Financial policy is a set of specific measures, forms and methods of influencing the results of production activities and methods of distribution of finances. There are different types of financial policies, but they all comply with the main principles:
- the dependence of all sectors of the economy;
- meeting the needs of all walks of life;
- strategic goals play a decisive role, and tactical should serve to achieve them;
- submission to the norms of the current legislation of the country.
At the macroeconomic level, financial policy is a tool with which the economic growth rate is stabilized, and international relations are developing. Indeed, due to the rational distribution of funds, the enterprise has a reserve, it can be used to improve the current situation of the organization, in particular, to develop relations with foreign partners.
The following types of financial policy are distinguished:
- Classical
- Neoclassical.
- Regulatory.
- Planning and directive.
Classical politics is based on the opinions of politicians such as Adam Smith and David Ricardo. It involves the complete removal of the state from market relations, that is, the government does not interfere in the affairs of traders, thereby achieving freedom in the market. Of course, in connection with this, the powers of the state were significantly limited and the expenditure side decreased. And incomes were replenished due to the taxation system and regular budget revenues.
Different types of financial policies were developed by prominent economic figures. One of them is Keynes's regulatory policy. He argued that the state is obliged to participate in market relations and regulate them using certain financial instruments. Subsequently, this type of financial policy began to affect the social aspects of state regulation. Accordingly, the principles of taxation have changed. For example, a progressive rate has been introduced in calculating income tax. A huge role was given to the sphere of lending, and lending to the state, due to which the balance of payments was achieved. That is, the resulting budget deficit was covered by loans. It is worth noting another important fact related to the regulatory policy in the field of financial management: a single supervisory authority was divided into several independent units.
The neoclassical concept allows government intervention and even recognizes it as necessary, but sets boundaries. It was assumed that the economy and the social sphere should develop independently. In practice, it turned out differently, the regulation of these areas only increased, as the government began to use other financial instruments, in addition to existing ones, including setting the exchange rate and adjusting prices for securities and essential goods. This is done in order to alleviate the tax burden, especially for poor citizens.
In countries with an administrative-command economy , a policy-planning type of policy was used. He assumed complete regulation and control by the government over all spheres of society. Any means of production were the property of the state. Thus, the management bodies sought to concentrate all the financial resources at their disposal. And the spending of funds was carried out in accordance with a strict estimate, which was compiled on the basis of a general strategic plan. The management of the financial part was wholly owned by the Ministry of Finance, which determined the needs of the population and allocated funds for social needs. The monopoly extended to all aspects of market relations, including a pricing and lending system.
We can distinguish such types of financial policies as budget, customs, tax, investment, credit, monetary, price and others. Each species undergoes some changes depending on the choice of a particular type. In connection with the foregoing, we can conclude that there are different types of financial policies, and each of them sets certain government powers. But their main goal is to stabilize the economic situation in the country and improve the welfare of citizens.