State credit - these are relations of an economic nature, the subjects of which are the state, legal entities and individuals.
The possibility of the state’s appeal to cover its own expenses by attracting free monetary resources of the population and economic structures arose with the formation of a market economy. This is the essence of state credit.
A state loan is characterized by all the mandatory conditions inherent in any type of lending: repayment, payment and urgency.
The greatest need for the development of this type of credit relations arises in the context of a budgetary shortage of funds. Then the state turns to attracting funds of enterprises, as well as individuals through the sale of government securities of a high degree of reliability.
The terms of repayment of the state loan cannot exceed 30 years. Moreover, the state can act as a borrower, and a creditor, and at the same time as a guarantor. In most cases, the state acts precisely as a borrower of funds. Much less often - as a lender when granting loans to legal entities and individuals. In those cases when it assumes responsibility for fulfilling obligations to repay loans, the state is the guarantor.
The main tasks to be solved by state credit: regulation of microeconomics; macroeconomic regulation; regulation of monetary policy and the financial condition of the country; finding finance to cover budget expenses.
State credit has the following objectives: equalization of conditions for economic development of regions; budget deficit financing ; support of municipalities; assistance to major economic sectors.
State credit performs a number of functions: accounting; control; redistributive (between budgets of various levels of the country); regulatory (ensuring the effectiveness of the use of borrowed funds).
Often, the functions of state credit are reduced to two main ones: regulatory and fiscal. It is through the fiscal function that the formation of funds of a centralized level and financing of the budget deficit is carried out.
State loan forms both internal and external assets. This type of borrowed capital can provide to state entities, as well as to foreign states.
Forms of state credit are distinguished by the following:
- on the subject of borrowed relations (loans are placed by central and local authorities)
- centralized
- decentralized;
- at the place of placement or receipt
- domestic (domestic)
- external (provided by the IBRD, IMF and other international credit institutions);
- by maturity
- short-term (no more than one year)
- medium-term (from one to five years)
- long-term (more than five years).
The concept of government loan is directly related to the concept of public debt. Public debt is formed as a result of borrowing and the provision of state guarantees. The growth of the country's accounts payable leads to an increase in public debt and vice versa. The state debt must be provided with the state treasury. Government debt management is carried out by the Ministry of Finance of the Russian Federation and the Central Bank.
In general, public debt is the result of the activities of the country's executive state authorities with legal entities and individuals (both residents and non-residents of the country), executive bodies of other countries and international financial organizations with the aim of forming a fund of funds to meet the country's financial needs.