4.3.FINANCES
4.3.3.
REGIONAL PUBLIC LOAN
The local authorities can now widely use
regional and municipal
loans to attract capital with various goals in mind, like
eliminating a cash-deficit, speeding up privatization,
concentrating resources for purchase of grain, fuel, etc.
Loans
can be issued by the regional Soviet or by the Administration,
if so authorized. Property controlled by the local authorities
can be used as a collateral on a loan. Loan terms depend
on its
goals and may vary.
Nizhni Novgorod has established and improved
a loan
procedur (cash deficit. When the cash crisis is safely over,
bonds can be used for other purposes. Procedures for various
commodity loans, a bread loan, for instance. Their goal
is to
accumulate capital, primary that of the population, in order
to
buy goods whose prices are expected to rise at a maximum
pace.
This will help to alleviate a price rise shock.
NEW OPPORTUNITIES
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Reforms in Russia started on January 2,
and brought about a
natural drop in rates of capital and series accumulation
by the
population of Russia (from 11.9% of expenses in December
to
7.4% and 5.6% in January and June respectively). Enterprises
experienced a similar sharp accumulation drop. To a certain
extent it was a natural outcome of tough fiscal restrictions
directed against both the population and enterprises. However,
it was in part due to the fact that the government of Russia
did not have any income adjustment policy aimed at introducing
primarily a structural effect - to prevent "eating
up" of
resources, that is, their use for consumption.
High rates of inflation make the problem
of savings more acute.
People stop saving capital because there are no depreciation
safeguards. The Savings Bank, which is the main holder of
population savings, pays low interest on deposits. Commercial
banks offer higher interest rates but they do not enjoy
the
confidence of the population. People stick to their deposits
with the Savings bank, which is now one of the major credit
suppliers in the inter-bank market. The local authorities
have
ample opportunity to compete with the Savings Banks in
attracting the cheapest capital - the savings of the
population.
Greater financial opportunities which the
emission of public
(regional) or municipal loans provides are becoming more
and
more attractive to the regional authorities. Potential goals
of
the loans to be issued may vary from investments (construction
of a foreign-currency hotel) to simply receiving the difference
between a loan interest and an interest rate on deposits
where
funds from loan emission can be allotted. Distribution of
either a regional public loan (or municipal loan) or commercial
securities faces one and the same difficulty, which is a
narrow
sales market. Therefore the loan distribution policy should
pursue goals enjoying the confidence of potential investors,
and provide high loan profits, and should have a clear-cut
distribution strategy.
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