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, determine the conditions and issue new government securities.

Management is carried out by the Government of the Russian Federation, within the powers established by the Federal Assembly of the Russian Federation.

The main objectives of public debt management are:

Maintaining the volume of public debt at an economically safe level;

Maintaining the cost of servicing public debt;

Ensuring the fulfillment of state obligations in full at a lower cost in the medium and long term.

Payment of income from loans and their repayment are usually made from budget funds. However, in the face of a significant increase in public debt and growing budgetary difficulties, the country may resort to refinancing government debt. Refinancing refers to paying off old government debt by issuing new loans. For example, our country used refinancing to pay off debt under the state 3% domestic winning loan of 1966. Upon expiration of this loan, the bonds were exchanged within one year for bonds of a new loan - the domestic winning loan of 1982 without paying exchange rate differences.

Refinancing was also used when issuing government treasury bonds. As they were implemented, additional funds were allocated to repay loans of 1955-1956, which were placed among the population by subscription.

An important area of ​​public debt management is related to the determination of conditions and issuance of new loans. When determining the conditions for issuing loans, the main ones of which are the level of profitability of securities for creditors, the duration of loans, and the method of payment of income, the state is obliged to be guided not only by the interests of achieving maximum financial efficiency of loans, but also to take into account the real situation in the financial market. The success of new loans can be ensured only if the situation in the economy, the state of money circulation, the level of profitability and terms of existing loans, the benefits provided to creditors and many other factors are correctly taken into account.

The production, storage and distribution of government loan bonds are entrusted to the relevant departments of the Ministry of Finance, the sale of government securities is entrusted to the banking system. Banks freely sell and buy government bonds on all working days, except for the period from the day the winning draws are held to the day they receive the official table. On the eve of the draw, existing bonds are sealed; upon receipt of the official winnings table, they are checked by a special commission. Winning bonds are withdrawn from further circulation, and the winnings on them are credited to budget revenue. The next day, operations for the purchase and sale of bonds of winning loans are resumed. Transactions with interest-bearing bonds and treasury bills are carried out continuously.

The factor of political stability is of great importance for companies conducting operations or having sales markets in other countries. In the host country for a foreign investor or product export, political changes may result in restrictions on property rights for foreigners (even the nationalization of foreign property) or the imposition of special duties on imports. Balance of payments or problems servicing foreign debt may make it difficult to obtain dollars exported as profits. On the other hand, policy may change in a direction favorable to investors when there is a need for an influx of capital from abroad. Establishing diplomatic relations can open the way to new markets, as it did in China, but in other countries business usually continues despite formal diplomatic confrontation.  

In Russia, similar functions are performed by the Bank for Foreign Trade, the Bank for Foreign Economic Activity, specializing in servicing external debt and managing assets of the former USSR.  

The negative current account balance in Russia in 1998 was due to the following circumstances: an overvalued ruble exchange rate, which restrained exports and stimulated the import of goods; a decrease in prices for major export goods, especially oil; and increased payments to service external debt. The Central Bank of the Russian Federation, after massive foreign exchange interventions, was unable to maintain the foreign exchange rate.  

One of the main reasons for the instability of the balance of payments is the growing payments of income on investments, interest on public debt, and debt servicing costs of private Russian banks and companies. From 1994 to 1997, the negative balance under the item Income from investments increased almost 5 times. In the first half of 1998, the amount of income payable under this item amounted to 8 billion versus $6 billion in the corresponding period of the previous year. In 1994, the trade surplus was 10 times greater than the deficit in external debt servicing operations. In the first half of 1998, the opposite situation developed: the negative result on investment income was twice as high as the positive trade balance. This circumstance, along with the budget crises, was responsible for the government’s refusal to make payments under GKOs/OFZs announced on August 17, 1998.  

Bank loans. The influx of external financial resources into the USSR occurred mainly through syndicated loans from international banks and export loans. Banks, not without reason, considered the USSR as a reliable debtor. However, after serious violations in servicing external debt in 1991-1992. banks sharply reduced their lending volumes. The net inflow of bank loans in 1994 was close to zero, and in 1995 it was negative.  

In the USSR, difficulties with servicing external debt first appeared in 1990. In 1991, Vnesheconombank, which managed external debt and acted as a monopolist in the field of international payments, spent all its resources and client funds on debt servicing. Subsequently, this debt was converted into domestic foreign currency loan bonds. Russia fulfilled its obligations with significant deviations from schedule. However, until August 17, 1998, debt problems were resolved according to the norms accepted in modern practice through multilateral (through the Paris and London clubs) or bilateral negotiations.  

The Russian Federation assumed all obligations to service the external debts of the USSR in exchange for the right to own all assets, in particular, the right to receive debts with doge  

The USSR had a reputation as a reliable debtor, and the debt was repaid strictly on schedule. In 1992, the schedule was no longer observed. Russia was supposed to allocate $19.5 billion to service the external debt, but in reality payments amounted to $2.6 billion. The same situation repeated itself in 1993, 1994 and 1995.  

The starting point in this scheme is operating leverage, which is the relationship between the organization’s total revenue, its gross income and production expenses. The latter includes the total expenses of the organization, reduced by the amount of expenses for servicing external debts. Financial leverage characterizes the relationship between net profit and the amount of income before payment of pro-  

In the coming years, the danger of state bankruptcy in the external sphere will remain, since the servicing and repayment of external public debt is comparable in scale to federal budget revenues. Due to limited resources, the federal budget, starting in 1999, has made provisions for payments to service external debt, which do not include the bulk of interest payments on the debt of the former USSR. The problem of Russia's fulfillment of external obligations remains open until the issue of restructuring payments with external creditors is resolved.  

It has become necessary to take measures to prevent the adverse impact on the federal budget of significant fluctuations in foreign currency exchange rates and interest rates in the international financial market. In order to increase the efficiency of using budget funds allocated for the repayment and servicing of external debt, the Government of the Russian Federation came to the conclusion that it would be advisable to use, along with cash, commodity schemes for repaying the external debt of the former USSR.  

Obligations to private creditors were fulfilled, and the exchange of the outstanding third tranche of domestic currency loan bonds (OVVZ) for new bonds continued. A number of constituent entities of the Russian Federation have fulfilled their obligations to service external debt. Timely servicing of external debt became possible due to the improvement of the macroeconomic situation in the country and favorable conditions on world commodity markets.  

Solvency depends primarily on the availability of resources available to the debtor country, i.e., on the volume of its GNP, as well as on the export base; payments for servicing external debt are usually made in foreign currency. A country with a dynamically developing economy, and especially its export sector, regularly pays its foreign debts. Based on these criteria, (primarily the World Bank) use the following indicators to analyze the solvency of developing countries. A country's external debt is compared to its gross national product (debt/GNP). In 1986, a period of extreme debt distress, debt averaged 38% of developing countries' total GNP. In 1991, this figure dropped to 21%, and in 1970, in a favorable situation, it was approximately 10%. However, there is no universal criterion for this indicator. Each country has its own critical level.  

A general indicator is production and financial leverage - the product of the levels of production and financial leverage. It reflects the general risk associated with a possible lack of funds to reimburse production costs and financial costs of servicing external debt.  

Induced inflation caused by economic factors (military spending, servicing external debt, overloading the budget).  

It should be borne in mind that attracting foreign credit resources that form external public debt under Government guarantees is associated with the implementation of debt obligations to service it, which is one of the important expenditure items of the state. By diverting a significant portion of funds from domestic investment, payments to service external debt can restrain the pace of economic growth.  

Overdue payments for servicing external debt 1.1 5.1 2.7 13.2  

Postponed payments for servicing external debt 12.1 56.3 8.4 42.6  

External debt service ratio, % 26.8 22.1 18.3  

Actual external debt servicing ratio, % 6.1 7.8 7.2  

The likelihood of such a mechanism being used in Russia is low. This can be explained primarily by the intended purpose of the loans provided. In addition, servicing Russia's external debt imposes certain restrictions on the required reserve of foreign exchange funds for long-term intervention. Accordingly, if this is the option used by the leaders of the Central Bank of Russia, then a fall in the dollar exchange rate to the announced level of 20-25 rubles, especially in conditions of inflation, is practically impossible.  

External debt servicing (end 1998 - 1999)5 (billion dollars)  

Russia is a debtor and at the same time a creditor. The Russian Federation assumed obligations to service the external debt of the USSR. The country's external debt increased sharply during the transition period. If in 1985 it amounted to 28.3 billion dollars, then in 1990 it increased to 59.8 billion dollars, and in 1993 - to 80 billion dollars, and as of 1999 exceeded $140 billion  

Here the coefficient jU3 reflects the need to service external debt, U5(f) -  

Current external debt servicing  

To date, there are no officially published statistics for Russia as a whole. Since 1996, the Central Bank of the Russian Federation began to publish data on the international investment position without taking into account Vnesheconombank of Russia, which is the government’s agent for servicing external debt and keeps records of all related categories of assets and liabilities.  

Schedule for servicing external debt, taking into account the conditions achieved for its restructuring in 1996-1997. assumed a smooth increase in annual payments to 12-15 billion dollars by 2005 with a subsequent decrease until 2020. Thus, it was assumed that the restructuring of external debt would allow Russia to free itself from the status of an insolvent state and spread out debt payments over a sufficiently long period in accordance with the real capabilities of the economy to service this debt.  

Economic growth policies typically include an element

State/municipal debt is the result of borrowings undertaken to cover the budget deficit. It is formed by the sum of deficits for previous years minus surpluses. Let's take a closer look at how it's done

General information

TO State debt of the Russian Federation include obligations to:

1. Legal entities and individuals (including foreign ones).
2. Subjects of the Russian Federation.
3. International financial structures, other subjects of international law.
4. Foreign countries.

Public debt is also formed by obligations:

• under state guarantees provided by the Russian Federation;
• arising as a result of the adoption of laws on the attribution of third party debt to the public debt.

Terminology nuances

In accordance with the provisions of the law, national and public debt is allocated. The first concept is considered broader. The national debt consists not only of the obligations of the government of the Russian Federation, but also of the governance structures of the republics included in the country, as well as self-government bodies.

Security

It is carried out at the expense of federal property, which forms the country's treasury. Despite the fact that credit relations are secured by the treasury, federal budget funds are used to pay off debts (

Budget Code contains an imperative instruction for federal government structures to exercise all powers to raise revenue to pay off obligations.

Compound

Government debt of the Russian Federation- a direct consequence of the credit policy of the country's authorities. The composition is determined by the form of the loan - a way to attract free (temporarily) funds at the disposal of the authorities.

As Article 98 of the Book Code establishes, the volume of public debt includes:

• amounts of principal debt on loans;
• nominal amount of government securities;
• obligations under issued guarantees.

The debt does not include the payment of interest, as well as non-interest income on government borrowing. In accordance with the BC, they act as an independent form of federal budget expenditures.

Methods of managing and servicing public debt

Public debt appears when government expenses exceed revenues, that is, a budget deficit is formed. It is covered by government borrowing. The situation is similar with municipal debt. The only difference is that borrowing is carried out at the local or regional level.

Public debt management is one of the areas of the state's financial policy. It is a set of activities related to servicing public debt, its repayment, issue, placement of loans. Management also includes regulation of the government loan market.

Management methods include:

1. Refinancing. It represents the repayment of previous debt by issuing new loans, which involves replacing obligations that are due to expire with new bonds or short-term debts with long-term ones.
2. Conversion. It represents an adjustment to the original terms of a previously issued loan. In particular, the profitability changes (the percentage decreases or increases).
3. Consolidation. It involves extending the loan term by combining several obligations into one long-term one. In this case, as a rule, the loan interest rate changes.
4. Unification. In this case, several loans are also combined, but previously issued bonds are exchanged for new ones. The goal of the method is to reduce the number of types of papers, which, in turn, optimizes work with them and reduces costs. In some cases, an exchange may be carried out under a recourse agreement. This means that several bonds issued previously are equal to one. Such an exchange, for example, was carried out after the war to remove war bonds from circulation. The ratio was 3:1 (three old ones to one new one).
5. Deferment of repayment. It represents a postponement and termination of payments for a certain time.
6. Cancellation. It implies a complete waiver of obligations. This can happen for various reasons: financial insolvency, the coming to power of persons who refuse to recognize the obligations of the previous government, etc.
7. Restructuring. It involves revising the deadline for paying interest or repaying the principal debt, reducing the rate, and writing off a certain part of the debt. As a rule, this method is used when solvency deteriorates and there are signs of bankruptcy. According to Article 105 of the BC, restructuring is the termination of the state’s obligations with their replacement by other obligations that require different conditions servicing public debt and its repayment.
8. Ransom. In the secondary market for financial instruments, the debtor country can redeem its obligations.

Measures to service public debt

The main ones include:

• payments to creditors;
• providing guarantees;
• repayment of internal/external loans;
• determination of conditions for the issue and placement of new obligations, etc.

The effectiveness of these measures depends on the validity of the decisions made. It, in turn, is based on a thorough analysis of the structure and volume of public debt, an objective assessment of the current state of borrowing.

Normative base

The provisions governing the servicing of public debt and municipal borrowing are enshrined in Article 119 of the BC.

It is understood as a set of transactions for the payment of income in the form of interest or discount. ABOUT servicing state (municipal) debt carried out from the budget of the appropriate level.

Clause 2 of this article establishes that the Central Bank, a credit structure or another specialized financial organization performs the tasks of an agent of the Government for the implementation of these operations, as well as for the placement, exchange, repurchase, and repayment of obligations. This activity is carried out in accordance with agency agreements concluded with the general agent, the Central Bank performs free of charge.

As Article 119 of the BC establishes, payment for the activities of agents for the implementation of tasks enshrined in agreements signed with the Ministry of Finance is made from the federal budget.

The implementation by a credit structure or other specialized organization of the functions of an agent of the executive body of state power of a region of the Russian Federation is carried out in accordance with agreements concluded with the executive institute of power of the subject carrying out borrowing.

Agreements can also be signed with the local administration (when servicing municipal debt). In this case, payment for agency services is carried out from the local budget.

Maintenance costs

They are mentioned in Art. 111 BC.

Costs of servicing public debt subject or municipal borrowings are planned annually. The estimate is approved by the law on the corresponding budget.

The maximum amount of expenses for servicing public debt according to the indicators of the report on the execution of budget income and expenditure items for the reporting period, it cannot be higher than 15% of the volume of expenses of the corresponding budget. Costs incurred through subsidies are not taken into account.

Key principles

Public debt servicing is based on:

1. Unconditionality. It involves ensuring accurate and timely repayment of obligations to investors and creditors without imposing additional conditions.
2. Consistency. It involves maximum harmonization of the interests of the lender and borrower.
3. Unity of accounting. In the course of managing and servicing public debt, all types of securities issued (issued) by government bodies, regional structures and municipalities must be taken into account.
4. Unity of credit policy. It involves the use of a unified approach in carrying out activities for managing and servicing debt on the part of the center in relation to the Moscow Region and the regions.
5. Reducing risks. Financial policy must include all necessary measures to help reduce risks for creditors, investors, and the debtor himself.
6. Glasnost. All interested users should receive complete and reliable information about loans in a timely manner.
7. Optimality. A system of government loans must be created in which their repayment will be carried out with minimal risks. At the same time, operations should have the least negative impact on the economy.

Authorized Subjects

In accordance with Article 101 of the Book Code, management:

• the state debt of the Russian Federation is carried out by the Government or the Ministry of Finance authorized by it;
• state debt of the region - the highest executive institution of government or financial structure authorized in accordance with regional legislation;
• municipal obligations - the executive and administrative body of the municipality (local administration), authorized by the charter of the municipality.

Conclusion

The size of the public debt determines the effectiveness of all credit transactions carried out by the state. The absolute indicator of borrowings, their dynamics, and the pace of change characterize the state of the country’s finances and economy and the efficiency of financial organizations.

During a recession, according to the classical approach to liability management, it is advisable to reduce the amount of public debt. Otherwise, debt will negatively affect both the financial condition of the country and its economy.

An alternative approach is based on the opposite concept. In accordance with it, when business activity decreases, the amount of loans must be reduced. At the same time, public debt will serve as a financial mechanism that helps accelerate economic development.

Government borrowing can only be useful during times of sustained economic growth. During periods of recession, a budget deficit can significantly worsen the country's financial condition, increasing the threat of a debt crisis and reducing the country's reliability rating. This, in turn, leads to a deterioration in the overall economic condition. The growth of public debt leads to real negative consequences for the financial, economic and social sectors.

EXTERNAL DEBT SERVICE, the process of repaying a country's debt to external creditors, providing for the payment of the principal amount of the debt and interest accrued on it.

External debt as of a certain date is the financial obligations of the state in relation to foreign creditors - countries or international financial institutions, subject to repayment on time. External debt arises as a result of borrowing from abroad, as well as in cases of nationalization of foreign property with the obligation to pay compensation to previous owners.

External debt is classified according to a number of criteria:

according to lending conditions (loans on commercial terms, preferential loans);

by payment terms (short-term external debt - up to 1 year, medium-term - 5-10 years, long-term - over 10 years);

by sources of lending (debt to official or private creditors).

As a clear example of servicing external debt, we will use the experience of developing countries.

Until the end of the 1960s. developing countries attracted mainly funds from official sources, incl. non-repayable subsidies in significant amounts. Therefore, the external debt of these countries grew relatively slowly and reached $64 billion in 1970. However, in the 1970s and 1980s. the size of their foreign debt began to increase rapidly, reaching by the early 1990s. $800 billion. During these decades, many developing countries entered the world market for loan capital, and the repayment terms of a significant part of the debt were repeatedly postponed. In the 1990s. the growth of external debt began to decline, since during this period various methods of partial debt write-off were widely used and payments for its repayment increased. In the early 1990s. payments to private creditors amounted to about 2/3 of the total amount of payments, to official ones - 1/3

The largest debtors include not only countries that have repeatedly revised their debt payment schedules (Brazil, Mexico, Argentina), but also states that, as a rule, comply with their obligations (the Republic of Korea, Thailand, Malaysia) and have a high reputation in the global loan market capital.

A country's solvency depends primarily on the availability of resources, that is, on the volume of its gross domestic product (GDP) and the state of its export base. Countries with a dynamically developing economy and a stable export sector pay their foreign debts more regularly. Based on these criteria, international financial institutions use a number of indicators to analyze the solvency of developing countries. External debt is compared with the size of GDP. In the mid-1980s, i.e. During the period of rapid growth of foreign debt, its value approached 40% of the total GDP of developing countries.

The debt service payment schedule can be evenly stretched over a long period. But sometimes payments are concentrated over a short period of time. Therefore, the situation in countries with the same debt/GDP ratios may differ significantly. In this regard, another indicator is calculated - debt service payments/GDP. It is generally accepted that if a country has to devote 5% of GDP or more to debt servicing, its external debt becomes a concern.

Since debt service payments are typically made in convertible currencies, the export capabilities of the debtor country must be taken into account. To do this, the following coefficients are calculated: a) the ratio of debt to exports, b) the debt service rate (DSR) - the ratio of the size of debt service payments to exports. GCD is considered the main indicator when analyzing solvency. There is an opinion that if the GCD exceeds 20%, there is a threat of disruption to the debt service payment schedule. However, some countries maintained GPLs of 35% or higher, while others stopped regular payments at 15%. On average for developing countries, GCD in the early 1970s. was approximately 10%, and in the late 1990s - 21%.

In connection with the problem of servicing external debt, the analysis of interest payments is very important. They are compared to both gross domestic product (percent/GDP) and exports (percent/export). Deferred payments usually postpone the repayment of the principal amount of the debt, and lenders take a strict position regarding interest payments. In addition, a significant part of loans to developing countries is provided on a floating interest rate basis, and therefore the situation for the debtor country can change dramatically.

As for the Russian Federation, by the end of the 20th century. the total volume of the country's foreign debt is close to $150 billion: the debt of the former USSR is approx. 100 billion dollars and the Russian debt itself is approximately 50 billion dollars. Since 2000, to repay the external debts of the Russian Federation, it is necessary to pay 15-17 billion dollars a year. With sustainable economic growth, steadily developing exports and “working” exchange controls, this is a difficult but achievable task. If the economy stagnates in the near future, the Russian Federation will have to conduct difficult negotiations with creditors on debt restructuring, i.e., postponing its payment, new external loans and/or partial debt write-off. R. S. Grinberg.