The Ministry of Finance is the abbreviation for the Ministry of Finance, the main body in the field of financial supervision of the Russian Federation. Currently, the Ministry of Finance of the Russian Federation regulates the financial, budgetary, tax, banking, foreign exchange and insurance public sectors. In fact, today the order of the Ministry of Finance of Russia has the highest priority of execution after the order of the President of Russia and determines the financial strategy of the state.
How did the financial regulatory authority in Russia
In the ninth century, when Kievan Rus was at the peak of its development, the state needed people who would control financial flows. Money had to not only be stored, but also kept records, and also used efficiently. For these purposes, the prince had treasurers. It is noteworthy that the treasurers were not considered full-fledged officials until the 16th century, but had a purely confidential relationship with the prince.
Already in 1512, Prince Vasily III formed a unified set of rules for the storage and production of valuables, servicing the state treasury, processing and fixing financial transactions using the state treasury. These rules were enshrined in law and later became known as the “Treasury Order”.
Prior to Peter I, the treasury system remained unsettled. But shortly after coming to power, he changed the financial management system, placing the Senate at the head of the treasury. The state financial regulator quickly developed and improved, so in 1802 the Ministry of Finance of the Russian Empire appeared, which became the prototype of the modern Ministry of Finance.
The formation of a full regulatory mechanism
After the riots during the Socialist Revolution in 1917, the People's Commissariat of Finance of the Republic was created, which gave the local provinces enormous freedom in organizing and disposing of the budget. Autonomy lasted until 1946 until the USSR Ministry of Finance appeared, which combined all the financial regulators of the republics of the Union.
After the collapse of the USSR in 1992, the former Ministry of Finance of the USSR had to split into two departments - the Ministry of Finance of the Russian Federation and the Ministry of Economy of the Russian Federation. Subsequently, the Ministry of Economy of the Russian Federation was renamed the Ministry of Economic Development of the Russian Federation.
What activities does the Ministry of Finance carry out?
The first thing you should start to review the activities of the Ministry of Finance of Russia is government support. All government departments that use finances in their activities should be guided by the general rules for conducting financial activities established by the Ministry of Finance. Accounting of all enterprises and organizations of various ownership forms is also conducted according to the rules established by the Ministry of Finance of Russia. Moreover, the Ministry of Finance regularly conducts inspections of departments and institutions for violations of established rules.
To ensure effective management in the field of financial supervision, the Ministry of Finance of the Russian Federation closely cooperates with the State Duma of the Russian Federation, as well as with its relevant committees.
Another important part of the work of the Ministry of Finance is foreign policy. For example, the Ministry of Finance of the Russian Federation exercises control in the field of securities, customs regulation, auditing, precious metals and stones, investments and even real estate. We should also mention non-state pension funds, whose regulation is also carried out by the state financial regulator.
The organization of the Ministry of Finance implies the division of departments into separate departments, each of which is responsible for its own direction. However, in addition to this, the Ministry of Finance of Russia has several autonomous subordinate bodies:
- Federal Treasury - performs the function of administering the federal budget.
- Federal Tax Service - exercises control in the field of taxation.
- Federal Customs Service - controls the activities of customs services.
- Rosalkogolregulirovanie is a federal service that regulates consumer prices for alcohol.
Who runs the Ministry of Finance in 2018?
Today, the head of the Ministry of Finance of Russia is Anton Germanovich Siluanov. It is noteworthy that starting in May 2018, he also holds the position of First Deputy Chairman of the Government of the Russian Federation. His father German Mikhailovich headed one of the departments of the Ministry of Finance after the collapse of the USSR. Therefore, Anton Siluanov decided to continue his father’s business and already in 1985 he graduated from the Moscow Finance Institute with a degree in Finance and Credit.
Immediately after graduation from the institute, Anton Germanovich got a job at the Ministry of Finance, where he confidently walked up the career ladder and improved his professional skills. After a dozen posts in 2003, Anton Siluanov became Deputy Minister of Finance of Russia, and then at the end of 2011 he was appointed Minister of Finance and was introduced to the Security Council of the Russian Federation.
With his personal life, Anton Germanovich, too, everything happened in the best way. He lives in a happy marriage and raises his son Gleb, born in 1999. Anton Germanovich has repeatedly admitted that he maintains accounts on social networks Instagram and Facebook under pseudonyms. The current Minister of Finance is interested in riding motorcycles, is fluent in German, and also has a large collection of phonograph records.
Actual problems of the Ministry of Finance: areas of special attention
After winning the presidential election of Vladimir Putin, he immediately after the inauguration turned to the updated Government of the Russian Federation with new decrees, which have already received the common name "May". In these decrees, the president voiced many urgent challenges that the Russian government will have to face in the near future. Among the theses voiced were those that required an urgent response from the Ministry of Finance. This is a pension reform, as well as changes in legislation in the field of shared construction.
The role of the Ministry of Finance in pension reform
The Russian government concluded that the current state pension system is outdated and will not be able to function normally in the near future. According to the authorities, real incomes of pensioners will decrease, therefore, the state needed to work out new mechanisms for pension accumulation. Work on the reform was entrusted to the Ministry of Finance.
The subject area that needed to be reformed was so large that the draft law was developed with the participation of all ministries and government departments.
The result of the work was the order of the Ministry of Finance of the Russian Federation to create a bill to amend certain laws of Russia in the field of assignment and payment of pensions. The main thesis of the initiative was to increase the retirement age for men to 65 years, and for women to 63 years. For a painless transition from the old legislation to the new, they decided to raise the retirement age gradually starting in 2019.
Already on September 26, 2018, the bill was adopted by the State Duma of the Russian Federation. However, before adoption, more than 300 changes were made to it by relevant committees, as well as by the President of the Russian Federation. In particular, Vladimir Putin sent a letter to the Ministry of Finance, in which he proposed that women not raise their retirement age to 63 years, as previously planned, but to 60 years.
Opinions are divided
The adoption of the bill caused a great public outcry and mass protests. Several political and social forces even wanted to hold a referendum on the abolition of pension reform.
A new approach to pension savings should put the Russian economy in the top five largest economies in the world. However, for this, the annual volume of GDP should increase by at least 5.5%. The Ministry of Finance considers this a perfectly feasible task.
The problem of shared construction
Major embezzlement of funds, defrauded investors, high-profile criminal investigations - this and much more from time immemorial accompanies the Russian market for shared construction. But from 2019, the situation should change, since a new order of the Ministry of Finance of the Russian Federation completely changes the principles of building multi-apartment buildings.
Effective solution from the Ministry of Finance
If previously interest holders transferred funds directly to the developer, that is, the developer, and in fact were completely dependent on him, now interest holders will deposit funds to special bank escrow accounts. The effectiveness of this approach is that the developer will not have direct access to the money of developers.
Now, developers will have to raise funds from outside, and the best solution for this is a bank loan secured by money from interest holders. It is noteworthy that escrow accounts are automatically insured by banks, and in case of force majeure circumstances interest holders are paid their money in full, however, insurance is valid for amounts not exceeding 10 million rubles. Of course, this decision was not easy for the Ministry of Finance, but in this matter the regulator gave priority to the interests of equity holders.
Real estate market experts have already recognized that the reform will bring substantial losses to the real estate market, but will protect investors from fraud. According to analysts, many small construction companies will be forced to leave the market due to lack of investment. Moreover, when receiving a loan from the bank, the developer will pay additional interest, which will ultimately increase the value of the finished property. The companies have repeatedly sent letters to the Ministry of Finance of Russia with a demand to soften the reform of shared construction. The final version of the bill took into account all the appeals of interested parties.
There is another opinion. Over the past few years, the demand for finished real estate has grown in the Russian real estate market and, according to financial forecasts, will continue to rise. In this regard, real estate prices will not increase, however, they may fluctuate the first time after the entry into force of the reform.
Currency Issues
Since 2017, the Ministry of Finance of Russia, with the participation of the Central Bank of the Russian Federation, began to purchase foreign currency in the domestic market in order to stabilize the ruble and reduce the external impact on the Russian economy. In the summer of 2018, the Central Bank had to temporarily cancel the budget rule and stop buying foreign currency for the Ministry of Finance due to the high volatility of the Russian currency. This measure helped reduce the demand of the Russian currency in world financial markets and maintain a stable ruble exchange rate.
It is noteworthy that the purchase of foreign currency under the budget rule will be carried out in accordance with the planned volumes. From September 7 to October 4, the Central Bank purchased a record 426.9 billion rubles for the Ministry of Finance.
The Ministry of Finance also increased the volume of foreign currency purchases during the summer and autumn of 2018 due to higher oil prices on international stock markets in order to minimize the impact of black gold on the Russian currency and the country's economy as a whole.
Not single sanctions
2018 was a year of testing not only for the Ministry of Finance of Russia, but also for the entire economy of the country. In addition to the sanctions, which impose some restrictions, Russia has begun a long and painful phase of reform to increase economic performance. The role of the Ministry of Finance in reconfiguring the economy cannot be overestimated, because in fact it is this regulatory body that forms the economy of the new time. Employees of the Ministry of Finance understand this and are trying to do everything possible to improve the lives of Russian citizens.
