ISSN 0798 1015

Vol. 39 (Number 14) Year 2018 • Page 4

State policy of Russia in the sphere of financial regulation designed for minimization of the threats to financial security during the transition to innovation-based economic development

La política estatal de Rusia en el ámbito de la regulación financiera diseñada para minimizar las amenazas a la seguridad durante la transición al Desarrollo Económico Basado en Innovación

Marsel M. IMAMOV 1

Received: 10/01/2017 • Approved: 31/01/2018

Content

1. Introduction

2. Prioritized Measures at the Support of Financial System

3. Dynamics of the Budget Expenditures of the Russian Federation

4. Influence of the Economic Crisis on Financial Security

5. Conclusion

Bibliographic references

1. Introduction

Financial security is an indicator of capacity of a state’s financial system for full and consistent financial provision of economic processes at a due level. The problems of financial security are on the agenda of every state of the world. Today, provision of a due level of financial security is the main area of the national financial policy (Barabash et al., 2017, p. 296-305).

Increase in the level of market strength of the Russian Federation regarding manifestation of systemic risks, increase in its competitive advantage, elimination of the deformation in its system is an important task of the state policy (Lewis et al., 2015, p. 447-475).

Increase in the level of investment availability at implementation of the innovation-based economic model is a task of the financial system’s development. Formation of an international financial center in Russia and improving reliability of banking and insurance sector are still the priorities in the development of financial sector (Franko, 2017, p. 319-333; Di Falco et al., 2018, p. 123-131; 5.  Mason et al., 2017, p. 128-138). The economic crisis 2008 revealed the relevance in enhancing the resource base of the national financial sector by so-called “long” money. Solution of this task may be found only in forming new models of placement of the citizens’ retirement savings in the financial system of the country and sovereign funds.

In the conditions of the global crisis the state role in provision of national financial security, creation of the necessary conditions for effective work of financial markets and institutions objectively increases.

2. Prioritized Measures at the Support of Financial System

At implementation of general measures on support of the country’s financial system in the conditions of economic recovery one should keep in mind the following priorities (Smirnov, 2008, p. 164-168):

1. It is necessary to guarantee maintenance and enhancement of the current industrial and technological potential for the future economic growth. The economic cluster of the government should ensure the tax-payers’ investments only into the economically viable enterprises. The companies able to boost their efficiency over the last years, investing their funds into its development and creation of new products and services, able to increase their labor performance, should have the right of receiving the support by the government in solution of the problems arising during the crisis period.   
2. The level of the national internal demand must be prioritized after the recovery and during the economic development. The main tasks of the government must have become decrease in the significance of the external factors for the economic growth and enhancement of significance of the internal resources. In the conditions of crisis the defining role will be played by two kinds of the internal demand – governmental and, increasing during the economic recovery, private one. Exactly boosting these two kinds of demands should be the priority of the government.
3. The process of economic modernization of the country should not be stopped because of the crisis. Moreover, during the crisis such work should be as active as possible. At the same time, the main task of modernization faced by the government should be changing the current model of the economic growth. Instead of the model of so-called “oil” growth, the country should transfer to the innovation-based model. During this transfer the most important innovation processes should be supported, including increase in the energy performance of the economic model. Increase in the level of the investments into the human resources, such as education and healthcare, should become the priority of the expenditures of the federal and local budgets. The infrastructure facilities, introduction of which should contribute to the increase in the efficiency of the national economy, must be implemented considering the necessity of saving the budget funds.
4. It is necessary to eliminate the corruptive pressure on the Russian business on the part of the state officials. Here, the most important factor should be elimination of the administrative barriers for business, which are one of the most important corruptive factors. Alongside with it, the government should introduce a new system, designed to support small and middle-sized business in the conditions of crisis.
5. Stable financial industry should play the role of the backbone of the country’s economy. The government must undertake all the necessary measures designed to support stable functioning of the financial industry, including the bank sector and stock market in order to ensure consistent and full investment of the credit means into the economy. At the same time, the main efforts should be directed to making and introduction time of the necessary managerial decisions. 
6. The government and heads of the Central Bank should implement such a macroeconomic policy, which is aimed at not only ensuring the macroeconomic stability, but also providing the conditions and incentives for increase in the level of the population’s savings, by boosting the investment attractiveness of the national economy and formation of a more modern model of economic development. This causes the necessity in forming a balanced budget policy and support of the stable exchange rate of the national currency. The monetary policy will be focused on elimination of the liquidity crisis in the financial sector with the simultaneous inflation fight. All these measures should ensure the increase in the population’s confidence in ruble, increase in the monetization index of the economy, which, in its turn, should lead to recovery of the stable level of the economic growth.

The table presents the data of the Russian budget expenditures. According to the presented data, there was a consistent budget proficit up to 2009; however soon after the economic crisis 2008 one may observe the decrease in the revenue flow, resulted in the fact that in 2009 the budget was implemented with RUB 2.3 trillion deficit.

Table 1
Dynamics of the Budget Expenditures, RUB billion

According to the data as of September, 1 2015, the expenditure component of the budget exceeded the revenues’ one almost by trillion rubles, which is a bit more than two percent of the gross domestic product of the country. One may forecast that in 2015 the budget deficit will be equal to RUB 2.68 trillion. In order to decrease the expenditure items, the government suggests using lowered indexation of the welfare payments — by 5.5% in 2016, by 4.5% in 2017 and by 4% in 2018.

The presented data show that the problem of consistent functioning of the budget system remains relevant because of the tendency towards increase in the internal debt. Besides, there is still a tight dependency of the federal budget revenues on the hydrocarbons revenues, which is an unfavorable factor for decrease in the budget deficit at the condition of lowering the international crude oil prices. Solution of this problem is in ensuring the federal budget independency on the oil and gas sector investments, because the existence of a country should not be defined by the world oil prices (Marchenko, 2013, p. 39-42). A necessary step is the government’s decision on transition to the one-year cycle of budget planning which is caused by high volatility of the oil and gas prices, influencing the exchange rate of the national currency.

The economic conditions for overcoming the crisis cause the role of the national budget policy to be very important (Kiseleva and Fonotov, 2017, p. 480-485). Alongside with it, cutting a great amount of the current expenditures that are not obligatory, will provide an opportunity for implementing additional anti-crisis measures and full financing of those items of the federal budgets, which will help in ensuring stable financing of the economy and maintaining positive dynamics in the social sphere.

The economic crisis 2008 was international. It affected an overwhelming majority of the international economy branches, caused significant degradation of social sphere, transformation of the world economy structure and general rules of the international economic interrelations. The existing tendency shows that the economic recovery will be long. The government is to consider these processes at development and implementation of anti-crisis measures and based on the necessity of stabilization of the necessary level of reserve financial means to ensure implementing the planned anti-crisis programs and the strategic development plans of the country for the next periodsn (Aganbegyan, 2017, p. 361-363).

The articles of the adopted Concept of Long-Term Socio-Economic Development specify that the enterprises, the economic activities of which are ineffective, cannot rely on the state support from the tax-payers’ money. The Russian government must render assistance to the workers of such enterprises and local communities in case of bankruptcy and guarantee maintenance of the strategically significant production capacities of such enterprises during the bankruptcy procedure (Presbitero, 2016, p. 17-31).

At the same time, those enterprises showed increase in their performance over the last time, invested in expanding their production and development of new products, boosted the level of their labor performance, but happened to be in the situation of crisis due to the lack of access to the credit means and temporary decrease in the demand for their goods, may rely on the state support (Morrissey, 2016, p. 384-386).

The Russian government should render assistance to the processes of innovation-based activities in the national economy. To ensure the due level of private investments into the innovation-based project, the government should develop the measures on providing the state support in implementing the programs of introduction of innovation-based products and services, financing the technological modernization programs etc.

5. Conclusion

Effective introduction of anti-crisis programs and achievement of necessary positive result in the economic sphere are possible only at ensuring the guaranteed degree of macroeconomic stability.

Exactly for this purpose the government in cooperation with the Central Bank of the Russian Federation will implement the balanced macroeconomic policy. The goals of this policy are maintaining the balance between enhancement of the social support for the population, support of the internal consumption, and economic development on one hand, and the goals of maintaining acceptable levels of inflation, stable exchange rate of the national currency, ensuring the optimum level of the budget deficit on the other hand. 

The next task is the increase in the volumes of the bank credits and their cheapening for those enterprises, which release innovation-based products and services.  At this moment, expensiveness of the credit resources is to a greater extent caused by the risks connected with the instability of the external and internal demand. The state program on activation of the consumption and investment demand will allow minimizing such risks, and in combination with reduced volatility of the foreign exchange rate expected in future, will create the conditions for reduction of the interest rates.

At the operational level of planning the most important condition for reduction of the interest rates will be systemic lowering of the inflation level. The government has no intention to excessively increase the level of the loans on the national financial markets in order to completely direct the bank resources to expanding the level of crediting the population and the business.  

The economic safety of the Russian Federation is inconceivable without ensuring the guaranteed level of the macroeconomic stability of the economy. It requires maintenance of the minimum size of the reserve fund, the level of gold and foreign currency reserves, positive balance of the foreign trade and gradual decrease in the level of the budget deficit.

Aganbegyan, A.G. (2017). Investments in fixed assets and human capital: Two interconnected drivers of socioeconomic growth. Studies on Russian Economic Development, 28(4), 361-363.

Barabash, N.S., Bochkovskii, P.P., Shamsutdinov, Yu.A. (2017). The impact of the institutional and infrastructural environment on innovation-based development in today’s world. Studies on Russian Economic Development, 28(3), 296-305.

Di Falco, S., Feri, F., Pin, P., Vollenweider, X. (2018). Ties that bind: Network redistributive pressure and economic decisions in village economies. Journal of Development of Economics, 131, 123-131.

Franko, W.W. (2017). Understanding Public Perceptions of Growing Economic Inequality. State Politics and Policy Quarterly, 17(3), 319-348.

Kiseleva, V.V., Fonotov, A.G. (2017). Areas of national modernization: Search for priorities. Studies on Russian Economic Development, 28(5), 480-485.

Lewis, D.C., Schneider, S.K., Jacoby, W.G. (2015). Institutional Characteristics and State Policy Priorities. The Impact of Legislatures and Governors. State Politics and Policy Quarterly, 15(4), 447-475.

Marchenko, G.N. (2013).The Problems in Equilibrium of the Budget System of the Russian Federation in the Conditions of Financial and Economic Crisis. Journal “Modern Science: Relevant Problems of Theory and Practice”, 01-02, 39-42.

Mason, S.G., Zhu, P., Van Dyke, J. (2017). Regional Industry Analysis: An Approach for Large and Smaller Economies. Economic Development Quarterly, 31(2), 128-138.

Morrissey, M. (2016). Radical Possibilities: Public Policy, Urban Education and a New Social Movement. Economic Development Quarterly, 30(4), 384-386.

Presbitero, A.F. (2016). Too much and too fast? Public investment scaling-up and absorptive capacity. Journal of Development of Economics, 120, 17-31.

Smirnov, I.E. (2008). Anti-Crisis Measures in Legislation. Management in Credit Institution, 6, 164-168.

1. PhD (Economy), Cand.Sc.(Law), Associate Professor, Department of Economics, Kazan Federal University; Russian Federation, E-mail: nayer@mail.ru