Financial Journal

p. 10-20

Authors: Eduard N. Hakobyan, Narek N. Karapetyan

The article discusses the international experience and theoretical foundations of fiscal rules, problems of Armenia’s fiscal policy, the upgrade of fiscal rules in Armenia and the directions for their future improvement. The authors consider the reforms of fiscal rules in the sphere of Armenia’s fiscal policy as a crucial change in the logic of policy, because new rules aim at significant increase of the fiscal policy role in ensuring public debt sustainability on the one hand and respond to economic cycles on the other hand.

p. 32-37

Authors: Ori А. Alaverdyan, Nairuhi R. Avetisyan

Obviously, that the main destination for vast majority of capital flows are countries with favourable conditions, particularly countries that apply low tax rates and provide preferential tax regimes. Because of this process, the outflow of capital occurs from non-offshore countries to law tax or offshore jurisdictions, which is considered as a harmful tax practice. The issue is more emphasized in developing countries, as the national tax authorities more often have not enough capacity to fight against tax fraud and tax evasion. Aiming to solve the mentioned issues the Organization of Economic Cooperation and Development together with G20 have joined efforts to set up new standards for tax control (OECD Global Forum). They also elaborate new rules that will ensure taxation of profits where economic activities are carried out and value is created as well as increase predictability, transparency and flexibility of international tax environment for business. The article analyzes the government activities of the Republic of Armenia to create a tax system that corresponds to the current trends in international tax cooperation.

p. 53-61

Authors: Karen R. Tamazyan, Arman E. Jhangiryan

The article reviews the Armenian pension system, particularly, funded pension system, its history and necessity of implementation. At the same time, international practices of countries such as Peru and Chile which have undertaken a private pension system are being introduced. Moreover, the authors draw a comparisons between “private” and “state” pensions, considering possible alternatives to the private system. The article includes a brief overview of how funded pension system works, as well as the figures for assets under management for pension funds and their allocation.

p. 76-89

Authors: Makar I. Kudelich, Hasmik V. Khachatryan

The article is addressed to the issues of ensuring the correlation between the budgetary process and public-private partnership (PPP) in the context of its implementation in the Republic of Armenia and the formation of an appropriate regulatory and legal framework. The article contains recommendations for end-to-end participation procedure of the Armenia’s financial authorities at all PPP project stages: from preparation and justification to monitoring and evaluation of effectiveness based on the results of its implementation. The recommendations were prepared on the basis of the best international practices for financial grounding and structuring PPP projects. They are aimed at budget expenditures optimization, appropriate budgetary arrangement and provision of other resources for PPP projects, increasing the validity of proposals for financial support for various forms of public partner participation in PPP projects at the expense of state (local) budget of the Republic of Armenia.

p. 103-114

Authors: Karen I. Alaverdyan, Raffi A. Aleksanyan, Svetlana A. Tabalina

The article discusses the international standard requirements to the public sector consolidated financial statements. The main international standards guides for the public sector statements are the Government Finance Statistics Manual (GFSM) and the International Public Sector Accounting Standards (IPSAS). The article highlights that several countries use the approach to public sector financial statements that allows to comply both GFSM and IPSAS requirements. Most governments use step-by-step transfer to the consolidated financial statements presentation at the public sector.

p. 121-131

Authors: Ivan V. Nikonov, Anton I. Votinov

The article provides the analysis of the future prospects for the economic development in the Republic of Armenia. The authors choose the theory of economic complexity, developed by Cesar A. Hidalgo and Ricardo Hausmann, as the baseline for the research. Based on the theoretical premises, the economic complexity index (ECI) for Armenia was calculated and then compared to the ECI of other countries. This study further establishes how the development of economic sectors influences the complexity of the product space in the Armenian economy. The results reveal that in terms of economic complexity Armenia is ahead of some neighboring countries and some EAEU members. The original methodology of opportunity value index estimation was modified for research purposes. This methodology was used to assess the most promising areas of development of the Armenian economy. The authors suppose that manufacturing can contribute significantly to the long-term economic growth in the Republic of Armenia; however, in order to create the necessary conditions for the growth enormous efforts are required for this sector development.

p. 9-20

Authors: Igor A. Yakovlev, Ludmila S. Kabir

Today green investments are seen by the Russian government both as a solution for environmental problems and as an economic growth factor. Up until now the process of transition to the green economy has not been clearly defined, since the adjustment of the national green investment financing mechanism has not been completed. This article describes the results of the research on the prevalence of ideas of green growth in the national business environment and in the practice of national companies of green investment. For analysis, an array of data was collected on the official websites of 253 largest national companies. In addition to empirical data, the national strategic planning papers have been studied to find the reflection of ideas and principles of the green economy in the development strategies of industries and territories, as well as the guidelines designed by global institutions. As a result, the following problem has been identified: low level of green investment in Russian business due to, inter alia, the lack of a clear conceptual framework and rules. The solution of this problem lies in the plane of reaching a public consensus as to which sectors of the national economy should be recognized as leading to the sustainable development, and which of them, to the unsustainable one.

p. 34-48

Authors: Oleg V. Buklemishev, Denis L. Mikhaylov, Vladimir V. Solovyev, Igor G. Fetisov

Lately the debt burden of the Russian regional authorities has been increasing markedly. On the basis of analysis of the Russian regions’ budget indicators and the structure of their debt, recommendations are made to adjust and improve the system of indicators controlling the budget deficit, the level of debt and borrowings of the federal subjects. In particular, it is proposed to rule out the usage of planned budget figures and change the basis in calculation of expenditures maximum of the regional public debt.

p. 64-77

Authors: Natalya N. Sisigina

Regulation of access to specialist medical care is widely viewed as effective tool for health cost containment. However, the results of the access reforms in well-developed public health systems in practice are often below the expected level. The article provides an overview of structure and outcomes of major national access reform programmes in European countries. Based on the collected data key determinants of successful adoption of gatekeeping model were highlighted in the article. The author proposes the promising ways of the development of the current access model reform in Russia.

p. 90-98

Authors: Eugene M. Gutzait

The article discusses the relationship of economic entities bankruptcy with auditors’ errors in the validity test of assumption of an economic subject’s activity continuity. It is shown that the task of checking the validity of this assumption can be classified as a special case of the problem of economic entities development forecasting. The author examines the definition of a term “continuity of activity” and interprets possible errors of an auditor in the verification of the specified assumptions fairness, based on the standpoint of the general theory of decision under uncertainty, and analyzes the consequences of such errors. The article also presents the research on different difficulties occurring in verification of ability of an economic entity to maintain its continuous activity and provides recommendations on how to overcome them.

p. 111-120

Authors: Eduard V. Batanov

Following the violation of the payment sovereignty of the Russian Federation associated with the service termination of Visa and Mastercard bank in Russian credit institutions, there is an unfavorable situation for the financial system of the country threatening its economic security. The object of the study is Mir national payment system and its implementation in the Kaliningrad region. The research is focused on monopolization of the Russian Federation’s banking market by international operators and Mir national payment system as an alternative to foreign payment systems.

p. 9-23

Authors: Alexey M. Lavrov, Olga K. Yastrebova

This article is focused on general trends and innovations in budget process in OECD countries over the past decade and considers the possibility and conditions to apply them to the budget system of the Russian Federation. The article also compares the models of classic performance-based budgeting (PBB) with the next generation PBB models, defines general trends in PBB development and typical mistakes of PBB implementation in OECD countries. Taking into account the foreign experience and the accumulated Russian practice, the authors suggest a number of measures to increase the effectiveness of the PBB application in Russian economy. In addition, the authors summarize the experiences of using a Spending Review (SW) by OECD member countries and propose a two-stage approach to implement a SW process as part of the budget process in the Russian Federation. The role, functions and experience of implementation of independent fiscal institutions (IFI) in OECD countries are considered in the article. The question is raised about the feasibility and possible options for the creation of IFI within a separate structure under the aegis of the executive or the legislative authority of the Russian Federation. The authors consider the international experience in fiscal risk management and provide the quantitative probability assessment of fiscal risk realization and fiscal costs caused by them. Moreover, the authors give recommendations for improvement of the fiscal risk management in Russia.

p. 36-46

Authors: Yelena I. Andreeva, Dmitry G. Bychkov, Olesya A. Feoktistova

In spite of the improvements in the demographic situation in Russia that have occurred in the 2000s and that have been triggered, among other things, due to the introduction of a number of new family support benefits and increasing amounts of the existing ones, the amount of family support benefits as percent of the GDP in Russia remains lower than it is in most European countries. The efficiency of such benefits as a policy method to increase the birth rate remains questionable as well. The paper presents an attempt to estimate the amount of federal government expenditures that will be required to fund new mean-tested family allowances introduced in Russia in the beginning of 2018 — the monthly allowance upon the birth of a first and/or a second child, and to estimate the effects of these allowances upon the poverty headcount and the income gap in Russia. The authors conclude that a clearer definition of the social policy goal, such as increasing the human capital of the new generation rather than increasing the birth rate, and finer tuning of benefit parameters, which would require harmonization of eligibility criteria for different family support measures and universal applicability of federal family support measures, disregarding the region of family’s residence, could increase the efficiency of these benefits as a poverty prevention tool and provide more universal and transparent social support to families.

p. 59-72

Authors: Olga V. Bogacheva, Oleg V. Smorodinov

The article is focused on determination of key development directions of environmental risk management in G20 countries, based on the analysis of its current state. They are: 1) application of new classification of risk factors in environmental risk management; 2) application of new, more precise and efficient instruments and methods of environmental risks’ identification and analysis; 3) formation of publicly available environmental database; 4) integration of instruments, methods, procedures and results of evaluation of environmental risks into enterprise-wide risk management system of financial organization. It was noted in the article that financial institutions also started applying the newest methods and instruments of risk management (such as scenario analysis, stress testing, probability modeling, systems analysis, etc.). The authors claim that one of the keys to financial institutions’ success is an ability to integrate procedures, methods and instruments of environmental risk identification and evaluation results into enterprise-wide risk management system (ERM). The article also conducts a case study of application of the newest methods and instruments of environmental risk management by financial institutions in various G20 countries. The authors draw a conclusion that G20 countries, which are planning a transition to sustainable development, need to increase their efforts in order to put in place environmental risk management systems.

p. 84-93

Authors: Amir K. Sembekov, Yeraly G. Budeshov

This article examines the issues of assessing the competitiveness of the national insurance markets of the EAEU. It also analyzes the main criteria characterizing the level of competitiveness of the national insurance market in the conditions of the integration union. As a result of the research, the main competitive advantages and weak positions of the national insurance markets are identified in the context of each country, based on the application of the methodology for assessing the competitive advantages of the insurance markets of the EAEU member countries through the «competitiveness polygon». Using economic and mathematical modeling the authors estimate the influence of factors of the industry competitiveness of the insurance markets in the conditions of the integration space of the EAEU. Measures aimed at enhancing competitive advantages in the activities of insurance companies and forming a competitive national insurance market of the Eurasian Union are proposed at the end of the article.

p. 109-119

Authors: Leyla B. Mokhnatkina

The article is focused on financial and budgetary aspect of regional economic security. The author considers a concept of budget balance in a broad and narrow sense and determines its quantitative and qualitative characteristics. An approach to the structuring of public debt, which helps to assess the impact of market and non-market debt obligations on the balance of regional budgets, has been implemented. The author critically evaluates approaches to normalization of the budget deficit and public debt implemented in the Russian budget legislation. There is also an analysis of the dynamics of regional budgets’ balance in relation to the dynamics of public debt by the example of indicators of the Russian Federation and Orenburg region. At the end of the article the author draws the conclusions concerning the account of short-term and long-term economic effects on the debt policy of the subject of the Russian Federation and formulates a more reasonable use of the budget balance indicator as an indicator of financial and budgetary security of the regions.

p. 129-131

Authors: Mstislav P. Afanasiev, Nataliya N. Shash

The review on the R. Thaler’s book “Misbehaving: The Making of Behavioral Economics” in the Russian translation presents the main conceptual ideas of behavioural economy. The architecture of a consumer’s choice in the course of economic decision-making processes of all types is described. The authors draw the conclusion that Thaler’s approach can be applied to macroeconomic and the government activities, especially in the sphere of monetary, budgetary and tax policy.

p. 9-25

Authors: Stanislav S. Bychkov, Alexey I. Kokarev, Alexey M. Lavrov

In 2008 the Ministry of Finance of the Russian Federation for the first time conducted the monitoring of quality assessment in financial management of the federal budget resources chief controller intended to analysis and evaluation of processes and procedures that ensure the effectiveness of budget funds usage. The article presents an analysis of the development of methods for assessing the quality of financial management, its main disadvantages and limitations, as well as proposals for its improvement. Also this article covers the review of international experience in assessing the quality of financial management, which indicates significant progress of the Russian Federation in this area. The analysis of the results of practical approval of tools for assessing the quality of financial management shows the possibility of a significant improvement in the quality of budgetary authority execution (financial performance) by the chief administrators of federal budget funds as part of the improvement of internal financial control and audit systems.

p. 39-50

Authors: Vladimir V. Gromov

Special Economic Zones are important mechanism of attracting investments to regions but in recent years their number has significantly reduced and other investment tools have appeared. Since taxation directly affects investment decisions, the article provides estimation of current federal tax reliefs concerning SEZ residents in terms of their ability to create incentives for obtaining resident status in SEZ. It also includes comparison with other favourable tax regimes recently introduced in Russia.

p. 61-70

Authors: Anna A. Mikhaylova, Vladimir V. Klimanov

The article compares the Indian and Russian models of fiscal federalism and defines main similarities and differences of these models. It also considers the types of intergovernmental fiscal transfers in each country and draws conclusions about the inter-country differences in their provision. The authors determined that not only intergovernmental fiscal transfers, but also revenues from the state taxes share in the tax revenues of the central government play an important role in the revenue side of the state budgets.

p. 87-99

Authors: Yuri A. Spletuhov

The article discusses the practice of agricultural insurance in the Russian Federation and in foreign countries, and, above all, agricultural insurance programs with state support. In particular, it characterizes the objectives that the state solves when providing such support, the content of programs, the consequences of their implementation. The author generalizes the principles of crops and cattle insurance with the state participation in Russia and analyzes it. The dynamics of insurance development. Particular attention is paid to countries with the most developed insurance program as the USA, Canada and Spain. Moreover, the author provides characteristics of agricultural insurance schemes, defines the role and functions of state and private insurers, state support methods, insurance types and achieved results. In conclusion, the author dwells on the problems arising in the implementation of agricultural insurance programs with government support.

p. 110-122

Authors: Vladimir V. Vagin, Natalia A. Shapovalova

The article presents the results of monitoring of the initiative budgeting (IB) programs and practices in the Russian Federation for 2016 — in its 35 subjects. It analyzes the IB programs administration strategies, sources and forms of budgetary allocation for the IB projects, general and special legal regulations, parameters of the regional IB practices, and conditions of institutional infrastructure at the regional level. The authors attempt to systemize the programs and practices of the IB and also formulate and describe the criteria for IB development evaluation in the Russian Federation regions. The proposed approach, as well as the analysis of the indicators of the IB regional programs and practices, made it possible to form TOP 15 subjects of the Russian Federation leading in initiative budgeting in 2016. The IB indicators for 2015–2016 and its development pace in 2017 give the reason to predictic positive dynamics of qualitative and quantitative indicators, and also create prerequisites for the successful implementation of the Program for the Initiative Budgeting Development in the Russian Federation for the medium-term period, developed by the Ministry of Finance of the Russian Federation.

p. 9-24

Authors: Vladislav V. Bukharsky, Evgeniya Y. Vetrova, Alexey M. Lavrov

In 2005–2016 the public debt and the debt burden on the budgets of the Russian Federation subjects have increased significantly. At the same time, the trends demonstrated by the subjects of the Russian Federation in the public debt dynamics have been qualitatively different. With correlation analysis results as a basis the article states that none of the objective factors have shown a significant and stable influence on the trends above, thus formulating a hypothesis of subjective (political) factors as those having a decisive impact. Hence the need for greater responsibility of regional authorities in debt policy matters.

p. 40-49

Authors: Andrey A. Bokarev, Igor A. Yakovlev, Ludmila S. Kabir

The article provides analysis of the problems that hamper development of the «green» investments financing mechanism as a part of the national strategy for sustainable development financing. There the authors considered the arguments put forward by various interested parties as «green» investments justification. Attention is drawn to the key role of the state power and the importance of a political solution for launching the process of national economy transition to the «green» growth model. The article also studies the areas of restrictions and contradictions in the sphere of «green» investments implementation in Russia. There given speculations about the reasons that so far have not allowed to highlight the priorities for the process of «green» investment in the Russian economy. The authors conclude that the foreign experience already gained the great practical value despite the politicization of the transition to the «green» economy.

p. 64-74

Authors: Anton I. Votinov, Ivan P. Stankevich

The paper presents a vector autoregression-based approach to evaluation fiscal measures. Using both structural and Bayesian VAR models, the authors estimate fiscal multipliers of overall government expenditure and its components: national defense, national economy, education and social policy expenditures. The results are checked for robustness using different lag length and model specifications and different sets of hyperparameters in Bayesian VAR case. Regarding overall expenditures these results are quite stable across specifications and correspond well with results obtained in previous research in this field. National defense and social policy multipliers are shown to be negative (in contrast to previous research on Russian data), when national economy and education expenditures multipliers are positive. The article also presents some policy implications.

p. 85-97

Authors: Yuri М. Gorlin, Elena E. Grishina, Victor Yu. Lyashok, Vitaly V. Fedorov

The article analyzes the foreign experience of increase in the retirement age. The authors investigate the boundaries and rates of increase in the retirement age, taking into account different, such as life expectancy (including life expectancy of persons older the retirement age), the requirements for the length of service and the availability of early retirement opportunities. The article gives an actuarial estimation of economic effects of raising the retirement age in relation to Russian conditions. It is shown that raising of the retirement age makes it possible to achieve a long-term pension system balance with the increase in pensions in real terms.

p. 110-120

Authors: Alena V. Matskevich, Vera V. Romanova

The purpose of this article is to analyze financing of educational institutions based on per capita standards and to identify various approaches to determination of standard costs for public (municipal) services provision. Based on the legislative and normative frameworks of the Russian Federation subjects, as of May 2017, the authors identified three main approaches at the regional level to determination of the standard costs structure, depending on the distribution of the costs’ elements for general economic needs. The results of the research showed that, despite another Russia’s demand to oblige regions to apply per capita standards for determination of the subsidy amount for public (municipal) assignment fulfillment, it was not accomplished in all constituent entities of the country. In some cases, relative statutory and regulatory enactments imply the use of per capita standards and standard costs, but in reality, the calculations for financing receiving are based on actual expenditures.