds. A bond is a security that certifies a loan relationship between its owner (creditor) and the person who issued the document. A complete and complete definition of this concept is given by the Civil Code: “A bond is a security that certifies the right of its holder to receive from the person who issued the bond, within the period specified by it, the nominal value of the bond or other property equivalent. A bond also provides its holder with the right to receive a fixed percentage of the nominal value of the bond or other property rights” (Article 816).

The right to issue bonds (their issue) belongs to the Government of the Russian Federation, the federal Ministry of Finance, government bodies of the constituent entities of the Federation and local governments. Bonds are named according to the issuer. Bonds are issued both registered and bearer. As a rule, domestic loan bonds are bearer.

Based on the type of income payments, they are divided into 3 groups:

Interest bonds.
- Interest-free.
- Winning bonds.

For winning bonds, income is paid only in the form of winnings drawn in special draws. There are win-win loans, but they are not currently practiced in Russia. Targeted loans guarantee holders the receipt of any goods. In principle, bonds can also differ in the form of payment: those paid in national currency and those paid in foreign currency. In Russia, the latter form of payment is not practiced. An exception is the domestic government foreign currency bond issued in accordance with the Decree of the President of Russia “On measures to settle the internal currency debt of the former USSR”.

The loan is carried out by placing bearer bonds for a total amount of 7885 million US dollars. Bondholders are legal entities that had foreign currency accounts with Vnesheconombank. Income - 3% per annum. The bonds must be repaid within 15 years.

Bond rate, i.e. the price at which they are bought and sold is determined as a percentage of their face value. The face value certifies that the bond represents a specific capital temporarily used by the Government. An issue rate can also be established - the price at which bonds are sold to credit institutions (banks, their associations). The issue rate, as a rule, is less than the nominal one - this should promote intensive placement of bonds, because when paying, the government must follow the nominal exchange rate.

The real exchange rate price of bonds and, accordingly, their attractiveness for lenders can only be established if government securities are freely circulated on the stock market. The first freely negotiable loan quoted by the Bank of Russia is the State Republican Internal Loan of the RSFSR, the trading of bonds of which was started by the Bank of Russia.

The circle of entities among which bonds are placed may be limited by the relevant legislative act. Such bonds, for example, circulated only among legal entities, are called bonds with a limited circulation. Other bonds are called freely tradable. The production, storage and distribution of bonds is carried out by the Ministry of Finance.

In addition to bonds, loan relations between the state and individuals and legal entities can be formalized by state treasury obligations.

Treasury bonds are a type of government securities that certify that their holders have contributed funds to the budget and give them the right to receive a fixed income during the entire period of ownership of these securities. The first issue of treasury bonds was carried out in accordance with the Decree of the Government of the Russian Federation “On the issue of treasury bonds”.

The issuer of treasury bonds is the Ministry of Finance of the Russian Federation. When each series is issued, the maturity date of the obligations, the interest rate and the nominal value are established. Treasury obligations are implemented both among individuals and among legal entities, i.e. their owners can be both.

Issue and circulation are carried out in non-documentary form in the form of entries in accounts in an authorized bank. The Ministry of Finance, by a special Regulation “On the procedure for placement, circulation and repayment of treasury obligations”, established that they can be repaid both as a general rule in cash and with tax exemptions at the current exchange rate of treasury obligations. The amount of tax exemptions is calculated using a special formula in accordance with the exchange rate of treasury bills at the time of their redemption. Tax exemptions are issued by the Main Directorate of the Federal Treasury within the limits of the volume of issue of these obligations. The repayment of treasury obligations is carried out by the Ministry of Finance by transferring to the accounts of their holders the amount of debt at the nominal price and interest indicated when issuing treasury obligations.

An independent form of public debt is other debt obligations guaranteed by the Government of the Russian Federation. Such debt obligations are, for example, gold certificates (from the Latin certum - true; fasere - to do), issued as debt obligations guaranteed by the Federal Government. The issue of these government securities is carried out by the Ministry of Finance of the Russian Federation, the denomination of one certificate is 10 kg of 0.9999 fine gold, and the certificate can be crushed to one hundredth of the denomination. Holders can be both individuals and legal entities. The certificate is valid for 1 year. The holders' income is the difference between the purchase price and the redemption price. When the certificates were redeemed, their holders received the right to the corresponding weight of gold.

In accordance with the Decree of the Government of the Russian Federation “On the issue of treasury bills of the Ministry of Finance of the Russian Federation,” this type of securities was issued. Treasury bills are short-term obligations, they are issued for a period of 3, 6 and 12 months, usually to bearer. Treasury bills are sold at a discount (from the English discount - discount on the price of a product), and thus the income of the holders is formed by the difference between the nominal price (redemption price) and the selling price.

Regulation of public debt

Public debt is the totality of government budget deficits over a certain period of time. This is the economic definition of government debt. The Budget Code provides a legal definition of this concept as debt obligations of the Russian Federation to legal entities and individuals, foreign states, international organizations and other subjects of international law.

The main reasons for the formation of public debt are the state budget deficit and the availability of free funds among individuals and legal entities.

Government debt obligations can exist in various forms:

Loan agreements and agreements of the Russian Federation with credit organizations, foreign states and international financial organizations in favor of these loans;
- government securities issued on behalf of the Russian Federation;
- agreements on the provision of state guarantees of the Russian Federation, guarantee agreements to secure obligations by third parties;
- re-registration of debt obligations of third parties into the state debt of the Russian Federation on the basis of federal laws;
- agreements and treaties of the Russian Federation on the prolongation and restructuring of debt obligations of the Russian Federation of previous years.

Public debt can be classified according to various criteria. According to the currency criterion, it is divided into internal and external: ruble debts refer to internal debt, and foreign currency debts refer to external debt. In international practice, there is another definition of external debt: total debt to non-residents, and internal debt - as total debt to residents. Public debt is divided into capital and current. Capital debt is the sum of the government's issued and outstanding debt obligations, including interest. Current debt is the cost of paying income and paying off liabilities.

In terms of terms, government debt obligations can be short-term (up to 1 year), medium-term (from 1 to 5 years), long-term (from 5 to 30 years). Debt obligations cannot exceed a period of 30 years.

According to the level of management, public debt is divided into public debt of the Russian Federation, public debt of a constituent entity of the Russian Federation and municipal public debt. Russia is not responsible for the debt obligations of the constituent entities of the Russian Federation.

The maximum volumes of internal debt are approved by the budget law for the corresponding financial year (federal law, law of a constituent entity of the Russian Federation or local government body). The maximum volume may be exceeded by the Government of the Russian Federation if this reduces the cost of servicing the public debt.

The budget law also approves the maximum amount of borrowed funds allocated by the Russian Federation, constituent entities of the Russian Federation or municipalities to finance the budget deficit of the corresponding level. For a constituent entity of the Russian Federation, this limit should not exceed 30% of budget revenues for the current financial year, excluding financial assistance from the federal budget and borrowed funds raised in the current year. For municipalities, it should not exceed 15% of local budget revenues without taking into account financial assistance from the federal budget and the budget of a constituent entity of the Russian Federation, borrowed funds raised in the current year. The maximum amount of expenses for servicing the public debt of a constituent entity of the Russian Federation or municipal debt should not exceed 15% of the volume of budget expenditures at the corresponding level.

Public debt management is a set of financial operations of the state to ensure the unity of planning and accounting of all operations to attract, repay and service external and internal government borrowings, as well as regarding the provision of government guarantees.

The main methods of regulating public debt are restructuring, conversion, extension and assignment of claims.

Restructuring means the termination of debt obligations constituting public debt, based on the agreement of the parties, with the replacement of these debt obligations with other debt obligations providing for other conditions of servicing and repayment. During the restructuring process, a partial write-off of the principal amount may be carried out.

Unlike restructuring, conversion is not aimed at deferring payments, but at reducing the monetary volume of public debt.

Novation of public debt means the termination of an obligation by agreement of the parties to replace the original loan agreement with another obligation. The new obligation provides for a different subject or method of execution. The main condition for innovation is the preservation of the subject composition of the obligation.

Rolling over a government debt means extending the duration of a debt obligation.

An assignment of a claim is the replacement of one creditor with another. This method of regulating public debt can be expressed in the sale by the state of its receivables to third parties.

Consequences of government debt

Public debt is the sum of the state's debt to external and internal creditors. This value shows the absolute size of the debt. Public debt consists of the debt of the central government, regional and local authorities, government organizations, and enterprises.

There is a distinction between external and internal debt. External debt is the state's debt to citizens and organizations of other countries.

Domestic debt is the state's debt to citizens and organizations of its country.

To quantitatively characterize public debt, relative indicators are also used:

1. GDP ratio. An increase in debt over GDP by more than 2.5 times will not allow the country to solve its problems, and all its efforts will be aimed only at paying off the debt.
2. Comparison with income from foreign trade activities. It brings the country the currency necessary to pay its external obligations. If such payments account for 20 - 30% of foreign trade turnover, then attracting new loans from abroad becomes problematic.

Public debt management includes the following activities:

Effective use of loan funds;
- Finding funds to pay off debt;
- Neutralization of the negative consequences of public debt.

Effective use of loan funds involves directing them to projects that allow, within the allotted period, to receive a profit that exceeds not only the amount of the debt, but also the interest payments on it. The interest rate becomes the minimum criterion for the efficiency of using borrowed funds.

To repay the debt, the state can use:

Refusal of the debt or part of it, however, this undermines the reputation of the state and in the future it will not be able to count on receiving loans;
- Raising new loans to pay off old debts cannot be used repeatedly, since increasing debt reduces the hopes of creditors to repay their debts;
- Continuation of the debt provides for an increase in the period for its payment. In this case, the interest amounts increase because the interest is paid on the amount and the outstanding debt. It is more profitable for the state to restructure the debt, in which it is transferred to the rank of long-term, which does not lead to an increase in interest payments;
- Conversion of debt, which is associated with its transformation into long-term foreign investments, when in exchange for debt, creditor countries are offered to buy real estate, participate in equity capital, etc.;
- Sale of bad debts, which is possible if a country has given a loan to another state in the past. Such debts are sold at a significant discount. The country, by selling debts, buys time to obtain the necessary funds.

The negative consequences include the fact that government debt significantly changes the state of the money market. When it increases, there is an additional supply of money. This happens not only when the state covers the debt at the expense of the printing press or through external loans. An increase in domestic debt leads to the expenditure of bank reserves and the attraction of household savings, that is, an increase in money in circulation. This process results in a decrease in the purchasing power of the national currency and leads to inflation. Debt subscription, on the contrary, reduces the amount of money in circulation and contributes to the tendency to curb economic growth. To neutralize such side effects, the Central Bank can pursue a policy of expensive money during the period of increasing public debt and a policy of cheap money during its subscription. The state can use tax policy: strengthen it during periods of increasing debt and soften it when paying off debt obligations.

State debt(national debt) – debt obligations of the state to legal entities and individuals, foreign states, international organizations and other subjects of international law, arising from government loans (borrowings), treaties and agreements (including international) on the provision of budget credits and loans , and debt obligations of previous years assumed by the state () for the obligations of third parties, other obligations, as well as obligations of third parties assumed by the state.

Public debt is the total amount, at a certain point in time, of outstanding loans received by the state for financing and other purposes specified by law, unpaid interest for servicing these loans, as well as provided guarantees for the obligations of other government entities.

The legislation details the purposes for which borrowing can be made; therefore, public external debt is formed by:

• loans to finance the state budget (mainly funds borrowed from international financial organizations) and repayment of external public debt;
• loans to maintain the stability of the national currency (replenishment);
• loans to finance investment and institutional projects of national importance;
• guarantees to foreign counterparties to fulfill contractual obligations in connection with non-commercial risks;
• state guarantees provided by the Cabinet of Ministers of Ukraine for lending to projects, the financing of which is provided for by the state budget of Ukraine.

Ineffective use of borrowed loans can lead to an increase in the volume of public debt. In many countries, budget legislation defines a maximum limit for the amount of public debt, the achievement of which signals a danger for the entire sphere of public finance.

External public debt- the totality of state debt obligations arising as a result of state borrowing on the foreign market.

Based on the currency of attraction, public debt is divided into debt in national and foreign currency.

Public debt in foreign currency arises as a result of direct borrowing from foreign governments, international financial and credit organizations, foreign banks, as well as the placement of government debt on international capital markets. The total volume of external debt is estimated in US dollars. Domestic debt is predominantly valued in national currency. To raise funds, securities priced in hryvnia are issued and placed on the domestic stock market.

According to the payment period, public debt is divided into capital, which includes the entire totality of government debt obligations on a certain date, and current, which generates payments for obligations that the borrower must repay in the reporting (current) period.

Instruments for processing debt obligations of the general government sector can be:

1. Debt securities- which indicate that the institutional unit has obligations that must be settled by the payment of cash, the provision of another financial instrument or any other object of a certain economic value (bonds, treasury bills and other short-term securities) that provide the owner with unconditional the right to receive a specified fixed amount within a certain period of time. There are short-term, medium-term and long-term bonds depending on the terms of circulation at par. However, depending on the specifics of different countries, as well as the location of the trading platforms on which they are issued, their gradation is different. Thus, in Ukraine, for domestic bonds, the circulation periods are respectively up to 1 year, 1-3 years, 3-5 years, while in the USA this gradation is different - respectively up to 1 year (treasury bill), from 1 to 10 years (treasury note ), from 10 to 30 years (treasury bond).
2. Credits and loans- financial instruments that are created when a creditor provides funds directly to a debtor and receives a non-negotiable document as evidence of ownership of the asset. If loans and borrowings become the object of purchase and sale on the secondary market, they are transferred to the category of securities.
3. Insurance technical reserves- consist of the value of household assets in pension funds and life insurance reserves, funds received as prepayments of insurance premiums, as well as reserves to cover outstanding claims from insurance compensation.
4. Other accounts payable- debt liabilities that are formed passively (debt for wages and social benefits, tax debt for reimbursement of tax payments (VAT), the payment period of which has already come; debt arising as a result of the assumption of obligations of one institutional sector by an institution of another institutional sector, paid advance tax payments, etc.

Depending on the method of calculating interest on obligations, debt is divided into:

• fixed rates;
• floating rates (linked to certain indices - minimum market rates on leading international exchanges, index);
• mixed options that combine elements of fixed and interest rates;
• without accrual of income (budget debt).

Payment of interest on debt obligations can occur:

• at the end of the term (zero coupon bonds, bills, short-term securities, loans and borrowings);
• periodically during the circulation period of the security (credit loan validity);
• not be produced at all (unregistered budget debt);
• permanently - in the case of issuing perpetual bonds (consoles).

There are also other types of public debt:

1. Nominal and market value of debt.
2. Consolidated and unconsolidated - the difference between them is that consolidated debt does not take into account the part of the debt that is owned by other structural units of this sector. That is, if the owner of part of the central government debt bonds is non-budgetary funds, then the consolidated debt of the general government sector will be less by the amount of these bonds. The consolidated method is carried out in EU countries, but in the USA and Japan only unconsolidated debt is officially taken into account.
3. Debt that is accounted for on the cash and accrual basis.
4. Net and gross debt - net debt is calculated by subtracting assets on the same instruments from liabilities represented by certain instruments that form this debt.
5. Internal and external debt - depending on the residency of the creditor, or the location of the debt obligations.
6. Market and non-market debt - depends on whether government debt is traded on the stock market.

The presence of public debt requires measures to service it, including the repayment process, payment of interest and other payments provided for by the terms of the obligation. Debt repayment is the payment of the principal portion of the debt to the creditor. It can occur both at the expense of budget revenues and as a result of new borrowings ().

It is worth noting that the definition of “public debt” in different countries is not identical due to the peculiarities of the language, as well as different methods for calculating it. The term “public debt” can be interpreted as the debt of the central government (government debt), the general government sector (general government debt) and public debt (public debt).

In addition to the debt of general government bodies at various levels, in order to control the indicators of debt that is likely to become government debt, the so-called public debt is taken into account in international practice. In accordance with UN international standards, public debt- this is a set of obligations (both existing and legally formalized, which are provided with the necessary funding, but, as a result of certain circumstances, have not entered into force), which are directly assumed by government bodies such as: the central government (or the federal government, depending on political organization of the country); state, provincial, municipal, regional or other local government authorities; corporations or enterprises that are government owned or controlled, other economic units that may be considered government or quasi-government (that is, those that operate as private entities but enjoy government privileges), and the body of obligations assumed by government agencies from on behalf of private corporations or other economic units.

In accordance with the Budget Code of Ukraine, public debt is the total amount of debt of the state, which consists of all issued and outstanding debt obligations of the state, including debt obligations of the state that come into effect as a result of issued loan guarantees, or obligations arising under legislation or agreement. That is, the concept of public debt in Ukrainian legislation is narrower and includes only debt at the central government level, if we take the definition of the international classification. But in domestic legislation and in scientific practice there is no category that would be an analogue of the public administration sector, at the level of which the level of the state’s debt burden is most often determined. There is no debt at the level of local authorities (regional state administrations) and extra-budgetary funds, due to the establishment of a legislative ban on the right of these bodies to borrow.

Domestic legislation also distinguishes between direct, debt and contingent obligations. Direct obligations- these are obligations that are assumed by the state as a direct borrower by issuing government securities, concluding loan agreements or other ways provided for by the legislation of Ukraine.

Contingent (guaranteed) debt obligations- these are obligations that are undertaken directly by legal entities and are guaranteed by the state, including obligations under IMF loans, except in cases where they are directly sent to the state budget. Until the entry into force of state guarantees, transactions on these obligations are not reflected in the state budget indicators.

Due to the use of the cash method of accounting for budget transactions in Ukraine, the state debt does not include those not formalized as a state debt in an appropriate manner. This distorts the real level of public debt and does not allow us to adequately assess the level of debt security.

The volume of debt of the general government sector has economically justified limits, above which the negative consequences exceed the positive impact of its further accumulation. It has been established that for developed countries this feature is the volume of public debt, which does not exceed 60%, and for countries that do not belong to them - 30-35% of GDP. The criterion of its relationship to export earnings is also used - 220%. The principles, mechanisms and measures in the field of public debt management to prevent the emergence of negative phenomena associated with an excessive level of debt burden form the debt policy of the state.

State debt- the result of financial borrowings 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 budget surpluses.

When considering public debt, as a rule, counterclaims of this state to others are not taken into account, that is, the debt of other states or individuals and legal entities to this state is not considered. The state's obligations in the field of social and pension security are also not taken into account.

The amount of public debt is expressed in national currency or its equivalent in any other currency.
For a more objective comparison, government debt is reported as a percentage of gross domestic product (GDP).

The Budget Code provides a legal definition of this concept as the amount of debt obligations to legal entities and individuals, foreign states, international organizations and other subjects of international law.

The main reasons for the formation of public debt are the state budget deficit and the availability of free funds among individuals and legal entities.

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  The importance of public debt in the economy is contradictory: from "one of the most terrible disasters that has ever been invented by mankind" according to the famous English economist David Ricardo before his acquittal “increased debt stimulates economic growth” from a Keynesian point of view.

  Economic restrictions

  The state cannot increase its debt without limit, since upon reaching a certain level, investors and creditors begin to doubt the solvency of the state (reduced quality). The assessment of solvency, in turn, depends on the refinancing rate and the rate of economic growth of the country. That is, if the refinancing rate is significantly lower than the GDP growth rate, then long-term government borrowing is possible.

  For countries with high levels of public debt, new borrowing not only increases interest rates on loans, but also reduces the number of investors themselves willing to provide their capital. There is a real danger for a highly indebted country to fall into a vicious circle: on the one hand, ever-increasing interest rates on repaying existing debt, and on the other hand, increasingly limited access to the financial market. This can lead to loss of solvency and even bankruptcy, especially if the debt is in foreign currency.

  If a state has its own national currency, and its central bank is somewhat dependent on the state, then the government of that state may be tempted to simply print more money and thereby help pay off its debts. However, these actions lead to a further loss of confidence and creditworthiness and (through inflation) to the devaluation of all financial assets in that currency.

  Consequences of accumulation of public debt

  • Shifting the tax burden to future generations.
  • Redistribution of income among the population.
  • Crowding out (reduction) of private investment due to the issue of government securities.

  The peak of Russian public debt occurred in 1998 (146.4% of GDP). As of January 1, 2000, external debt reached $146 billion (and the total external and internal public debt amounted to 84% of GDP). At the beginning of 2007, public external debt was reduced to $52 billion (5% of GDP).

  For comparison, the public debt of other hydrocarbon exporting countries (IMF, 2011), % of GDP:

  Kuwait - 7.4% Saudi Arabia - 7.5% Uzbekistan - 9.1% Kazakhstan - 11% Azerbaijan - 10% Norway - 30%

  Public debt by European Union countries as a percentage of GDP in 2013(:

  France - 93.5% Germany - 78.4% Portugal - 129.0% Italy - 132.6% Greece - 175.1%

  For comparison: USA - 116.4% of GDP (2016) Japan - 239.2% of GDP (2016)

  Government debt by country

  State debt

  ≤30%

  30% ÷ 60%

  60% ÷ 90%

  >90%

  in national currency, billion in % of GDP in national currency, billion in % of GDP per person State 2011 2012 2013 2011 2012 2013 2011 2012 2013 2011 2012 2013 2011 2012 2013 2011 2012 2013 USA (USD) 15534 16245 16800 -1427 -1300 -951 −8,7 −7,7 −5,4 15379 16627 17559 99,0 102,4 104,5 49302 52927 55499 China (RMB) 47310 51947 56885 -336 -766 -586 −0,7 −1,4 −1,0 13588 13547 12740 28,8 26,1 22,4 10085 10005 9363 Japan (JPY) 471311 473777 478368 -40772 -36961 -38025 -8,3 −7,6 −7,8 1083243 1124489 1163497 229,8 237,3 243,2 8469718 8811847 9136865 Brazil (BRL) 4143 4392 4838 -124,7 -119,9 -159,3 -3,0 -2,7 −3,3 2679 2995 3209 64,7 68,2 66,3 13740 15238 16184 Russia (RUB) 55644 61811 67260 879 -115 -930 1,6 0,0 −1,4 6515 7875 9018 11,7 12,7 13,4 45590 55070 63094 India (INR) 90097 101133 113215 -7469 -7614 -8132 −8,5 −7,6 −7,1 60143 67374 75534 66,7 66,6 66,7 49665 54901 60751 Eurozone (EZ 18) 8617,4 8560,9 8524,2 -389,2 -351,7 -292,8 −4,1 −3,7 −3,0 8251,4 8619,8 8890,4 87,4 90,7 92,6 24728 25892 26689 Germany 2454,8 2471,8 2482,4 -22,0 2,4 190,0 −0,8 0,1 0,0 2087,7 2160,9 2147,0 80,0 81,0 78,4 25526 26892 26663 France 1808,6 1808,8 1812,7 -103,1 -98,7 -87,6 −5,2 −4,9 −4,3 1724,9 1841,0 1925,3 86,2 90,6 93,5 26422 27963 29358 Italy 1424,8 1391,0 1365,2 -59,1 -47,4 -47,3 −3,7 −3,0 −3,0 1907,6 1989,4 2069,2 120,7 127,0 132,6 32134 33495 34669 Spain 948,7 933,1 921,7 -100,1 -109,5 -72,6 −9,6 −10,6 −7,1 737,4 884,7 960,7 70,5 86,0 93,9 15800 18895 20559 Netherlands 554,5 547,5 543,0 -26,0 -24,3 -15,2 −4,3 −4,1 −2,5 393,7 427,1 443,0 65,7 71,3 73,5 23636 25529 26401 Belgium 327,6 327,2 328,0 -14,2 -15,2 -9,9 −3,8 −4,1 −2,6 366,2 380,2 387,2 99,2 101,1 101,5 32880 33608 34687 Austria 269,2 271,5 273,0* -7,3 -7,9 -4,8 −2,5 −2,6 −1,5 218,6 228,4 233,3 73,1 74,4 74,5 25910 27018 27604 Greece 180,0 167,4 161,0 (-20,0) (-17,2) (-23,1) −9,6 −8,9 −12,7 355,1 303,9 318,7 170,3 157,2 175,1 31927 27324 28809 Ireland 167,0 167,3 167,5* -21,3 -13,4 -11,8 −13,1 −8,2 −7,2 169,2 192,5 202,9 104,1 117,4 123,7 37023 41997 44199 Finland 168,8 167,1 164,8 -1,4 -3,5 -4,1 −0,7 −1,8 −2,1 93,1 103,2 110,2 49,3 53,6 57,0 17273 19096 20306 Portugal 156,6 151,5 149,4 -7,4 -10,6 -8,1 −4,3 −6,4 −4,9 185,2 204,9 213,6 108,2 124,1 129,0 17521 19430 20370 Slovakia 49,8 50,7 51,2 −3,3 −3,2 -2,0 −4,8 −4,5 −2,8 30,1 37,4 40,0 43,6 52,7 55,4 5547 6892 7388 Luxembourg 33,3 33,3 34,0 0,072 0,020 0,0026 0,2 0,0 0,1 7,8 9,3 10,5 18,7 21,7 23,1 15247 17743 19573 Slovenia 31,6 30,8 30,4 −2,3 −1,4 -5,2 −6,4 −4,0 −14,7 17,0 19,2 25,3 47,1 54,4 71,7 8300 9343 12292 Republic of Cyprus 15,4 15,0 14,2 -1,1 -1,1 -0,9 −6,3 −6,4 −5,4 12,8 15,3 18,4 71,5 86,6 111,7 15217 17807 21299 Latvia 13,1 13,8 14,4 −0,712 −0,296 -0,224 −3,5 −1,3 −1,0 8,5 9,0 8,8 42,0 40,8 38,1 4117 4420 4384 Estonia 12,2 12,7 12,8 0,179 0,041 -0,034 1,1 -0,2 -0,2 1,0 1,7 1,8 6,1 9,8 10,0 739 1292 1397 Malta 5,6 5,7 5,8 −0,184 −0,224 -0,203 −2,7 −3,3 −2,8 4,6 4,9 5,2 68,8 70,8 73,0 11102 11666 12443

  Note: Countries are listed in descending order of GDP size. Eurozone states are grouped together in a group of the same color.