Government loan is a key form of government loan. It is carried out through the issuance of state. debt obligations (in other words they are called treasury bonds) guaranteed by the government. In our article, we will discuss types of state loans and other equally important aspects of the issue.
Inversion classification
It is worth noting that the Ministry of Finance has the right to attract borrowed funds on behalf of the Government of the Russian Federation. The concept of state loan implies the existence of a fairly broad classification. So, in accordance with such a criterion as the method of treatment, they are divided into market and non-market.
Market government loans are those issued in the form of certain securities. The latter are distinguished by free circulation after initial placement in the relevant market. Non-market loans should be understood as loans that are executed in stock instruments purchased by the investor from the Government. It is worth noting that they can only be implemented by the Government.
By borrowing period
A state loan is a category that is also classified by loan term. So, loans can be short-term (in this case, the repayment period should not exceed 1 year), medium-term (repayment period varies from 1 to 5 years) and long-term (repayment period can exceed 5 years). According to the budget legislation of the Russian Federation, debt obligations are short-term (up to 1 year) and long-term (more than 1 year).
By location and security
In accordance with such a criterion as a placement, loans in the state economy can be divided into external and internal. The first category represents government obligations to non-residents. We are talking about foreign creditors. Domestic loans are nothing more than loans to residents of a country.
Depending on the criterion of security of government debt loans are mortgage and non-mortgage. The former are secured by a specific pledge, for example, certain property. In turn, mortgage-free loans are distinguished by the fact that they are not secured by anything concrete. In this case, all state property plays the role of collateral.
According to the form of payment
Government loan is the main form of government. loan, which has a fairly extensive classification. So, according to the method of paying income, loans are of the following varieties:
- Interest loans. In this case, income is set as a fixed percentage of the face value.
- Discount loans. The investor receives the profitable part through the purchase of debt instruments at a discount, as well as their subsequent repayment in accordance with the nominal value at the end of the fund for which the funds were provided to the borrower (state).
- Winning loans. Income on this form of state domestic credit is based on the draws of winnings.
- Index loans. In this case, the income is paid by indexing the face value of the securities originally acquired by the investor.
Other classifications
For the obligation on the part of the borrower to fully comply with the terms associated with the repayment of the loan and determined upon its release, it is customary to allocate obligations with the right to repay ahead of schedule and without this right.
In accordance with the sign of holders of the Central Bank, they distinguish loans that are realized exclusively among legal entities, among individuals, as well as universal, in other words, placed both among legal entities and among individuals.
By issuers of state. loans are classified, for example, for liabilities issued by the Government of the Russian Federation and local governance structures.
In the areas of borrowed funds, government loans can be classified as target and non-target. It is worth noting that the money raised in accordance with targeted loans should be used only to finance specific, pre-defined programs for the implementation of which they are placed. The proceeds from the placement of government loans of a non-target plan are used to cover current budget expenditures, refinancing of current debt, or for other needs. Their use is appropriate in the event of a budget deficit (this is an excess of the expenditure part of the state budget over the revenue).
Government Borrowing Rules
In the territory of the Russian Federation the right to exercise state borrowing belongs to the Russian Federation, the Government of the Russian Federation, as well as to residents of the country under the guarantee of the Government. On behalf of the Russian Federation, government borrowing (for example, issuing government loan bonds) is implemented by the Government of the Russian Federation.
Government borrowing is made within the boundaries of internal and external public debt. It is worth noting that they are established by law regarding the republican budget for the next fiscal year. The total volume of state. under no circumstances should there be more than the amount of capital expenditures of the state budget in the corresponding financial year.
Debt Forms
Debt obligations of the Russian Federation can be implemented in the following forms:
- A loan agreement, in other words, a state loan agreement. It is concluded on behalf of the Russian Federation as the borrower, with credit plan organizations, international organizations, foreign states and other non-residents and residents of the country. It is also advisable to include the agreements (agreements) concluded on behalf of the Federation regarding the restructuring and prolongation of the country's debt obligations remaining from previous years.
- Government loans, which are carried out through the issuance of the Central Bank on behalf of the Russian Federation.
- Agreements on the provision of relevant guarantees of the Government of the Russian Federation.
- Government loans implemented through the issuance of the Central Bank by local regulatory and executive bodies.
- The contract regarding the provision of guarantees of local administrative and executive. This applies to the regional, district and city executive committees.
- The contract for a budget loan.
It is worth noting that today obligations in the form of contracts (credit agreements) are used most actively because of the need to create appropriate conditions in order to overcome the crisis in the economy and cope with the budget deficit (this is an excess of expenses over income). That is why it is advisable to consider this form in more detail.
Loan agreement. Borrower and Lender
As it turned out, the main form of debt is a loan agreement. This category is regulated by Art. 817 of the Civil Code of the Russian Federation. According to the state contract a loan, the borrower is the Russian Federation or its subject, and the lender is an individual or legal entity. A state loan is in any case a voluntary decision. The relevant contract is concluded through the purchase by the lender issued by the state. bonds or other state. securities that certify the lender’s right to receive money from the borrower from the borrower or, depending on pre-determined conditions of the loan, other property, specific interest or other property rights in the time period provided for by the terms of the loan.
It should be noted that the contract state. A loan may also be in other forms described in the previous chapter and provided for by the budget legislation of the country (the paragraph is introduced by the Federal Law of July 26, 2017 No. 212-ФЗ). Changing the established conditions of the issued state loan is unacceptable. Rules regarding the state contract Loans are respectively applicable to loans issued by a municipality.
Contractual relationship
In relations related to the conclusion of credit agreements (in other words, agreements), as it turned out, the Russian Federation represented by the relevant structures acts as a borrower. These relations, together with the norms of the financial legal industry, are regulated through international law, within the framework of which it determines, inter alia, the legal status of financial organizations at the international level, the conditions, the procedure for the provision, use and repayment of funds issued by these organizations. It is important to note that the involvement of external state. loans on behalf of the Federation are implemented by the government solely by decision of the president of the country.
External state. loans that are provided to residents of the Russian Federation on the terms of assignment, in any case, are equal to external state. loans received under the guarantee of the Government. The purpose of attracting government loans of an external type is necessarily indicated in the decision on its attraction in accordance with the main purposes of borrowing, which are provided for by the President of the Russian Federation and relevant legislative acts.
Objectives of attracting external loans
Further, it is advisable to consider the main objectives of attracting external government loans:
- Federation - in order to cover the deficit of the republican budget, as well as for other purposes that are provided for by the President of the Russian Federation and legislative acts in force in the country.
- The Government of the Russian Federation - to deal with environmental and social problems, eliminate the effects of natural disasters and support economic reforms. This category also includes other goals stipulated by the President of the Russian Federation, as well as legislative acts in force in the country.
- Residents of the Russian Federation under the guarantees of the government, as well as the government and residents under the guarantees of the government - in order to provide loans to resident borrowers in accordance with the terms of the transfer, that is, for the import of energy, raw materials, other necessary commercial products, as well as products in an emergency the purpose of providing them with the republic; for the implementation of state programs and investment projects in accordance with the priority areas of development of the state economy; for other purposes in accordance with legislative acts operating in the country.
It is worth noting that the decision on attracting a state loan is made by the president. In addition, it can be adopted by the Government, including in accordance with the terms of the assignment (by the government of the country after agreement with the president); residents of the Federation under government guarantees, including according to the terms of assignment (by the government of the country after agreement with the president).
Issue of securities
It is important to keep in mind that government loans, which are implemented through the issuance of securities on behalf of the Federation, play an important role in ensuring the state budget. This form of debt obligations of the country is also quite common. Government securities should be understood as securities issued by the Ministry of Finance on behalf of the Russian Federation.
Securities of state significance may be issued in the form of:
- Short-term government bonds with a maturity of up to 1 year (GKO).
- Long-term government bonds, the circulation period of which varies from 1 year or more (GDO).
The issue of government bonds is carried out in order to attract funds of citizens and legal entities that are temporarily free, including foreign ones, as a rule, to finance the deficit of the state budget (as noted above, the deficit should be understood as the excess of the expenditure over the revenue).
Bonds are issued on behalf of the Ministry of Finance. The volume of the issue of securities is determined by this structure in the formation of the draft republican budget, as a rule, for the next budget (financial) year. In any case, the volume is specified in the process of its implementation in accordance with the procedure established by the legislation of the country.
In accordance with each issue of bonds, the Ministry of Finance of the country makes a decision containing information on their type, maturity, date and amount of issue, maturity date, nominal value, current conditions of their placement, early repayment, interest income payments (this item applies only to interest-bearing bonds), as well as on the exchange of bonds.
Placement of securities among organizations is carried out by the following methods:
- Implementation at an auction, which is carried out in accordance with certain rules approved by the bank, but in agreement with the Ministry of Finance.
- Direct sale by the Ministry of Finance to organizations on the terms approved by that ministry.
- Transfer or sale of bonds to banks for resale.
Among individuals, bonds are placed in the manner established by the Ministry of Finance.
