4.3.FINANCES
4.3.2.
MANIPULATING RESOURCES OF THE EXTRA-BUDGETARY FUNDS
The fiscal policy of the local government
is not restricted to the region or city budgets. Decentralized
management of the economy, mainly of financial resources,
which is now taking place, and the formation of the financial
market make it possible to attract extra resources in order
to settle current problems or make breakthrough alterations
which form the basis of economic growth. There is also an
opportunity to concentrate relatively large resources on
priority targets.
At the regional level the fiscal policy
now makes use of such instruments as extra-budgetary funds,
municipal loans, budget balance, and foreign investments.
The property which the local government has at their disposal
(land, real estate, capital assets of enterprises) serves
as the basis for more active policy in the fiscal sphere.
THE SITUATION
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A tendency to increase the number of extra-budgetary
funds and the volume of financial resources channelled through
them was given powerful impetus in early 1991. The Council
of Ministers of the USSR and the Supreme Soviet of the USSR
decided to set up the so-called "extra-budgetary economic
stabilization funds" both at the Union and the Republican
levels. The USSR Pension Fund became an independent institution.
The government of Russia followed the same
course when it was working on the budget of the Russian
Federation for the first quarter of 1992. It was decided
to set up several extra-budgetary funds at once: a road
fund, population employment fund, conversion fund, and the
fund for social protection of the population. Political
aims were the priority. It was meant to demonstrate the
government readiness to treat "weak spots" even
under the shortage of budget appropriations, as well as
to have more freedom of action. However, the economic goals
were also important. They were to strengthen the purpose-oriented
use of resources and to develop the financial market and
its institutions.
By the month of September, 13 extra-budgetary
funds were set up in the Nizhni Novgorod region:
1. Pension Fund of the Nizhni Novgorod region.
2. Road fund.
3. Employment Fund.
4. Regional Fund for Social Protection of
the Population.
5. Conversion Assistance Fund.
6. Extra-budgetary Fund of the Regional
Administration.
7. Regional Environment Fund.
8. Fund for support to the Agroindustrial
Complex.
9. Fund for support to the Construction
Complex.
10. Special stabilization Reserve.
11. Regional Currency Reserve.
12. Heat-and-power Engineering Complex Development
and Energy Fund.
13. Foreign Trade and Purchase Operation
Support Fund.
From January to June the expenses of regional
extra- budgetary funds (aside from the Pension Fund) amounted
to about 900 million roubles or 10.4% of the regional budget
outlays over the same period. The Pension Fund's expenses,
totalling almost 5 billion roubles in the first half of
the year, reached 57% of all budget appropriations. The
share of financial resources channeled through the extra-budgetary
funds is sizable. Their amount balances are significant.
Hence, effective use of their resources is of great importance.
Problems which arise in the use of resources
accumulated in the extra-budgetary funds are similar to
those other regions and republics of Russia are facing.
These are:
-unsettled legal and organizational matters
governing the formation and activities of the extra-budgetary
funds. Some of these are not approved by the regional Soviet,
and have no Regulations. The fund management procedures
are not properly outlined. There are also some personnel
problems, etc;
- the absence of proper control over handling
of resources, resulting in their dissipation and misuse.
Each department of the regional administration seeks to
have "its own" extra-budgetary fund. Additional
fund management related expenses are required. It is difficult
to control the expenses (auditing services of the financial
agencies are overburdened with work), fiscal discipline
is often infringed, and money is not used the way it should
be;
- temporary balances of unused extra-budgetary
funds accounts.
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