Financial Journal

p. 21-33

Authors: Evgeny L. Goryunov

Usually disinflation policy leads to decline in economic activity in medium term. Later, inflation expectation decrease and money circulation normalization will lead to interest rate decline and widening of a planning. These effects, both positive and negative, affect various industries differently. In this paper the author aims to assess sectoral consequences of disinflation policy, which has been recently implemented by the Bank of Russia.Economic theory predicts the following. Firstly, tight monetary policy hits industries producing investment goods, since demand for that type of goods in sensitive to interest rates change. Secondly, procyclical industries suffer. Thirdly, interest rate hike constrains loans to small and medium enterprises more than to large ones. Furthermore, real exchange rate appreciates during disinflation policy and therefore worsen terms for exporters. All these effects, except real appreciation of ruble, are present in Russian economy. Along with that mortgage lending is widening and long-term interest rates are decreasing.

p. 47-58

Authors: Azamat B. Berberov, Nikolay S. Milogolov

This article is focused on the evaluation of the scale of tax base erosion in Russia. To achieve this goal the authors use the indicator methodology for tax base erosion assessment, according to Action 11 of the BEPS (Base Erosion and Profit Shifting) Plan. Estimations are based on the data from the competent authorities of Russia, as well as information provided by supranational institutions. The results of the study show that tax base erosion problem is highly significant for the Russian Federation and requires an adequate response from the competent authorities, including implementation of the OECD recommendations in national legislation.

p. 71-82

Authors: Makar I. Kudelich

The launch of the “Factory” for Project Financing program in early 2018 was a new stage in the development of project financing in Russia with state support. At the same time, the rules of the program create certain imbalance in risks allocation between government and private investors comparing to general rules of undistorted market environment. In this regard, this article discusses the key features of project financing “Factory” program and also contains proposals for program improvement rules in order to increase justification of federal budget expenditures and reduce the risks of state when implementing investment projects within the program.

p. 95-108

Authors: Boris I. Alekhin

This article describes how the Russian government has tried to create a liquid government bond market by using auctions to concentrate its domestic debt in key maturities. The maturity structure of bonds for 2005–2017 is calculated and explored in absolute and relative terms. For comparison the author uses the Italian Treasury issuance policy. Bonds with maturity 3, 5, 10 and 15 years dominate the Russian government’s debt portfolio. However issuance is characterized by bonds’ long-life cycle, unstable auction cycles and long distances between the last auction of an outgoing bond, the first auction of the incoming one and other shortfalls, while Italian issuance is determined by “extreme regularity, transparency, and predictability”. To reduce exposure to volatility and liquidity risks auction participants reduce their bids.

p. 120-127

Authors: Marat R. Zembatov

Public finances and the optimization of budget expenditures are among of the most important directions of modern financial science development. These directions are actively enriched by approaches of related scientific disciplines in recent decades. One of such cross-disciplinary interaction is the study of the regulatory impact assessment. In this survey an attempt is made to evaluate the current conditions and terms of regulatory impact assessment in the Republic of Armenia. The data on regulatory impact assessment in the Republic of Armenia are systematically analyzed. There is also a comparative approach to legal regulation of regulatory impact assessment in the Republic of Armenia regarding both laws — the old one of 2002 and the newest one of 2018.

p. 23-33

Authors: Antonina S. Kovalevskaya, Svetlana I. Nikulina

Government guarantees for investment projects are important as a risk allocation instrument encouraging investors to finance socially significant projects. In spite of many advantages, it involves considerable risks for a guarantor and financial stability of a country. Therefore, issues of managing risks connected with government guarantees provision are relevant for many countries especially for the Russian Federation, where existing mechanism of government support by means of guarantees needs changes. The article describes the experience of Brazil and India in government guarantees management in relation to the investment projects. Their practices are especially important for Russia as both countries are its BRICS partners and considered as the most attractive destinations for overseas investment allocation. It is useful for Russia as an investment guarantor in terms of its security improvement and risk management of investment projects during making decisions about guarantees provision. Analysis covers organizational and management specifics of government guarantees in the area of public-private partnership. The study is carried out on such elements of the management system as a creation of guarantee funds to protect investors from investment risks and evaluation of infrastructure projects effectiveness. Based on the analysis, the authors give recommendations on how to improve the government guarantees instruments in Russia.

p. 46-57

Authors: Vladimir V. Klimanov, Anna A. Mikhaylova, Vita A. Yagovkina

The article shows how in the Russian Federation the following concepts are used in normative legal acts and in practice: open (transparent) budget, citizens budget, people’s budget, initiative budget and participatory budget. All the above-mentioned budget types have been consolidated at the regional level in the Russian Federation. The authors present the examples of how these terms are reflected in normative legal documents and and how these types of budgets are correlated, in particular, that the people’s and initiative budgets are similar in content in the normative acts of the regions. The conclusion is drawn that at present the principle of budget transparency can be fully detected in the legislative acts of the Russian regions, thus an open budget system has been created at all levels of government. The authors also emphasize the significant impact of the Ministry of Finance on increase of the transparency degree in budget data.

p. 70-82

Authors: Samvel S. Lazaryan, Evgenii V. Mayorov

The article provides the analysis of specific model choices of public institutions and international organizations. The authors determine that the majority of central banks in the sample use DSGE models. On the other hand, DSGE models are far less common in ministries of finances. Currently, ministries prefer to use so-called macroeconometric models (MM). International organizations such as the IMF and the OECD have a greater variability of models in use including both DSGE and MM. Based on the academic and practical experience of DSGE modeling the authors find that this type of models is perfectly suitable for the usage in a ministry of finances. The authors also propose that current model selection criteria should be enhanced with accordance to the benefits provided by DSGE modeling.

p. 97-107

Authors: Victor S. Utkin, Anna A. Yurieva

The article analyzes the legal specifics of the regulation of the microfinance market in foreign countries. The authors investigate the validity of the microfinances perception at the international level as a tool of social policy, through which it is possible to combat social and financial inequalities, and stimulate the public self-employment. The article cites successful examples of anti-bullying state regulation of the microfinance sector, which, combined with the state grants, makes it possible to finance socially unprotected population at a rate much lower than a banking rate. Based on the study of foreign experience the authors conduct the analysis of the Russian microfinance market, identify the pressing problems of the Russian microfinance sector, which require urgent solutions, in particular, on implementation of regulatory arbitration by microfinance organizations and the debt load of the Russian people from microfinance organizations, and provide suggestions for their elimination.

p. 120-129

Authors: Svetlana V. Krivoruchko

It should be recognized that the monetary authorities in all countries of the world were not ready for the emergence and rapid development of digital currencies and their virtual diversity, regardless of the development level of national economy and domestic financial market. Minimization of the threats and risks of crypto-currency spread based only on their smaller issue volume comparing to fiat money is at any rate a shortsighted position. The interpretation of this phenomenon by a central bank has a decisive influence on its policy, which is especially important in the context of financial system globalization. The article provides the analysis of approaches to interpretation of the virtual (digital) currency concepts in central banks of different jurisdictions, as well as a wide range of scientific publications. These data led to the conclusion that it is necessary to develop a common understanding of state regulation in this field at the global level. According to the author, the most reasonable method is the interpretation of digital currencies as an asset, which is due to the inferiority of these financial instruments in terms of money key functions in the classical sense. The author notes the significant progress of central bankers in understanding the nature and capacity of a crypto currency with dominant tendency to strengthen control and supervision over operations with these financial instruments. However, there is also a significant divergence in the development of restrictive, permissive or supportive measures. The article concludes that it is necessary to coordinate the efforts of central banks with governments, other financial bodies and international organizations in this direction in order to adequately and homogeneously react to the development of the crypto currency as a kind of financial innovation without violation of the healthy competition rules in the payment services market and to prevent investors’ exposure to excessive risk.

p. 21-31

Authors: Samvel S. Lazaryan, Maria A. Elkina

The purpose of this article is to estimate government expenditure multiplier in the Republic of Armenia via a SVAR model. The model is evaluated using the data over the period from 2004 to 2017 and accounts for a structural break, which occurred in the year 2009. In addition, it controls for the dynamics of copper prices and output of the Russian Federation. The results indicate that the response of output to the government expenditure shock is quite strong right after the discretionary change of fiscal policy. The multiplier reaches its peak on impact with the estimated value about 3. However, there is a substantial uncertainty regarding the exact value of the multiplier and the 95 % lower bound estimate is only 0.8. Moreover, the value of the government expenditure multiplier decreases over time rather quickly. In the medium term the impact of the government expenditure shock on output is negligible. Overall, the authors conclude that government expenditure policy can be used successfully to stabilize the dynamics of output in the event of substantial recession or boom. Estimates obtained in this study do not contradict the results of previous researches dedicated to the evaluation of fiscal multipliers in the Republic of Armenia.

p. 38-52

Authors: Milyausha R. Pinskaya, Nikolay S. Milogolov, Suren F. Adamyan

The article analyzes domestic tax legislation of the Republic of Armenia and main countries investing in Armenia in combination with double tax treaties concluded between Armenia and these countries. The aim of such analysis is to find out the riskiest double tax treaties in terms of tax treaty shopping potential. Research approach is based on assessment of indicator characterizing country position in the global investment and capital flows comparing to the main countries investing in Armenia. This indicator is determined as ratio of foreign direct investment to gross domestic product. Based on this assessment countries-investors were divided to two groups according to the level of tax base erosion risk. The article further presents the detailed analysis of national legislation and double tax treaties with these countries. Moreover, the authors discuss international experience of developing legal approaches towards addressing the issue of tax treaty abuse, such as Principle Purpose Test, Limitation of Benefits Rule and Concept of Beneficial Owner of Income. The authors also analyze international experience of formulating the criteria of assessment of necessary conditions for obtaining tax treaty benefits. These approaches can be used for development of international tax policy in the Republic of Armenia with the aim of defending its sovereign tax base and creating certain and sustainable business and tax rules for foreign investors and domestic taxpayers expanding overseas.

p. 62-75

Authors: Vsevolod Y. Cherkasov, Julia A. Maklakova

The article considers financial dollarization as one of the distinctive features of the Armenian economy. During the time of currency sovereignty, the country systematically pursued a policy of dedollarization. Various traditionally recommended tools have been applied, including legislative measures, stabilization of domestic prices, differentiation of required reserve ratios and deposit guarantees. Nevertheless, the level of dollarization remains high. The article analyzes its structural causes (labor migration, diaspora, persistent trade deficit). The structural policy gap affects the effectiveness of monetary policy in Armenia conducted within inflation targeting framework, which detailed review is also given in the article. The authors assume that targeted measures toward dedollarization should be supported by comprehensive policy of the Armenian economy competitiveness increase as envisaged by the ongoing medium-term program of national development.

p. 90-102

Authors: Igor A. Yakovlev, Kristina V. Shvandar

The goal of this article is to show how the financial market of Armenia is arranged at the moment with short descriptions of the historical path of its development, explaining how past difficulties were solved and what problems still need to be addressed. The country’s banking system demonstrates high capital adequacy and liquidity ratios, while the infrastructure of organized market for trading in financial assets meets the best world standards. However, the volume of bank loans to the economy still does not reach 50 % of GDP; the capitalization of the stock market and the turnover of corporate bonds show the modest market capacity. Enhance of the securities market, primarily corporate bonds market would facilitate the increase in contribution of the financial market to the national economic development of Armenia. Joint efforts of the authorities and the market have done much for the development of the trade and depository block, improvement of the regulatory framework, enlargement of the investors community. In the final part of the article the authors present their considerations on the essential components of a further work on the development of the Armenian stock market.

p. 115-120

Authors: Edgar А. Mkrtchyan, Sveta А. Harosyan, Gor А. Hakobyan

The article focuses on Performance Budgeting (PB), one of the most common reforms of public finance management (PFM) in developing countries over the last years. Result based budgeting reforms aim to move from article control to objectives and results in order to increase accountability and operational efficiency. The introduction to the program budgeting preliminary procedures have started in Armenia since 2003. During 2005–2017 budget instruments and methods, conceptual and methodological issues and challenges have been repeatedly reviewed and approved.

p. 21-33

Authors: Mikhail Yu. Andreyev, Andrey V. Polbin

The article reviews theoretical works on the government spending impact on the main macroeconomic indicators. Both neoclassical models with flexible prices and neo-Keynesian models with rigidities are considered by authors. As monetary policy matters in neo-Keynesian models, this work raises the problem of relationship between monetary policy and the fiscal multiplier size. Special attention is given to the peculiarities of fiscal policy in the liquidity trap. The authors examined the changes of fiscal policy effectiveness when the interest rate is at zero lower bound. At this economic situation the most effective fiscal policy is to stimulate aggregate demand, while stimulating the aggregate supply (e.g. reducing distortionary production taxes) may have a negative effect on economic activity. The article ends with conclusions about the possible fiscal policy in Russia.

p. 49-63

Authors: Nikolai A. Begchin, Olga V. Bogacheva, Oleg V. Smorodinov

This article is focused on the conceptual framework of spending reviews. The authors claim that after the global financial crisis (2007–2008), the role of spending reviews in OECD countries has drastically increased. Originally a technical tool for the evaluation of government programs’ efficiency and effectiveness, it has evolved into the key instrument of public finance management. Many countries have started using such reviews both for the identification of inefficient expenditures/programs and for re-allocation of public resources in line with new medium-term policy priorities. The article examines the present-day interpretation of this concept, offers classification of spending reviews, analyzes legal environment and organizational models of planning and preparation of spending reviews in various OECD countries. As a result, the authors formulate a set of necessary conditions for the successful implementation of spending reviews, including legal, organizational and institutional conditions, and data requirements. Spending reviews should be integrated into the budget preparation process, stakeholders’ roles should be determined prior to conducting spending reviews, policy priorities should be clearly determined. As Russia moves towards adopting spending reviews as the key public expenditures management instrument, putting these pre-requisites in place becomes an immediate challenge.

p. 78-89

Authors: Aleksandr V. Kniaginin

The study is devoted to the assessment of the impact of the antitrust laws interpretation on the conviction of tacit collusion. In the first part of the article tacit collusion is explained in terms of game theory and economic theory and then a general approach to proving firms to be guilty of tacit collusion in Russian antitrust legislation is presented. The main part of the work includes analysis of 48 cases content, in which firms of Russian retail fuel market argued in court that they were not guilty of tacit collusion. Based on this analysis, main effects of the antitrust laws interpretation on the conviction of tacit collusion were identified. Author concludes that under certain circumstances the concepts adopted in the Russian legislation make the outcome of the trial depending on the court’s opinion on the interpretation of these concepts and generate a number of unintended systematic effects that may lead to a decrease in public welfare.

p. 99-110

Authors: Vadim A. Malyshenko

The article is devoted to the search for ways to overcome the problem of distorting the assessment of the financial condition of an enterprise in the long-term aspect. The prospective essence of this problem in the sanatorium enterprises of the Crimea is connected with the consequences of overstating the value of non-current assets (and the corresponding amount of their own capital) for the formation of the annual financial result. The proposed instrument is repulsed from the original mechanism of managing the amount of depreciation deductions and the final financial result. This mechanism regulates the process of reaching both the optimum value of own capital and the optimum value of circulating assets. The author presents the methods to achieve a comprehensive impact in a single model for all key financial management objects (profit, capital, cash flow). Methodological development can be useful for enterprises of the resort complex of Crimea and other enterprises of the resort business.

p. 121-130

Authors: Guzel F. Biglova

The article actualizes the problem of social principles development in the economy. As an obligatory stage in the formation of a socially-oriented economy, the author proposes to single out the process of socialization of economic relations, which is based on three main directions: socialization of property relations, reduction of social differentiation, humanization of labor. Also, it is suggested, is impossible to stimulate scientific and technological process without the proper level of socialization of the economy. As the impossibility reason to transform the labour potential of the national economy in high-performance innovative work the author proposes to consider both deterioration of working conditions and salary level along with its general alienation because of the development lack and associated collective forms of enterprises’ ownership.

p. 24-35

Authors: Nataliya V. Golovanova

The terminology used in numerous publications on the theory of intergovernmental transfers differs from one researcher to another. As for papers in Russian, variations in terms is augmented by differences in their translation. The article presents an overview of different approaches to the classification of transfers; special attention is paid to the relationship of the concepts of conditional and specific-purpose grants. The paper reflects the evolution of the definitions of general grants, subsidies and subventions in various editions of the RF Budget Code, assesses the role of intergovernmental transfers in the consolidated budget of the Russian Federation. The final part of the article lists the latest changes in the Russian system of intergovernmental relations, in particular, the transformation of equalization grants into conditional transfers, which significantly reduces the autonomy of sub-national authorities.

p. 47-58

Authors: Maksim V. Petrov

The article analyzes the current positions of the world’s top 10 economic powers in the world financial system. To assess their weight in global finance, a group of interrelated criteria was used: the size of the domestic financial market, the participation in the international capital flows, the level of internationalization of currencies, the status of international financial centers located in countries and the role of their national banking groups in the world. The article shows that in the period following the 2008 financial crisis, major developing countries (India, Brazil, Russia and Indonesia) for various reasons failed to significantly increase their influence in the financial sphere. For all the above criteria, they are much inferior to the leading developed economies that continue to dominate in the world finance. Only China can compete with them, consistently increasing financial strength and presence in global capital markets. The main factor that does not allow China to finally establish itself as one of the main world financial centers is weak internationalization of the renminbi. The measures planned by Chinese authorities to liberalize capital flows will help to expand the use of the yuan abroad and in further to increase China’s cross-border cash flows. The logical result of these processes will be the formation of a tripolar world financial system, in which the existing poles of power in the face of the USA and the Eurozone will be joined by China.

p. 73-83

Authors: Alexander V. Murychev, Petr N. Novikov, Rim K. Nurmukhametov

The article examines the issues of improvement of the professional standards of financial market professionals, caused by demands of the modern technological revolution. The experience of professional standards development is generalized by authors, and attention is drawn to the following difficulties, both theoretical and practical. The article is focused on the structure of the layout of a professional standard and clarification of the terminology. It also shows the main points of the Program of the digital economy of Russia and discloses such a new and popular term as “FinTech”. The authors consider the possibility to separate common (overprofessional) competencies (skills), along with professional ones, in professional standards demanded by the digital economy.

p. 94-105

Authors: Elena V. Krasova

The article is devoted to the actual issues in development of professional intermediaries in the Russian stock market. The author considers the conditions under which professional intermediaries operate and the trends of their development in recent years. The research methodology is based on the modern theory of securities market and the concept of effective development of stock markets. The article substantiates the role and the place of professional stock market intermediaries in the modern financial system of Russia, shows the dynamics and structure of the number of intermediary companies. It also studies the macroeconomic risks of their development, presents the rating of the leading intermediaries by the volume of transactions in the Russian stock market and analyzes the level of concentration as the most important characteristic of the professional intermediaries’ market.

p. 120-128

Authors: Olga N. Kuznetsova

The author of the article analyzes methodical and practical aspects of accounting in settlements with accountable persons. Information is based on normative legal acts and results of survey inspections of the Russian enterprises. The author defines the key problems in accounting in settlements with accountable persons and suggests possible ways of their elimination. In addition, the author recommends to introduce regulations and to keep effective control and auditing events within the system of internal organization control. The basis of checks is an identification of unsettled debts of accountable persons and assistance in competent local regulations development in the field of data structure of settlement operations. The author pays special attention to interpretation of innovations in standard and legal regulation of accounting in settlements with accountable persons, whose wrong understanding can lead to claim emergence from taxing authorities. The result of the research is the author’s model of optimization of accounting and control in settlements with accountable persons at an enterprise.