The concept of public debt and the essence of its management

Definition 1

Public debt is understood as the amount of debt the state owes to its own or foreign individuals and legal entities.

Public debt is divided into two types:

1. internal, that is, the state’s debt to its population or organizations registered on its territory;
2. external, that is, the state’s debt to foreign organizations or individuals.

Definition 2

Public debt management is understood as a system of financial measures carried out by the state in order to repay debt on loans, as well as to pay income on these loans, change the conditions and timing of the issuance of loans, and issue new debt obligations.

Public debt management is one of the priority areas of state financial policy. Public debt management is considered as a continuous process consisting of several successive stages. These stages include:

• firstly, the stage of placement of government securities aimed at attracting financial resources;
• secondly, the stage of repayment of public debt;
• thirdly, the stage of servicing public debt.

Note 1

The sources of repayment of public debt are funds from the state budget; gold reserves; funds received from the sale of state property; as well as cash received as a result of new borrowings.

Objectives of public debt management

Public debt management is aimed at solving a number of problems, including:

1. maintaining the volume of external and internal public debt at a certain level. The solution to this problem is due to the fact that it is necessary to maintain the economic security of the state, to ensure the possibility of repaying existing obligations without causing damage to the socio-economic development of the country and its financing;
2. minimizing the cost of public debt by prolonging loans and reducing the yield of government securities;
3. maintaining the reputation of a reliable borrower through timely fulfillment of government obligations to creditors;
4. maintaining stability and predictability of public debt;
5. achieving the most efficient and rational use of funds received from government loans;
6. coordination of actions of state federal, regional and municipal authorities in the state debt market;
7. diversification of debt obligations according to various parameters, for example, borrowing terms, forms of payments, and so on.

Characteristics of public debt management methods

There are many methods for managing government debt. The main task of the state in terms of managing public debt is to select adequate methods for managing it, which requires an assessment of certain factors that influence the choice of these methods. Such factors include, for example, the share of expenses for servicing public debt in the total amount of state budget expenses, the ratio of gross domestic product and the amount of government loans. In relation to external public debt, other indicators (assessment factors) may be used: for example, the ratio of the amount of external borrowing and the volume of exports, as well as the share of expenses allocated to repay external public debt in the amount of export revenue.

The entire set of methods for managing public debt can be divided into two groups:

• financial methods of managing public debt;
• administrative methods of managing public debt.

In the first case, we are talking about the choice of methods and forms through which the state intends to repay the public debt. When applying these methods, financial performance is assessed. This group of methods is aimed at ensuring the maximum level of efficiency in the use of borrowed loans, finding measures to reduce the costs of their repayment to a minimum. The second group of methods is based on the prompt implementation of orders from public authorities. This group of methods does not involve assessing the effectiveness and efficiency of actions related to public debt management.

Thus, the immediate methods of managing public debt are the following:

• firstly, refinancing public debt - the essence of this method is to organize the issue of new loans in order to raise funds to repay existing loan debt;
• secondly, conversion - the essence of this method is to change the profitability of existing government loans. Mainly when applying conversion, the state reduces the amount of loan payments, which makes it possible to achieve a reduction in the costs of servicing and managing public debt;
• thirdly, consolidation - the essence of this method is to make changes to the conditions of government loans in terms of their terms. Typically, such a change involves increasing the repayment period of government loans;
• fourthly, loan unification - the essence of this method is to combine several existing government loans. This method involves exchanging previously issued bonds for new ones. This method is often used in combination with consolidation;
• fifthly, cancellation of public debt - this method is characterized by a radical nature, expressed in the fact that the state refuses to fulfill its obligations to repay the public debt in relation to government loans.

Issues related to public debt management are among the most important in Russian economic policy. This is due to the fact that in recent years there has been an increase in public debt, as well as the costs of repaying it. Hence the main goal of management: reducing debt and reducing the cost of repaying it. But not everything is as simple as it might seem at first glance. Management, as well as external management, has features that are related to the nature of relations with creditors, debt settlement, ongoing maintenance and restrictions on the choice of debt settlement methods. In this regard, it is worth taking a closer look at what methods of managing public debt there are.

Public debt management methods

· Refinancing - repayment of part of the principal debt (or all in full), as well as interest on it from the funds received from the placement of new loans.

· Cancellation (default) - the state’s refusal to pay the debt and its interest on previously issued loans.

· Conversion - a decision by the state to change the profitability of previously issued loans. To achieve this, the government usually reduces the interest payment.

· Novation - an agreement between the borrower and the lender to terminate obligations, as well as replace them with other obligations that provide for other conditions for repaying debts.

· Unification - a decision by the state to combine several previously issued loans, when bonds of previously issued loans are exchanged for bonds of new loans.

· Consolidation - increasing the validity period of previously issued obligations. The state is always interested in obtaining loans for longer periods.

· Deferment of loan repayment (or all loans issued in advance) - carried out in the case when further issuance of new loans does not bring financial activity for the state.

Public debt management methods such as conversion, unification and consolidation of government hiring are most often carried out in relation to domestic loans. As for the deferment of loan repayment, a similar measure can be applied to external loans.

Principles of public debt management

Public debt management methods were created in order to solve the following problems:

· Keep internal volumes at the same level. This is necessary in order to maintain the economic security of the country, as well as to ensure that the authorities fulfill the obligations that they have undertaken, without causing significant damage to the financing of socio-economic development.

· Minimize the cost of debt by lengthening the debt term and reducing securities.

· Maintain stability and predictability of public debt.

· Achieve the most effective and efficient use of borrowed funds.

· Coordinate the actions of bodies of constituent entities of the Russian Federation, local governments and federal bodies in the country's debt market.

· Diversify in terms of borrowing terms, forms of payment and other parameters in order to satisfy the needs of investors.

Main problems of public debt management

· At the moment, the debt problem has not yet been fully resolved. In particular, this concerns the obligations of the Russian Federation under the state guarantees it has presented.

· Regulatory regulation of public debt requires improvement.

· There are no legally established norms for determining the volume of public external debt that correspond to international standards.

is a system of financial measures carried out by the state for the purpose of repaying loans, as well as paying income on these loans, changing the terms and conditions of issued loans, and issuing new debt obligations. This is one of the priority areas of the state's financial policy.

Decision-making on the choice of methods for managing public debt is influenced mainly by the following factors: the share of expenses for servicing public debt in the total amount of budget expenditure items and the percentage of GDP and the amount of government borrowing.

When assessing external government debt, indicators are used: the ratio of the amount of external borrowing and the volume of exports and the share of expenses spent on repaying external government debt to the amount of export revenue.

Public debt management- this is a continuous process in which three stages are sequentially distinguished: 1 - placement of securities in order to attract financial resources, 2 - repayment of public debt, 3 - servicing of public debt.

The state debt is repaid using budget funds, gold and foreign exchange reserves, money received from the sale of state property, as well as through new borrowings.

Public debt management involves two major groups of methods: financial and administrative.

Financial methods consist in choosing the forms and methods in which the state will repay the national debt, taking into account financial indicators. They are aimed at achieving maximum efficiency from raising loans and finding ways to reduce the costs associated with their repayment to a minimum.

Administrative methods are based on the rapid implementation of orders from government authorities. Their functions do not include assessing the effectiveness and efficiency of actions related to public debt management.

The main measures that states resort to when managing public debt come down to the following measures.

In conditions of growing debts and budget deficits, the country has the right to resort to such measures as refinancing of government debt– issuing new loans to pay off old debts.

Conversion is a change by the government in the yield of existing loans. As a rule, the state resorts to reducing the amount of loan payments in percentage terms in order to reduce the costs incurred in managing the public debt.

Consolidation– involves making changes to the terms of loans related to their terms. Their change usually occurs in the direction of increase.

Unification of loans– merging several existing loans into one. In this case, previously issued bonds are exchanged for new ones. Often unification is carried out together with consolidation.

Cancellation of public debt- a radical measure in which the state waives all obligations associated with the issued loan.

Public debt management in Russia in recent years has been characterized by a gradual decrease in relative and absolute indicators of public debt. The percentage ratio of debt to GDP at nominal value decreases.

Public debt management is carried out byGovernment of the Russian Federation, within the framework of the powers vested in him, which are established by the Federal Assembly of the Russian Federation.

It consists in forming a policy pursued in relation to public debt, establishing debt boundaries, determining goals and directions of influence on micro- and macro-level indicators, and establishing the feasibility of financing public debt through national programs. All this is implemented through a system of measures that are associated with the issue of debt obligations and its further servicing. This requires government authorities to take an integrated approach and determines the versatility of regulating emerging debt.

Issues related to public debt management are among the most important in Russian economic policy. This is due to the fact that in recent years there has been an increase in public debt, as well as the costs of repaying it. Hence the main goal of management: reducing debt and reducing the cost of repaying it. But not everything is as simple as it might seem at first glance. Management of internal public debt, as well as external, has features that are associated with the nature of relations with creditors, debt settlement, ongoing servicing and limitations in the choice of debt settlement methods. In this regard, it is worth taking a closer look at what methods of managing public debt there are.

Public debt management methods

· Refinancing – repayment of part of the principal debt (or all in full), as well as interest on it from the funds received from the placement of new loans.

· Cancellation (default) – the state’s refusal to pay the debt and its interest on previously issued loans.

· Conversion – a decision by the state to change the profitability of previously issued loans. To achieve this, the government usually reduces the interest payment.

· Novation - an agreement between the borrower and the lender to terminate obligations, as well as replace them with other obligations that provide for other conditions for repaying debts.

· Unification is a decision by the state to combine several previously issued loans, when bonds of previously issued loans are exchanged for bonds of new loans.

· Consolidation – increasing the validity period of previously issued obligations. The state is always interested in obtaining loans for longer periods.

· Deferment of loan repayment (or all loans issued in advance) - carried out in the case when further issuance of new loans does not bring financial activity for the state.

Public debt management methods such as conversion, unification and consolidation of government hiring are most often carried out in relation to domestic loans. As for the deferment of loan repayment, a similar measure can be applied to external loans.

Principles of public debt management

Public debt management methods were created in order to solve the following problems:

· Keep the volumes of internal and external public debt at the same level. This is necessary in order to maintain the economic security of the country, as well as to ensure that the authorities fulfill the obligations that they have undertaken, without causing significant damage to the financing of socio-economic development.

· Minimize the cost of debt by lengthening the debt term and reducing the yield of government securities.

· Maintain stability and predictability of public debt.

· Achieve the most effective and efficient use of borrowed funds.

· Coordinate the actions of bodies of constituent entities of the Russian Federation, local governments and federal bodies in the country's debt market.

· Diversify debt obligations in terms of borrowing terms, forms of payment and other parameters in order to satisfy the needs of investors.

Main problems of public debt management

· At the moment, the debt problem has not yet been fully resolved. In particular, this concerns the obligations of the Russian Federation under the state guarantees it has presented.

· Regulatory regulation of public debt requires improvement.

· There are no legally established norms for determining the volume of public external debt that correspond to international standards.

9. Public debt management

Public debt is divided into principal and current, depending on the maturity date.

Public debt is the entire amount of issued but not repaid government loans with interest accrued on them as of a certain date or for a certain period.

The national debt is divided:

1. Internal and external.

2. Basic and current.

State domestic debt RF means a debt obligation of the Government of the Russian Federation, expressed in the country's currency, to legal entities and individuals. The forms of debt obligations are loans received by the Government of the Russian Federation, government loans made through the issue of securities on its behalf, and other debt obligations guaranteed by the Government of the Russian Federation.

State external debt- this is debt in foreign currency for outstanding external loans and unpaid interest on them.

The principal debt is the entire amount of government debt that is not due and cannot be presented for payment within a given period.

Current public debt is the state's debt for obligations for which payment has become due.

World experience shows that public debt should not exceed half of the country's GDP. Significant amounts of public debt reflect the crisis state of the Russian economy.

The federal debt does not include debt obligations of national-state and administrative-territorial entities of the Russian Federation, i.e. municipal loans, if they are not guaranteed by the Government of the Russian Federation.

Servicing public debt is expressed in the implementation of operations to place debt obligations, repay them and pay interest on them. These functions are carried out by the Central Bank of the Russian Federation.

Public debt management is understood as a set of financial activities of the state related to the establishment of annual maximum values ​​of public debt, the issuance and repayment of loans, the organization of payment of income on them, carrying out conversions and consolidation of loans.

Payment of income from loans and their repayment is one of the main items of budget expenditures. The government is forced to resort to prolongation of loans and other obligations (extending repayment periods) or conversion (reducing the amount of interest paid on loans).

The main methods of financing government debt are monetary emission and the issuance of government loans.

There are different criteria for assessing external debt. For example, they compare the size of the debt and the need for its repayment and interest payments with the amount of exports. The limit of danger is considered to be an excess of the amount of debt compared to exports by 2 times, increased danger - by 3 times.

Currently, the country is unable to fully service its external debt. Required:

q organization of practical work on the return of interstate debts, because Russia continues to be the world's largest creditor;

q it is necessary to abandon international financial loans used to cover current budget needs, and direct them to the implementation of targeted federal programs related to the revival of production.

Methods of managing public debt are:

Conversion;

Consolidation;

Unification;

Exchange of bonds at a regressive ratio;

Deferment of repayment;

Restructuring;

Cancellations.

Conversion is a change in loan yield. It is carried out in the event of a change in the situation in the financial market (for example, the level of the central bank discount rate) or a deterioration in the financial position of the state, when it is not able to pay the required income.

Consolidation- this is the transfer of obligations under a previously issued loan to a new loan in order to extend the loan term. It is carried out in the form of exchanging bonds of the previous loan for new ones. In some cases, a reduction in loan terms may be applied.

Unification of loans- this is the combination of several loans into one, when the bonds of several previously issued loans are exchanged for bonds of a new loan. It simplifies the management of public debt. Unification can be carried out either separately or together with consolidation.

Exchange by regressive ratio The transfer of bonds from previous loans to new ones is carried out with the aim of reducing public debt. This is undesirable, since it represents a partial waiver by the state of its debts.

Postponement repayment is the postponement of debt payments. At the same time, during the period of postponing the debt repayment period, no payment of income is made.

Restructuring - This is the application in full or in part of the above methods.

Cancellation debt means a complete renunciation of the state's debt. However, this option is considered unacceptable. The authority of the state depends on its recognition of its debts and ensuring their full repayment on time.

Management of the state internal debt of Ukraine is carried out by the Ministry of Finance of Ukraine in the manner agreed with the National Bank of Ukraine.

The placement of debt obligations of the Government of Ukraine and the provision of guarantees on its behalf is carried out on its behalf by the Ministry of Finance of Ukraine.

The maximum size of the state internal debt of Ukraine, its structure, sources and repayment terms are established by the Verkhovna Rada of Ukraine simultaneously with the approval of the state budget of Ukraine for the next year.

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

External debt- these are 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.

The national debt may be short-term(up to one year), medium term(from one year 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.

Maximum volumes of government internal and external debts are determined by the law on the federal budget for another year. In accordance with Article 106 of the Budget Code of the Russian Federation, the maximum volume of 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 Internal 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.

State guarantee is a method 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 who received 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 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 institutions. 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.

IN State debt book information is entered on the volume of debt obligations of the Russian Federation, constituent entities of the Federation and municipalities for issued securities.

Information on borrowings is entered by the issuer into the State Debt Book of the Russian Federation within a period not exceeding three days from the moment the corresponding obligation arises.

Can be used to reduce debt burden debt restructuring. 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 conditions for debt servicing.

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;

government loan conversion- change in the initial terms of the loan regarding profitability. Most often, during the conversion, the government reduces the interest rate;

external debt conversion- a means of reducing external debt by fulfilling debt obligations to creditors by transferring to them bills and shares in national currency;

innovation- replacement of the original obligation between the parties with another obligation between the same parties, providing for a different method of execution.

In 1985, the external debt of the USSR amounted to 22.5 billion dollars, in 1991 - 65.0 billion dollars. The external debt of Russia, including the debt of the USSR, amounted to 124.5 billion dollars as of January 1, 2003. To fully repay it within 30 years, along with interest payments, at least $300 billion will have to be paid.

Table 6 Dynamics of public external debt of the Russian Federation (billions of US dollars)

Name	At 1.01. 1998	At 1.01. 1999	At 1.01. 2000	At 1.01. 2001	At 1.01. 2002	At 1.01. 2003
External debt of the Russian Federation, including obligations of the USSR Including:
on loans from foreign governments
on loans from foreign banks and companies
for loans from international financial organizations
government securities of the Russian Federation in foreign currency
on loans from the Central Bank of the Russian Federation
guarantees and reserves for changes in interest rates and exchange rates

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.

The most widely used methods for managing external debt obligations are restructuring And conversion. Basic schemes restructuring are buyout, debt securitization, use of Brady bonds, debt write-off.

Debt redemption. In cases where debtor states may have significant amounts of financial reserves, it is possible to allow the borrower to purchase its own debts, which will allow it to reduce the total amount of public debt. However, world practice has a negative attitude towards early repurchase of debts, since, firstly, the worst borrowers, whose debts are traded at the greatest discount, benefit, and secondly, the principle of equality of creditors is violated.

In April 2002, Russia signed a package agreement with Germany, according to which for the debt to the former GDR in the amount of 6.4 billion transferable rubles. 500 million dollars were paid, including 350 million dollars. in 2002, $75 million. - in 2003 and until February 1, 2004 - the remaining 75 million dollars. Of the 3.6 billion dollars. Russian debt of the Czech Republic, through the mediation of RAO UES, was purchased at a significant discount of $2.5 billion. The remaining $1.1 billion. were restructured for the period until 2020. A significant part of this amount will be repaid through commodity supplies.

Debt securitization - re-registration of public debt into new marketable money market debt instruments, including loan capital. Among the main types of securities traded on international financial markets, two groups are distinguished:

• ? foreign bonds issued by non-residents in the domestic market of a foreign state;
• ? Eurobonds are medium- and long-term obligations in Eurocurrencies, issued on the European market among foreign investors.

Recently, it has become widespread securitization of bank debts, those. exchange of obligations to creditor banks for bonds. If the new securities are trading at a smaller discount in the market, such an operation will lead to a reduction in the total amount of debt. This restructuring scheme is implemented on a voluntary basis if new obligations are recognized as priority over old debts. Otherwise, expected payments on the old debt will be equivalent to payments on the new one, which will trade at the same discount as the existing one.

By the beginning of the 1990s. In international practice, a fairly effective system for restructuring external debt has developed, proposed for the settlement of debt obligations of developing countries by US Secretary of the Treasury N. Brady (“plan

Brady"), At that time, the securities markets of developing countries were characterized by very low liquidity - 25-40% of the nominal value. As a result of negotiations between debtors and creditors in 1990-1994. was implemented Brady bond issue for a total amount of about 100 billion dollars. They are government bonds issued in exchange for government debt to commercial banks. In international practice the following are used types of Brady bonds: parity (with reduced interest); discount (with a reduced principal amount of debt); stepped (with lower initial rates); debt conversion, new debt; interest; capitalized.

Restructuring of external debt may be accompanied by partial write-off (abbreviation) principal amount. In some cases, partial debt forgiveness is a preferable strategy for creditors compared to providing additional loans in the hope of future repayment. It is worth recalling that in the 90s. When settling the debt obligations of the USSR to the Paris and London Clubs, Russia managed to achieve the write-off of part of the debts.

It is important to keep in mind that it is almost impossible to restructure all debt. In this case, resort to conversions.

The main financial mechanism of the conversion scheme is to eliminate part of external debt claims by exchanging them (swap) for other types of liabilities, primarily in national assets. The scheme is based on the principle of “unpaired exchange”: the nominal debt is swapped at a special repayment rate, which is based on secondary market quotes for the corresponding debt claims.

The advantage of large-scale conversion operations is that, along with debt relief, they can facilitate the influx of foreign direct investment for the development of priority export and import-substituting industries, privatization, reform of the financial sector, as well as slow down the outflow of capital from the country and stimulate its return.

Various forms of conversion operations (swap operations) before creditors (countries, international financial organizations, foreign commercial banks) are possible: "debt to cash»: debt repurchase at a discount on unguaranteed commercial debt;

"debt for export": Export of finished products allows, in addition to reducing the debt burden as such, to maintain competitive domestic production and promotes the development of new markets. The Russian leadership is most active in finding ways to repay external debt with commodity supplies, including military equipment and weapons;

"tax debt." This requires the legislative establishment of tax benefits for investors who hold the external debt of the debtor country;

"debt into bonds." This scheme was implemented by Russia as part of repaying its debt to the London Club by issuing Eurobonds. In addition to saving servicing costs, the issue of Eurobonds mitigates the crowding out effect of private investment;

"debt on property." To reduce the debt burden, an exchange of debt obligations for shares of privatized enterprises is used. The mechanism is as follows: a foreign company buys external debt (part of the debt) on the secondary market and then presents it to the central bank of the debtor country; the central bank pays the repurchased debt in national currency; the foreign company uses the funds received to finance investments in the debtor country;

"debt for debt" is essentially a swap of external liabilities into financial assets, i.e. debts to the debtor country. We are talking about a kind of political offset. For example, in connection with the emerging rapprochement of North and South Korea, a scheme may be implemented for Russia to offset part of the debt of 4.5 billion dollars. North Korea for the debt of South Korea.

In conclusion, it is worth mentioning such an unconventional method of solving the problem of external debt as commodity exchange transactions “debts for nature.” Their essence is that the World Bank or an interested group of environmentalists buys from the creditor at a significantly reduced cost (or receives for free) part of the external debt that the country is unable to repay. This amount is then transferred to the borrower's central bank and converted into local currency or securities denominated in local currency. The funds received in this way are used to carry out environmental protection measures in the debtor country, and part of the external debt is written off.

To repay part of the external debt can be used transfer of part of the national quota to reduce greenhouse gas emissions into the atmosphere. In accordance with the Kyoto Protocol, by 2008-2012. industrialized countries are obliged to reduce greenhouse gas emissions to the level of 1990. Russia has the opportunity to sell part of unused gas emission quotas, which promises from 3 billion to 10 billion dollars. This amount may become the subject of negotiations with Russia's creditors.

We must not forget about the simple (early) debt repayment. A very significant event for Russia in 2006 was the early final repayment of the debt of the former USSR to the member countries of the Paris Club in an amount equivalent to $21.6 billion. USA. Carrying out this operation, unprecedented in its scale, made it possible to reduce the volume of federal budget expenditures in the form of future interest payments by an amount estimated at $7.7 billion. USA 1.

It can be a financial instrument and an object of management at the same time. As a financial instrument, public debt provides the opportunity for legislative (representative) and executive authorities to influence money circulation, the financial market, investment, production, employment, the level of savings and many other economic processes.

The public debt management system is presented in general form in Fig. 1.

Rice. 1. Public debt management system

Simultaneously state debt stands as a control object, when the authorities establish all the necessary practical aspects of its functioning. Thus, authorities determine the relationship between various types of debt activities, regulate the structure of public debt in terms of maturity and profitability of debt obligations, establish the procedure for issuing and circulating government loans, providing and returning government loans and government guarantees, as well as fulfilling financial obligations on them.

Objectives of public debt management

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

• 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;
• minimizing the cost of debt by extending borrowing terms and reducing the yield of government securities, by moving to other markets and shifting attention to other groups of investors;
• maintaining the state's reputation as a first-class borrower based on the impeccable fulfillment of financial obligations to investors;
• maintaining stability and predictability of the government debt market;
• achieving effective and targeted use of borrowed funds, government loans and guaranteed loans;
• ensuring timely repayment of government loans and payment of interest on them;
• diversification of debt obligations by borrowing terms, profitability, forms of income payment and other parameters to meet the needs of different groups of investors;
• coordination of actions of government bodies of all branches and levels in the government debt market. It seems appropriate to define public debt management in a broad and narrow sense.

Under public debt management in a broad sense we will understand the formation of one of the directions of the state’s economic policy related to its activities as a borrower. Public debt management in a broad sense is the prerogative of the legislative authorities (sometimes the government) and consists of formulating policies regarding public debt (domestic and external); establishing the boundaries of public debt (including in determining the size of the budget deficit and, consequently, the volume of loans attracted to finance it); determining the main directions and goals of influencing micro- and macroeconomic indicators; establishing the possibility and feasibility of financing national programs from public debt, etc.

Under public debt management in the narrow sense is understood as a set of activities related to the issuance and placement of government debt, servicing, repayment and refinancing of government debt, as well as regulation of the government securities market. Debt management in the narrow sense is carried out by executive authorities, mainly the Ministry of Finance and the central bank. It should be noted that these two authorities do not have the ability to directly influence the amount of total public debt.

Public debt management process

Includes the following functional elements:

• planning borrowings by determining the procedure, conditions for issuing and placing government debt obligations;
• servicing debt obligations through operations to place loans, pay interest income on them, refinance and repay debt;
• control over the state of public debt.

One of the most important areas of public debt management in world practice is the management of the composition and structure of public debt (debtmanagement) with a constant volume of total debt. Objects of regulation debt management are:

• the structure of the maturity of various debt obligations, by changing which the state manages to partially or completely restructure its debt;
• the structure of creditors, the ratio of residents and non-residents, as well as the ratio of market and non-market loans intended for certain categories of creditors;
• the amount of total public debt.

Regulating the amount of internal and external debt of the state and keeping it at an acceptable level is a defining moment in managing public debt, which in practice is implemented in establishing a number of restrictions. In particular, the budgetary criteria for countries wishing to join a monetary union (Maastricht criteria) are of interest. According to these criteria, the volume of total government debt should not exceed 60% of GDP, and the current government budget deficit should not exceed 3% of GDP. If these thresholds are exceeded, governments must consider the possibility of penalties from the EU (eg payment of fines according to a pre-approved procedure). At the same time, in the event of a so-called “severe recession” in the economy (with a decrease in GDP by more than 2% per year), it is possible to increase the state budget deficit without applying penalties.

In Russia, the lending activities of all government bodies are regulated by a whole set of legislative restrictions. Thus, the Budget Code of the Russian Federation establishes maximum volumes of state and municipal borrowing, debt servicing costs, the need to develop and approve internal and external borrowing programs, and maximum budget deficits. Limits on domestic and foreign debt are set annually by laws and budget decisions at each level of government.

Public debt management can also be strategic and operational.

Strategic issues the development of public debt is within the competence of the Federal Assembly, the President and the Government of the Russian Federation, legislative (representative) and executive authorities of the constituent entities of the Russian Federation and municipalities. In particular, every year in the law on the federal budget the Federal Assembly and the President of the Russian Federation approve the maximum volumes of state internal and external debts; sources of financing the budget deficit, including income from the issue of government securities; maximum amount of external borrowings; maximum amounts of government loans to foreign states and CIS member states; directions of use, terms of provision and maximum amounts of budget loans; upper limits of state internal and external guarantees. The President and Government of the Russian Federation develop and approve socio-economic programs that can directly affect various aspects of the development of public debt. The President of the Russian Federation in his annual Address to the Federal Assembly of the Russian Federation also pays special attention to public debt management.

Operational management public debt is carried out by the Government and the Ministry of Finance of the Russian Federation, as well as the Central Bank of Russia, Vnesheconombank and Sberbank as agents of the Ministry of Finance of the Russian Federation. These bodies determine the general conditions for the issuance of individual loans, the procedure for issuing and circulating debt obligations, the time of issuing the next loan and the conditions for its functioning, organize the primary placement and secondary market for government securities, organize and carry out the payment of income and repayment of debt obligations, the issuance of budget loans and government guarantees, carry out control actions and other measures for the operational management of public debt.

Similar issues are resolved within the scope of their competence by the legislative and executive bodies of the constituent entities of the Russian Federation and municipalities. At the same time, they proceed from the norms laid down in federal legislation.

Thus, under public debt management one should understand a set of tactical and strategic measures to service public debt and implement new borrowings, regulate the volume and structure of debt, regulate the government borrowing market and control their targeted and effective use.

Principles of public debt management

Public debt management is based on the following principles:

• unconditionality - ensuring the unconditional fulfillment by the state of all obligations to investors and creditors that the state, as a borrower, assumed when concluding agreements for borrowing funds;
• unity - taking into account in the process of managing public debt all types of obligations issued by the Russian Federation as a sovereign, as well as constituent entities of the Russian Federation and municipalities;
• risk reduction - placement and repayment of loans in such a way as to minimize the impact of capital market conditions and speculative tendencies of the securities market on the government obligations market;
• optimal structure of debt obligations in terms of circulation and repayment periods;
• maintaining financial independence - maintaining an optimal structure of debt obligations between resident investors and non-resident investors;
• transparency - maintaining openness when issuing loans, ensuring access of international rating agencies to reliable information about the economic situation in the country in order to maintain a high credit reputation and rating of the country as a loan chic.

Control measures

Around the world, the most common method of managing public debt is refinancing public debt, i.e. repayment of part of the public debt by placing new loans.

To use this method, a high financial reputation of the borrowing state is required. In the global financial market, the reputation of borrowing countries is expressed by ratings assigned to them by international rating agencies in accordance with international rating rules.

During a financial crisis, there is a need for debt restructuring. In accordance with Art. 105 BC RF under debt restructuring means the termination of debt obligations constituting state or municipal debt based on an agreement, with the replacement of these debt obligations with other debt obligations providing for other conditions for servicing and repaying obligations. Debt restructuring can be carried out with a partial write-off (reduction) of the principal amount.

In conditions of a difficult economic situation, a growing deficit, and the inability to repay debts in full and on time, the government may resort to measures such as conversion, consolidation, unification, deferment of repayment, and cancellation of public debt.

Conversion - this is a change in the size of the loan yield; Most often, the state reduces the amount of interest paid on loans, thereby reducing state budget expenses for managing the public debt.

Consolidation - changing the validity period of previously issued loans, i.e. decision to postpone the payment date to a later date. The opposite solution is also possible - early repayment. Usually, together with consolidation, the unification of government loans is carried out.

Unification - exchange of several previously issued loans for one new one.

Deferred repayment A loan differs from consolidation in that during a deferment, not only does the loan repayment period extend, but also the payment of interest on it stops.

Cancellation state internal debt - complete refusal of the state or debt obligations (is a last resort).

The adoption of the listed possible state decisions violates the main principle of public debt management - the principle of unconditionality. Therefore, their use requires deep preliminary study and analysis of all possible economic and political consequences.

Control over public debt management

Public debt management involves monitoring two important indicators - the amount of public debt and the cost of servicing it. In conditions of economic growth, it is not their absolute size that is important, but the share of public debt in GDP (or in exports) and the ratio of real interest and the rate of economic growth. Simply stating the absolute size of the debt ignores the volume of GNP. It can be argued that a rich nation is better able to sustain a government debt of significant size compared to a poor nation.

Thus, with an increase in public debt, there is the possibility of bankruptcy of the nation and the danger of shifting the debt burden to future generations. And if the financing of public debt servicing is carried out by issuing new money, then such a scheme leads to a classic inflationary scenario - there is too much money and not enough goods.

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

• minimizing the cost of debt for the borrower;
• preventing the market from overflowing with government debt obligations and sharp fluctuations in their exchange rate;
• effective use of mobilized funds and control over the targeted use of allocated loans;
• ensuring timely repayment of loans;
• maximum solution of problems determined by financial policy.

The specifics of the category of public debt also determine the features of its operational management. Usually it is assigned jointly to the Ministry of Finance and the Central Bank. Management of the repayment of public debt is carried out from three main sources: from the budget; at the expense of gold and foreign exchange reserves, property; from new borrowings.

Techniques and methods for managing public debt

There are many methods to solve the problem of public debt. Based on the urgency and nature of the tasks being solved, budget-export and financial-technical methods are distinguished. According to the conditions and mechanism of implementation, market and non-market methods can also be distinguished.

Budget-export methods- long-term and link the solution to a problem, for example, external debt, with an increase in the country’s trade balance, as well as an increase in GDP and the state budget.

Financial and technical methods - short-term and allow you to solve the problem by improving borrowing conditions, reducing the total amount of debt, and changing the temporary structure of payments.

The following main financial and technical methods of managing public debt are distinguished: consolidation, conversion, unification, refinancing, restructuring, deferment of repayment, cancellation of loans, etc.

Non-market methods of managing public debt include conversion, consolidation and unification. These methods involve changing the terms of outstanding loans unilaterally, often without the consent of the security holders. Such measures violate the rights of investors and, in this regard, their use is possible only in a planned economy and is unacceptable in market conditions.

Thus, during the Soviet period, increasing the maturity and reducing the cost of public debt was achieved through conversion and consolidation. In a centrally planned economy, these measures were carried out compulsorily. Conversion usually refers to a change in the yield of loans. In order to reduce the cost of managing public debt, the state most often reduces the amount of interest paid on loans. However, an increase in the yield of government securities for creditors is also possible. Such an operation was carried out, for example, in 1990, when the yield on 3% winning bonds was increased to 9%, and the yield on Treasuries from 5 to 10%.

Consolidation refers to a change in the terms of loans associated with the timing of their circulation. Thus, in 1990, the service life of treasury bonds was reduced from 16 to 8 years.

Debt conversion and consolidation could be combined with unification loans, which meant the combination of several previously issued loans into one new loan. In this case, bonds of unified loans were exchanged for newly issued bonds, and the yield and repayment terms of the new loan changed in the direction desired by the state.

In modern conditions, the difficulties of many countries in repaying external debt have given rise to new methods of covering obligations to creditor countries. These methods of managing public external debt are usually combined into the concept conversion of external debt. In this case, conversion means 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. Among them: 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.

Russia is now actively using foreign debt repayment method commodity supplies. Thus, the debt of Slovakia ($1.8 billion), Hungary ($480 million), the Republic of Korea ($170 million), Bulgaria ($100 million) and Poland ($20 million) was repaid 130J-

Through the mechanism of the Paris Club, Russia agreed to write-off so-called bad debts of the poorest countries amounting to about 800 million rubles. Most of these loans were issued during the Soviet era, and the money was not returned. By writing off part of the debt, Russia is able to document the existence of the debt and formalize the procedure for its repayment and servicing through intergovernmental agreements. Thus, Russia, firstly, helped the poorest countries, and secondly, those who previously did not pay are now starting to do so.

Currently, according to Article 98 of the Code of the Russian Federation, changing the conditions of government loans issued for circulation - payment terms and the amount of interest payments, circulation terms - is not allowed.

In a market economy it is carried out restructuring debt based on the use of financial market mechanisms. The short-term nature of Russian debts and the high cost of borrowing in recent years have forced the state to constantly worry about extending the terms and reducing the profitability of new borrowings. This is achieved, in particular, on the basis of debt restructuring, under which, according to 105 of the Budget Code of the Russian Federation, is understood as the repayment of debt obligations by simultaneous borrowing in the amount of repaid debt obligations with the establishment of other conditions for servicing the debt and the timing of its repayment. The main restructuring schemes include: debt write-off, that is, cancellation of previous loans; debt redemption; debt securitization.

In the field of external borrowings, debt restructuring is also carried out on a contractual basis. Then restructuring means changing the schedule for repaying the principal debt and paying interest on it. Restructuring of external and internal debt can be carried out with a partial write-off (reduction) of the principal amount.

Currently, when developing options for optimizing Russia's external debt, attention is focused mainly on technical means of solving the problem: debt restructuring, conversion of part of debt obligations into property assets in Russia. Less traditional methods are also proposed - payment of compensation, repayment of debt in national currency, re-registration of accounts payable for settlement of accounts receivable.

Having assumed the external debt of the former USSR and not being able to fulfill its obligations under it, Russia almost immediately entered into negotiations on the terms of servicing and repaying the external debt. Lengthy negotiations with the Paris Club of creditors, accompanied by partial and temporary deferrals of payments, ended in April 1996 with the signing of a general agreement on the restructuring of Russian debt in the amount of $38 billion. Of this amount, 45% of the debt must be paid within 25 years, and 55% of the debt , which includes short-term debts, will be repaid within 21 years. Payment of the capital amount of the restructured debt began in 2002. On the basis of a general agreement, bilateral intergovernmental agreements are concluded with each creditor country, which fix specific amounts and terms of debt repayment.

In October 1997, a similar agreement was concluded with the London Club of Creditors. The restructuring covers $32 billion, repayment must be made over 25 years with a seven-year grace period |41|.

The consequences of the 1998 financial crisis pushed Russia to begin new negotiations with foreign creditors on the restructuring and partial write-off of the external debt of the former USSR. In February 2000, Russia and the London Club reached an agreement to reduce the debt from $32.6 billion to $21.3 billion (the write-off of Soviet debt amounted to 36.5%) and reissue the remaining debt into Eurobonds maturing within 30 years and interest rates from 2.25 to 7.5% per annum.

The main method of obtaining funds to repay loans stands for refinancing debt, which refers to the repayment of accumulated debt by issuing new loans. In this case, when constructing a schedule for issuing new loans, they proceed from the need to link the terms of their placement with the redemption dates of bonds of previous issues. For example, Russia used refinancing to pay off debt under the government's 1966 3% Domestic Win Loan. Upon expiration of that loan, the bonds were exchanged within one year for bonds of a new loan—the 1982 Domestic Win Loan—without paying any exchange rate difference.

The minimum price of borrowed funds on the market is determined by the refinancing rate. The refinancing rate is the interest rate at which borrowing occurs to service domestic debt.

Thus, government credit regulates the interbank loan market. If it is impossible to refinance the debt, current budget revenues are used to service and repay it.

In addition to the above methods of managing public debt, it is possible deferment of loan repayments and cancellation of public debt. The deferment of repayment of previously issued loans is carried out in conditions where the further development of operations to issue new loans is not financially effective for the state. Deferment not only delays the repayment of loans, but also stops paying income.

Cancellation of public debt refers to a measure as a result of which the state completely renounces its obligations on issued loans. Cancellation of state securities can be carried out for two reasons: in case of financial insolvency of the state, i.e. his bankruptcy; due to the coming to power of new political forces, which for certain reasons refuse to recognize the financial obligations of the previous authorities.

Countries with a market economy under normal conditions do not use these techniques for managing public debt, since their use leads to irreparable damage to the state’s reputation as a borrower among potential investors and creditors. In the history of public debt, their implementation was observed only in conditions of war, post-war devastation or severe budgetary and financial crises.

In 1998-2000 public debt operated under the sign of innovation in government securities. Novation - This is the replacement, by agreement of the parties, of the original debt obligations with new ones, establishing other conditions for servicing the debt and the timing of its repayment.

The innovation was a consequence of the debt crisis, which, in turn, was caused by the crisis of the Russian economy and finances. This measure was announced by Decree of the Government of the Russian Federation of August 17, 1998 No. 980 “On the organization of work on the redemption of certain types of government securities.” The total amount of the “frozen” debt amounted to 265.3 billion rubles, and its restructuring was envisaged.

Great value for increasing the efficiency of government debt activities will have the creation of a unified system for managing the public debt of the Russian Federation. Organic interaction of internal and external debts, ensuring their unhindered mutual substitution based on a unified debt policy, unity of planning and accounting of all operations to attract, service and repay external and internal government borrowings will allow: to optimize the terms of circulation, repayment and profitability of government securities; minimize the adverse impact of fluctuations in foreign currency exchange rates and interest rates in international financial markets on the amount and cost of government borrowing; optimize budget expenditures for servicing public debt; timely and fully fulfill obligations to internal and external creditors.