2. To accumulate the major part of the extra-budgetary funds (except for the Pension Fund, Road Fund and Employment Fund) in the budget. This option was declared by the government of Russia in its "Memorandum on the Economic Policy of the Russian Federation" sent to the International Monetary Fund. However, like many other steps this option remained unrealized by the federal authorities.

3. To concentrate temporary available resources of the extra-budgetary funds and set up a trust company in order to manage the stable liabilities of the funds. A company of this kind could use the fund account balances for commercial purposes and pay out appropriate interest either into the budget or the fund. Moreover, it could control the collection of resources for the extra-budgetary funds and the ways of expending them.

Such a company is being set up in the Nizhni Novgorod region as a general partnership of the regional major banks (that is, company liabilities are covered by the property of the banks). The company regulations, list of funds that can be handed over to the trust company to be managed, and other matters are now under consideration.

4. Some funds can be used as a basis for setting up various commercial institutions. For example, the regional conversion assistance fund of the Nizhni Novgorod region was reorganized into a commercial bank which retained the function of granting credits to enterprises under conversion. It is the enterprises transferring resources into the conversion assistance fund that became the bank founders rather than the administration of the region. The bank has been registered (judging by its authorized capital, it is one of the major banks in Russia and the region's largest bank) and will be ready to start operations in September.

5. Use is often made of a comparatively easy way of protecting the extra-budgetary fund balances against inflation which involves their transfer on commercial bank deposits. This yields far greater interest (50-70% per annum) than keeping them on the fund accounts. However, by so doing the fund resources are withdrawn from calculation and cannot be used as intended throughout the deposit agreement term.

6. Temporarily available resources of the extra-budgetary funds can be used to buy basic commodities whose price is most likely to rise under the present circumstances (oil, grain, hard currency etc.). This will allow protection of the fund resources against inflation and set up commodity stocks in the region. Afterwards it will either be possible to gain profit when the stocks are sold for commercial prices or to restrain price rises in the region by selling stocks for undervalued prices. Such operations, however, involve a certain commercial risk.

7. Finally, the administration may choose to support some commercial projects or enterprises which are engaged in solving the pressing problems of the region, and to transfer the extra-budgetary accounts from the Central Bank branches to commercial banks. The latter could use them as cheap credit resources.

At any rate, when state-owned financial resources made available to the region are used for commercial purposes, the representative bodies should exercise their powers in order to keep the process under their control, since complicated and often confidential financial operations invite corruption.

It is obvious that there are quite a few opportunities for operations with available state-owned resources. No common advice can be given as to the use of the extra-budgetary fund resources or the procedure for setting up such funds for some definite purpose. All these problems are to be solved on a case-by-case and regional basis. Consideration should be given to the urgency of the problem at hand, state of the regional financial market, the contacts of the administration and the regional commercial community, the capability of the administration staff to manage the resources with profit, etc.

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