Finance: lecture notes (). Finance and their functions 1 definition and essence of finance

LECTURE NOTES

Disciplines

STATE

AND MUNICIPAL FINANCE

Specialty 061000 - State and municipal administration

Compiled by G.V. Morunova

Cand. econom. sciences

St. Petersburg

Topic 1. Concept, essence and functions of finance

Finance - a certain system of economic relations associated with the formation, distribution and use of centralized and decentralized funds of funds (the state, organizations and other business entities) in order to fulfill the functions and tasks of the state and local government and to ensure conditions for expanded reproduction.

Cash - is money that is at the full disposal of economic entities and used by them freely, without special purpose and restrictions. Monetary funds - This is a separate part of the money, which has a purpose and relative independence of functioning. Centralizedmonetary funds - funds formed and used by the state (budget, special purpose funds, off-budget funds) represented by its federal, regional and local authorities. Decentralized monetary funds - funds created at the level of economic entities and citizens.

The main material sources of monetary funds is the country's national income - the newly created value.

Finance - an integral part of monetary relations, but not all monetary relations are financial. Money is primary - finance is secondary.

Finance is different from money both in content and in functions performed. Money is a universal equivalent, with the help of which the labor costs of producers are measured, and finance is an economic instrument for the distribution and redistribution of gross domestic product and national income, an instrument of control over the formation and use of funds.

Finance reflects the relationship of all legal entities and households associated with the formation and movement of funds.

The criterion for classifying certain relations as financial are:

1. Real cash flow, i.e. transfer from one owner to another.

2. Distributive nature of these relations (distribution of the value of GDP and income from foreign economic activity).

3. Place of origin - the second stage of the reproductive process (production, exchange, consumption).

In this way, with the help of finance:

The cost of the goods and services produced is distributed and the formation and use of monetary incomes, receipts and savings from economic entities: households, organizations and the state, which are used to solve social and economic problems;

Redistribution of income and savings of previous years is carried out through the budget system (taxes, loans, appropriations, subsidies, pensions) and through the financial market (issuance of securities, placement of shares, loans and borrowings, receipt of dividends, interest, insurance contributions and payments);

The reproduction process as a whole and its individual phases are quantitatively displayed (through stock exchange indices, profitability of farms, budget revenues, government debt, budget deficit, etc.).

Financial relations, expressing the continuous movement of value, circulate at all levels of the world economic system and classified as follows (Figure 1):

Financial relations

Figure: 1. Classification of financial relations

Examples of financial relationships are relationships between:

Enterprises in the process of purchasing goods, selling products and services;

Enterprises and higher organizations in the creation of centralized funds of funds and their distribution;

The state and enterprises when they pay taxes to the budget system and finance costs;

The state and citizens when they make taxes and voluntary payments;

Enterprises, citizens and extra-budgetary funds when making payments and receiving resources;

Separate links of the budgetary system;

Property and personal insurance bodies, enterprises, the population in the payment of insurance premiums and compensation for damage, in the event of an insured event;

Monetary relations that mediate the circulation of funds of enterprises.

Enterprises and banks (storage of own funds of enterprises in bank accounts, deposits, short-term and long-term lending);

Banks and the population (deposits of the population in the Savings Bank and other banks, the purchase of bank certificates, the payment by banks to the population of income on deposits, certificates;

The above spheres and industries and the shadow economy.

The material basis of financial relations is financial resources - as a set of incomes and receipts at the disposal of a business entity.

The sources of financial resources are:

At the level of business entities: profit, amortization, sale of securities, bank loans, interest, dividends on securities issued by other issuers;

At the population level: wages, bonuses, wage supplements, social payments made by the employer, travel expenses; income from entrepreneurial activity, from participation in profits, from transactions with personal property, from credit and financial transactions; social transfers, including pensions, benefits, scholarships; consumer credit;

At the level of the state, local authorities: income from state and municipal enterprises, income from the privatization of state and municipal property, income from foreign economic activity, tax income, state and municipal credit, money emission and income from the issue of securities.

Financial resources are dedicated to:

Meeting financial obligations;

Covering the costs of expanded reproduction;

Material incentives for employees.

Generally, financial resources of statesbut add up from three sources:

1) funds accumulated in the state budget system;

2) funds from off-budget funds;

3) the resources received by the enterprises themselves (profit, depreciation).

Finance functions

There are two main functions finance - distribution and control.

1. Distribution function finance is (Fig. 2):

1) in the creation of the so-called basic or primary income by distributing the national income among the participants in material production;

2) in the creation of secondary or derived incomes through the redistribution of national income between the production and non-production spheres, branches of material production, regions of the country, forms of ownership and social groups of the population.

Figure: 2. Distribution function of finance

The GDP created in the society, minus the means of production consumed in the production process, undergoes primary distribution, the result of which is the formation of incomes of the main participants in the sphere of material production. There is a need to redistribute the created product, which is due to:

The presence, along with the production non-production sphere, in which the material product is not created (education, health care, defense, etc.);

Differentiation of incomes of different groups of the population, which is inevitable in a market economy;

Uneven development of individual territories and sectors of the economy.

As a result of redistribution, state revenues are formed; income received in the non-productive sectors; the population receives additional funds through social payments; territories and enterprises - additional resources for development.

Thus, secondary incomes form the final proportions of the use of national income and play an important role in the balanced development of individual sectors of the economy and territories, ensuring a decent standard of living for broad strata of the population.

2. Control function consists in controlling the distribution of GDP among the relevant funds and their spending for their intended purpose by regulating financial information and stimulating the process of expanded reproduction.

The activities of all participants in financial relations, both at the micro and macro levels, are subject to financial control.

Financial control for private enterprises is associated with control in terms of the completeness and timeliness of tax payments, the correctness of the reflection of the costs of production and sale of products, the formation and use of income from entrepreneurial activities. For the public sector, this is control over the targeted use of budgetary funds, the execution of cost estimates. For individuals, control is associated with the timeliness and completeness of the payment of taxes on income and property.

Financial control by public authorities is a check of compliance with financial legislation in terms of the timeliness and completeness of the fulfillment of obligations by all business entities and citizens to the budget system, tax service, credit system, as well as mutual settlements and payments between enterprises and organizations.

Thus, financial control is aimed at increasing the efficiency of the use of budgetary funds, economic stimulation of entrepreneurial activity, rational use of material, natural, labor and financial resources available to society.

In addition to distribution and control functions, finance performs regulatory function, which manifests itself through the influence of the state on economic development (the behavior of business entities, the development of certain territories and industries) through financial levers. The main tools that are used are the following:

Taxes that can both reduce and stimulate entrepreneurship and private consumption;

Government expenditures that encourage firms or workers to produce certain goods and services, as well as social payments that provide a certain level of income for some segments of the population;

Regulation or control, through the adoption of appropriate laws, certain types of economic activity, up to the prohibition of some of them;

Setting price caps for some goods and services (mainly in the branches of natural monopolies).

In a market economy, finance must also fulfill stabilizing function, which is to ensure stable conditions in economic and social relations for all business entities and citizens. In this case, the issue of the stability of financial legislation is of particular importance, since without this it is impossible to implement investment policy in the production sector on the part of private investors.

Finance functions are carried out:

At all levels of management of the economic system (federal, territorial, local);

In all spheres of social life (material production, circulation, consumption);

At all levels of the economic system (intra-economic - enterprise finance, intra-industry - finance of complexes, intersectoral and inter-territorial - the state budget and extra-budgetary funds).

test questions

1. Give a definition of finance, indicate their specific features.

2. What is the object of the distribution function of finance?

3. What is the content of the control function of finance?

4. What is the object of the regulatory function of finance?

5. What is the object of the stabilizing function of finance?

6. What are financial resources?

7. List the sources and types of financial resources of business entities and state and local authorities.

8. What is the material basis of the monetary funds of the state and local government bodies?

The lecture notes meet the requirements of the State Educational Standard of Higher Professional Education. The accessibility and brevity of the presentation allow you to quickly and easily gain basic knowledge of the subject, prepare and successfully pass the test and exam. The content, functions, socio-economic essence of finance, the monetary system of Russia, the importance of the budget in the development of the economy and social sphere, the current state of off-budget redistribution of financial resources, as well as the finances of business entities, and much more are considered. For students of economic universities and colleges, as well as those who independently study this subject.

LECTURE No. 1

The essence and functions of finance

1. The emergence of finance

Finance appeared simultaneously with the emergence of the state kingdom with the stratification of society into classes. With the disintegration of feudalism and the development in its depths of the capitalist mode of production, the monetary income and expenditures of the state began to acquire an ever greater importance.

In the early stages of state development, there was no distinction between the resources of the state and the resources of its head.

With the allocation of the state treasury and its complete separation from the property of the monarch (XVI-XVII centuries), the concepts of state finance, state budget, and state credit arise.

Public finance served as a powerful lever for the initial accumulation of capital.

State loans and taxes were widely used to create the first capitalist enterprises. An important role in the creation of initial capital belonged to the system of projectionism, which allowed the first capitalists to set high prices for manufactured goods and receive high profits, which were largely directed to expanding production.

Under capitalism, when commodity-money relations acquire an all-encompassing character, finance expresses economic relations in connection with the formation, distribution and use of funds of funds in the process of distribution and redistribution of national income.

The fixed assets of the capitalist states began to be concentrated in the state budget.

The public finances of capitalist countries are characterized by a rapid increase in expenditures, which is primarily due to the intensification of the militarization of the economy. Military goals, the repayment of public debt and interest on it accounted for more than 2/3 of all public spending. Huge funds were spent on the maintenance of the state apparatus - parliament, ministries, departments, police, prisons, etc. The costs of education and health care were extremely low. The main source of income was taxes.

By the beginning of the XX century. the state began to participate in the process of production, distribution and use of the social product.

The democratization of public life in a developed market economy has led to the fact that in a number of small countries of Western Europe (Sweden, Norway, etc.), social spending has become one of the main ones. Hence the concept of the "Swedish model of socialism" arose.

State intervention in the economy has developed significantly. It began to actively help the monopolies of its country in the intense competition in the world market by providing export firms with so-called export bonuses.

Intervention in the process of reproduction and the sphere of social relations is carried out not only at the national, but also at the interstate level.

Interstate funds were created to finance agriculture, overcome unemployment, retrain and relocate the workforce, and overcome significant imbalances in the development of individual regions.

New government expenditures have emerged: on environmental protection, overcoming the economic backwardness of certain regions, and providing subsidies and loans to developing countries.

Huge expenditures necessitate tax increases - the main financial method of mobilizing resources for state and local budgets.

However, despite the increase in taxes, the accumulated income is not enough to cover the ever-increasing expenses of the state.

The budgets of all countries are characterized by large chronic deficits, covered by government loans, the issuance of which leads to an increase in government debt.

2. The essence of finance

Finance as a scientific concept is usually associated with various forms of processes that manifest themselves in public life and are necessarily accompanied by the movement of funds (distribution of profits, transfer of tax payments, making extra-budgetary and charitable payments).

Cash flow alone does not reveal the nature of finance. To comprehend it, it is necessary to identify those general properties that characterize the internal nature of all financial phenomena - the relationship between various participants in social production.

Finance, expressing production relations that actually exist in society, which have an objective nature and a specific social purpose, act as an economic category.

An important feature of finance is the monetary nature of financial relations. Money is a prerequisite for the existence of finance.

The next feature of finance as an economic category is the distributive nature of financial relations.

The distribution and redistribution of value with the help of finance is necessarily accompanied by the movement of funds that take a specific form of financial resources, which are formed from business entities and the state at the expense of various types of cash income, deductions and receipts, and are used for expanded reproduction, material incentives for workers, meeting various needs society.

Potentially financial resources are generated at the production stage, when new value is created and the old one is transferred. In reality, the formation of financial resources begins only at the stage of distribution, when the cost is realized and the specific economic forms of the realized value are isolated as part of the proceeds.

The use of financial resources is carried out mainly through special purpose financial funds.

Financial relations are always associated with the formation of cash income and savings, which take the form of financial resources. This is an important specific feature of finance that distinguishes it from other distribution categories.

So, finance is monetary relations that arise in the process of distribution and redistribution of the value of the gross social product and part of the national wealth in connection with the formation of monetary income and savings from business entities and the state and their use for expanded reproduction, material incentives, satisfaction of social and other needs of society.

3. Functions of finance

The essence of finance is manifested in their functions. Finance has two main functions: distribution and control. These functions are carried out by finance at the same time. Each financial transaction means the distribution of the social product and the national income and control over this distribution.

When the so-called basic or primary income is created, the distribution function is manifested. The amount of income is equal to the national income. The main income is formed when the national income is distributed among the participants in material production. They are divided into two groups:

1) wages of workers, employees, income of farmers, peasants employed in the sphere of material production;

2) income of enterprises in the sphere of material production. Primary income does not form public money

funds sufficient for the development of priority sectors of the national economy, ensuring the country's defense capability, meeting the material and cultural needs of the population. Further distribution or redistribution of national income is needed.

The redistribution of national income is associated with: intersectoral and territorial redistribution of funds in the interests of the most efficient and rational use of income and savings of enterprises and organizations; the presence, along with the production non-production sphere, in which the national income is not created (education, health care, social insurance and security, management); redistribution of income between different social groups of the population.

As a result of the redistribution, secondary, or production, incomes are formed. These include incomes received in the non-production sectors, taxes (personal income tax, etc.). Secondary incomes serve to form the final proportions of the use of the national income.

The income generated in the course of redistribution must ensure consistency between material and financial resources and, above all, between the size of monetary funds and their structure, on the one hand, and the volume and structure of means of production and consumer goods, on the other.

The control function is manifested in the control over the distribution of the gross domestic product in the corresponding funds and their spending for the intended purpose.

One of the important tasks of financial control is to check compliance with financial legislation, timely and complete fulfillment of financial obligations to the budget system, tax service, banks, as well as mutual obligations of enterprises and organizations for settlements and payments.

Distribution and control functions of finance are implemented through the financial mechanism, which is part of the economic mechanism. The financial mechanism includes a set of forms of financial relations in the national economy, the procedure for the formation and use of centralized and decentralized funds of funds, methods of financial planning, forms of financial management and financial system, financial legislation.

Finance, participating in the distribution of value, is closely related and interacts with categories such as price, wages, credit.

In order for the process of formation and distribution of various forms of cash income and savings to begin, the value formed in production must be realized. The economic instrument through which the value of a product receives monetary expression and becomes an object of distribution is price.

As a quantitative measure of value created in production, its monetary expression, price predetermines the proportions of future value distribution, but it itself cannot provide either distribution among the subjects of ownership, or functional separation of different parts of value. This is isolated at the exchange stage with the help of finance and wages. It is thanks to them that in the process of primary distribution, various types of cash income, savings and deductions are formed.

Wages as a form of distribution are due to the need to generate income for specific workers. As an economic category, wages expresses the value relations arising from the division of the newly created value when creating individual incomes that go to workers depending on the quality and quantity of labor expended.

Finances are at the disposal of business entities and the state and are intended to meet various social needs. But they are closely related to each other: on the one hand, finances contribute to the formation of the wage fund, on the other hand, wages, the accrual of which does not coincide with the payment in time, acts as a source of creating part of the enterprise's financial resources, taking the form of stable liabilities.

Being in the turnover of the enterprise between accrual and payment, wages are the source of the formation of working capital.

Credit also participates in the value distribution. Finance and credit have one economic basis, but unlike finance, credit operates on terms of repayment and payment.

The main objects of the complex impact of finance and credit on the reproduction process are fixed assets and working capital.

Based on the relationship of finance with the most important economic categories, it is necessary to attach particular importance to the issues of financial management, that is, the most effective management of financial resources.

5. Financial management

In economically developed countries, the greatest impact on the finances of enterprises is exerted by: the internationalization of economic life, the globalization of business operations and the expansion of computer technology.

Computer and telecommunications technologies are dramatically changing the financial decision-making process. The parent companies are provided with a system of personal computers, connected by a local network, with the computers of suppliers and boarders. This allows the financial manager to constantly be aware of all the information and make the most rational decisions.

The main tasks of financial management:

1) maximization of real assets and liabilities of enterprises;

2) forecasting the financial side of the activities of enterprises. Business plans are drawn up for the volume of production, sales of products, profits, capital investments, the introduction of new management solutions and financial resources to ensure them;

3) making appropriate decisions when investing large funds (optimal growth rates of sales volume, structure of attracted funds, methods of their mobilization, etc.);

4) coordination of financial activities of enterprises with other services (bank, tax department, etc.);

5) conducting large operations in the financial market for

mobilization of additional capital.

Financial management is also of great importance for public finances, including the budgetary system and off-budget funds.

In connection with the transition to market relations, there is a tendency of significant decentralization of financial resources. The development of off-budget funds leads to the dispersal of funds, does not allow their mobile use, concentration on priority areas of economic development, weakens control over the spending of public funds. Therefore, it is necessary to pay special attention to the development of financial management, on the basis of which financial policy should be built.

6. Financial policy

The main task of financial policy is to provide appropriate financial resources for the implementation of a particular program of economic and social development. Financial policy is a set of state measures aimed at mobilizing financial resources, their distribution and use for the state to perform its functions.

Financial policy is an independent sphere of government activity in the field of financial relations. It includes three main elements:

1) defining and setting the main goals and specifying further and immediate tasks that need to be solved to achieve the goals for a certain period;

2) the development of methods, means and forms of organizing relations, in which these goals are achieved in the shortest possible time, and the nearest and future tasks are solved in an optimal way;

3) selection and placement of personnel capable of solving the assigned tasks, organizing their implementation. Financial policy is assessed by how much it meets the interests of society and how it contributes to the achievement of goals and the solution of specific tasks.

To determine and form a financial policy, reliable information is needed about the financial position of the state, its financial potential, that is, the objective capabilities of the state.

During the period of evolutionary development of social life and a stable state structure, the internal and external financial policies of the state solve one main problem - ensuring the preservation and strengthening of the system of social relations existing in a given state. During the period of revolutionary changes, political forces pursue a policy aimed at destroying the existing system of social relations and forming a new system.

The role of financial policy at critical moments in life can hardly be overestimated, since, first of all, there is a radical redistribution of financial resources.

The primary tasks facing the modern financial policy of the Russian state are the fight against inflation, overcoming the decline in production, and increasing social protection of the population.

Finance is an economic relationship associated with the accumulation, distribution and use of centralized and decentralized funds of funds in order to fulfill the state's functions and the task of providing conditions for expanded reproduction.

Consequently, the financial activity of the state is the activity of the state in the formation, distribution and use of centralized and decentralized funds of funds, ensuring its smooth functioning and development.

Centralized finance is understood as economic relations associated with the formation and use of funds of funds accumulated in the state budget system and government extra-budgetary funds.

In other words, centralized funds of funds, or centralized finance, include those funds of the state that come at its disposal as a ruling entity. These funds include: firstly, the funds accumulated in the state budget system; secondly, off-budget centralized funds of the state; thirdly, state insurance; fourthly, state, including bank, credit.

Decentralized finance is understood as monetary relations that mediate the circulation of funds of enterprises. That is, decentralized finance includes the finances of enterprises and organizations of all forms of ownership, formed both from their own resources and from budgetary allocations, as well as sectoral and intersectoral extra-budgetary funds.

Finance is an integral part of monetary relations, therefore, the role and importance of finance depend primarily on the place of monetary relations in economic relations.

Finance is an economic instrument for the distribution and redistribution of gross domestic product (GDP) and national income, it is an instrument of control over the formation and use of funds.

the main thing destination finance - through the formation of cash income and funds, to ensure not only the needs of the state and enterprises in cash, but also control over the expenditure of financial resources.

Finance expresses monetary relations that arise between the following entities:

1. enterprises in the process of acquiring inventory items, selling products and services;
2. enterprises and higher organizations in the creation of centralized funds of funds and their distribution;
3. the state and citizens when they make taxes and voluntary payments;
4. enterprises, citizens and extra-budgetary funds when making payments and receiving resources;
5. separate links of the budgetary system;
6. insurance organizations, enterprises and the population in the payment of insurance premiums and compensation for damage.

Finance also expresses monetary relations that mediate the circulation of enterprise funds.

The role of the state in the accumulation, regulation, distribution and use of centralized and decentralized funds especially increases in the period of transition to a market economy system. As for centralized funds, in relation to them the state acts as a ruling subject and can provide its income through a compulsory system - taxes, duties, various fees, money emission, etc.

Another thing - decentralized funds... With regard to them, government regulation is expressed in a completely different way. And a completely different attitude should be towards the finances of private entrepreneurs, since private finances - their conditions and dynamics - are subject to the laws of a market economy.

Any financial activity of the state is associated with expenses and income. In the event that expenses exceed revenues, the state is forced to look for additional sources of funds to cover the necessary expenses - a bank or government loan, the issue of securities, etc. Therefore, it is the state of finances that reflects the processes taking place in the state, and not only in the field of economics and social processes, but in the spheres of politics, demography, ecology, etc.

It is impossible to hold practically a single event in the state without redistributing funds. In other words, holding any events in the state is associated with its financial activities. And that is precisely why the legal framework is needed that would regulate the conduct of financial activities of the state, since it is carried out, naturally, in a legal form.

Without the participation of finance, the national income, which is the main material source of monetary income and funds, cannot be distributed. Taking into account the volumes of the national income and its individual parts - the consumption fund and the accumulation fund - the proportions of economic development and its structure are determined. Finance, affecting production, distribution and consumption, are objective.

As already mentioned, the state of finances reflects, determines the state of the country's economy.

The main condition for the growth of financial resources - increase in national income. Finance and financial resources are not identical concepts. By themselves, financial resources do not determine the essence of finance, do not disclose their internal content and public purpose. Finances largely depend on the financial policy of the state. The essence of finance is manifested in their functions. Let's name four functions of finance: distribution, control, regulatory and stabilization, and characterize each of them separately.

The main functions of finance are two: distribution and control, which are carried out by finance at the same time. And this is natural, since every financial transaction means the distribution of the social product and national income and control over this distribution.

Distribution function finance means their participation in the distribution of national income, which consists in the creation of the so-called basic, or primary, income. Their sum is equal to the national income. The main incomes are formed when the national income is distributed among the participants in material production and are divided into two groups:

1. wages of workers and employees, income of farmers, peasants;
2. income of enterprises in the sphere of material production.

Further redistribution of national income is associated with:

1. with intersectoral and territorial redistribution of funds in the interests of efficient and rational use of income and savings of enterprises and organizations;
2. with the presence of not only the production, but also the non-production sphere in which the national income is not created (health care, education, social insurance and social security, management);
3. with the redistribution of income between different social groups of the population. As a result, secondary or derivative incomes, incomes received in the sectors of the non-production sphere, taxes are formed.

Consequently, the redistribution of national income occurs between:

• production and non-production spheres of the national economy;
• branches of material production;
• individual regions of the country;
• forms of ownership;
• social groups of the population.

The ultimate goal of the distribution and redistribution of national income and GDP, accomplished with the help of finance, is the development of productive forces, the creation of market structures of the economy, the strengthening of the state, and the provision of a high standard of living for broad strata of the population. At the same time, the role of finance is subordinated to the tasks of increasing the material interest of collectives of enterprises and organizations, as well as employees in improving financial and economic activities, achieving high results at the lowest cost.

Control function... Finance, being a tool for the accumulation and use of monetary incomes and funds, objectively reflects the process of distribution and redistribution of national income and GDP in the corresponding funds, and controls their spending for their intended purpose.

Financial control under the conditions of the transition to market relations is aimed at ensuring the dynamic development of public and private production, accelerating scientific and technological progress, and improving the quality of work in all sectors of the national economy. Financial control covers both production and non-production areas. It covers the whole complex of those economic relations, on which the size of funds and the efficiency of their use depend.

Financial control - an important means of ensuring the legality of financial and economic activities. Designed to prevent financial and economic crimes, he stands guard over the inventory and funds of the state. Financial control is acquiring particular importance at the present time, when the tendency for the growth of "white-collar" economic crime is very clearly manifested.

Thus, financial control is the activity of state, municipal, public and other economic entities, regulated by the norms of law, to check the timeliness and accuracy of financial planning, the validity and completeness of the receipt of income in the relevant funds of funds, the correctness and efficiency of their use.

In other words, the most important task of financial control is to verify the exact observance of legislation on financial issues, the timeliness and completeness of the fulfillment of financial obligations to the budget system, the tax service, banks, as well as mutual obligations of enterprises and organizations for settlements and payments.

The control function of finance is also manifested through the activities of financial bodies. The effectiveness of financial control carried out by various entities, in particular, state authorities, local governments, auditors, audit firms, to a large extent depends on their interaction, coordination of joint activities, and also on cooperation with law enforcement agencies.

Regulating function finance is associated with government intervention through finance - government spending, taxes, government credit - in the reproduction process. The state influences the reproduction process by financing individual enterprises and industries, social events and tax policy.

Stabilization function finance is to provide all business entities and citizens with stable economic and social conditions. This function should be performed by finance in the context of the transition and development of market relations.

The functions of finance are implemented through a financial mechanism, which includes a set of organizational forms of financial relations in the national economy, the procedure for the formation and use of centralized and decentralized funds of funds, methods of financial planning, forms of financial management and financial system, financial legislation. At the same time, the factor of stability of financial legislation is of particular importance, since without this it is impossible to implement investment policy.

One of the important elements of the financial mechanism is financial planning, which primarily refers to budget planning.

In the Russian Federation, a long-term financial plan is being developed based on the budget for the current year. Its goals are as follows:

1. informing the legislative (representative) bodies about the expected medium-term trends in the development of the economy and social sphere;
2. complex forecasting of the financial consequences of the developed reforms, programs, laws;
3. identifying the need for and the possibility of implementing promising financial policy measures;
4. tracking long-term negative trends for timely adoption of appropriate measures.

A forward-looking financial plan is being developed for three years:

• 1st year - the year for which the budget is drawn up;
• 2nd and 3rd years - the planning period, during which the real results of this economic policy can be traced.

The financial business originated in ancient times. Already in the documents of Indian cultureIV in. BC e. you can find information about the tax benefits provided to merchants-sailors, caravan owners, all those who settled new lands. The emergence of finance was the result of the transition from a subsistence economy to a regular commodity-money exchange and is associated with the development of the state and its needs for resources.

The term "finance" itself appeared much later. There are different points of view about its origin. Some authors argue that this term originated inXIII - XV cc. in the commercial cities of Italy, others - that the concept of "finance" was introduced into everyday life by the French scientist J. Boden, who in 1577 published the work "Six books about the republic."

The essence of finance

The concept of finance as an economic category has changed. Initially, the concept of "finance" was considered only in relation to the formation and use of funds to meet government needs. Later, this economic category was called "public finance", which now includes state and local finance (local government finance).

With the development of large-scale commodity production, the methods, methods of mobilizing, distributing and using funds between various participants in the reproduction process have improved.

The evolution of views on the essence of finance can be represented as follows. As for the definition, finance is interpreted:

In world economic theory (economics) as a set of value flows associated with the distribution and use of monetary resources;

In political economy as economic relations in the process of creating and using funds of funds (most common among Russian economists).

Distinguish between narrow, expanded and broad understanding of the term "finance". In a narrow sense, finance covers only budgetary processes and only state (public) finance belongs to them.

An expanded understanding of the term means that finance covers only a part of monetary relations. Until recently, this point of view prevailed in the Russian economic literature. So, for example, in the Soviet period, finance included: the state budget; material production finance; non-production finance. Since the 90s.XX in. finance began to include: the budget system (federal budget, budgets of the subjects of the Federation, local budgets); state extra-budgetary funds; government credit; insurance; finance of business entities.

In a broad sense, the term "finance" covers the movement of all value flows, including monetary and credit, thereby finance includes: public finance; credit system; finance of the branches of the reproduction process; household finance; secondary financial market; international finance.

Thus, practically all monetary relations in society, everything that is associated with the movement of money, is classified as finance, and the concept of "the country's monetary economy" is identical to the concept of "finance".

In foreign countries, and now in Russia, any specialist associated with money is called a financier, just like all money, including the income of citizens, is called finance.

This understanding of finance is reflected in modern foreign dictionaries:Finance - art, function, profession related to currency or money.

The condition for the emergence of finance is the presence of commodity-money relations in society. In the reproduction process, the movement of funds should mediate the movement of goods (Figure 1.1).

Figure: 1.1. Movement of goods and funds

Financial relationships arise on the basis of cash flow. A distinctive feature of financial relations is their connection with the distribution and redistribution of the value of the social product between various entities, each of which claims to receive a share in the produced product in accordance with the current legal norms or business customs.

An important feature of financial relations is that the process of distribution and redistribution of the value of a social product is accompanied by the creation of various funds of funds with a designated purpose. Funds of funds created at the level of the state, local authorities are called centralized, and funds created at the level of economic entities, households, are called decentralized. The formation of funds of funds is strictly regulated.

The following signs of finance:

Monetary nature of financial relations. Money is the material basis for the existence and functioning of finance (they always have a monetary form of expression);

Distributive nature of financial relations. The area of \u200b\u200borigin and functioning of finance is the stages of the reproductive process at which the distribution of the value of the social product according to its intended purpose and business entities, each of which must receive its share in the produced product;

Financial relations find their material embodiment in centralized and decentralized funds of funds.

As an economic category finance- these are economic relations, in the process of which the formation, distribution and use of centralized and decentralized funds of funds occurs in order to fulfill the functions and tasks of the state, to ensure conditions for expanded reproduction, to meet the social needs of society.

Finance functions

The essence of finance is manifested primarily through distribution function.The financial distribution process is complex and multifaceted. It is characterized by multistage distribution, which generates different types of distribution - intra-farm, intra-sectoral, inter-sectoral, inter-territorial. Finances serve different stages of the distribution of the value of the social product, participating in both primary distribution and redistribution. The financial method of distribution covers different levels of economic management: federal, regional (at the level of subjects of the Federation), local (at the level of local government bodies).

In general, the distribution function of finance allows:

Create targeted funds of funds at the level of the state, local governments, economic entities, and the population;

To carry out distribution between the production and non-production spheres and social groups, as well as on-farm, intra-industry, intersectoral, inter-territorial distribution.

Along with the distribution function, finance is inherent in control function.The control function is based on the movement of financial resources. Based on the nature of their movement, society has the opportunity to know how the proportions in the distribution of funds are formed. The information obtained allows you to assess the efficiency and feasibility of the costs incurred. For information to reflect the real state of affairs, it must be complete, timely and accurate.

Using the control function of finance in practice allows for financial control, which is a function of the financial authorities.

Both functions of finance are interconnected - they operate simultaneously: distribution cannot but be controlled and control without distribution is impossible.

The modern world is a world of comprehensive and omnipotent commodity-money relations. They permeate the inner life of any state and its activities in the international arena.

In the process of reproduction at different levels, starting with the enterprise and ending with the national economy as a whole, funds of funds are formed and used.

The system of education and the use of funds of monetary resources involved in ensuring the reproduction process is the finances of society. And the totality of economic relations that arise between the state, enterprises and organizations, industries, territories and individual citizens in connection with the movement of monetary funds, forms financial relations. They are complex, diverse and resemble the circulatory system of a living organism, through which the movement of goods and services, a kind of exchange of substances between the economic cells of a social organism.

There are many points of view in the understanding of the term "finance".

Currently, various scientists and economists give many different definitions of the category finance. For example, in the Russian scientific and educational literature, finance is defined as "a set of economic relations arising in the process of formation, distribution and use of centralized and decentralized funds of funds."

V.M. Oparin defines finance as follows "Finance is a set of economic relations that are associated with exchange, or distribution and redistribution in the monetary value of the gross domestic product (GDP), and in certain conditions of development and national wealth."

Lavrushin in his textbook “Money. Credit. Banks "gives the following definition to finance" Finance is monetary relations arising in the process of distribution and redistribution of the value of the gross social product and part of the national wealth in connection with the formation of monetary incomes and savings from business entities and the state and their use for expanded reproduction, material incentives for workers , satisfaction of social and other needs of society ”.

In the explanatory dictionary of V.I. Dahl can be found such a definition of finance - it is "everything that relates to the income and expenses of the state." In the first Russian textbook on finance, written by I. Gorlov and published by Kazan University in 1841, finance was defined as "the monetary nature of government spending."

Modern foreign textbooks give the following definitions: in the textbook by E. Bodi and R.K. Merton's "Finance" the following interpretation is given: "Finance is the science of how people manage the expenditure and flow of scarce monetary resources over a period of time."

Considering the essence and functions of finance, the author also came across different points of view of the authors.

One of the widespread points of view, which is held by a number of scientists D.A. Allakhverdyan, V.M. Rodionova, N.G. Sychev, L.A. Drobozina, N.V. Garetovsky and others that "the essential feature and basis of the concept of finance is the distribution of the aggregate social product and national income." In addition to such a general definition of finance, there are more specific definitions of the main essential feature of finance (MV Fedosov and S.Ya. Ogorodnik) as “the process of distribution and redistribution of part of the value of the aggregate social product”. E.A. Voznesensky, V.N. Garetovsky, N.E. The hare considered "net income and its connection with the processes of distribution and redistribution" as an object of finance research.

According to economists I. I. Balobanov, I. G. Balobanov, E. A. Voznesensky. Sycheva N.G., Boldyreva B.G. "Finances perform the functions of generating monetary income, the function of using monetary funds, and a control function."

Finance is a historical category. They appeared simultaneously with the emergence of the state with the stratification of society into classes. The term finansia originated in the XIII-XV centuries. in the commercial cities of Italy and denoted any cash payment. Later, the term received international distribution and began to be used as a concept associated with the system of monetary relations between the population and the state regarding the formation of state funds of funds. Thus, this term reflected, firstly, monetary relations between two subjects, i.e. money acted as the material basis for the existence and functioning of finance (where there is no money, there can be no finance); secondly, the subjects had different rights in the process of these relations: one of them (the state) had special powers; thirdly, in the process of these relations, a nationwide fund of funds - the budget - was formed (therefore, we can say that these relations were of a fund nature); fourthly, the regular flow of funds to the budget could not be ensured without giving taxes, fees and other payments a state-compulsory nature, which was achieved through the legal rule-making activity of the state, the creation of an appropriate fiscal apparatus.

The following financial prerequisites are distinguished:

First premise. In Central Europe, as a result of the first bourgeois revolutions, although monarchical regimes remained, the power of the monarchs was significantly curtailed, and, most importantly, the head of state (monarch) was rejected from the treasury. A nationwide fund of funds arose - the budget, which the head of state could not single-handedly dispose of.

Second premise. The formation and use of the budget began to be systematic, i.e. systems of state revenues and expenditures with a specific composition, structure and legislative consolidation arose.

Third premise. Taxes in monetary form acquired a predominant character, while earlier state revenues were formed mainly from taxes in kind and labor duties.

Thus, finance expresses a certain area of \u200b\u200bproduction relations and belongs to the basic category. But what is the role of the state here? Some economists, proceeding from the fact that financial relations are fixed by the legislator in the relevant normative acts, determine the leading role of the state in the formation of these relations and, therefore, classify finance as legal, i.e. superstructure category. But the fact is that a legal act only fixes the content of objectively existing economic relations, proving that finance is, first of all, an economic category (and refers to the basis) and only then - a legal category, i.e. the state, according to the apt expression of the economist E.A. Voznesensky, "dresses" financial relations in a legal form, gives them an appropriate state-power form while maintaining their objectively economic nature "

However, the role of the state cannot be diminished. The state actively influences finances depending on the political structure, main tasks, current conditions and other reasons. Through its financial policy, the state can influence the economy, exerting both positive and negative influence on it.

Since, undoubtedly, finance is a historical category (they have stages of origin), then two main stages in the development of finance can be distinguished.

At first, it was an undeveloped form of finance, when the bulk of the money (2/3) was spent on military purposes, and finance had practically no impact on the economy. Another characteristic feature of this period was the narrowness of the financial system, since it consisted of one link - the budgetary one, and the number of financial relations was limited. All of them were associated with the formation and use of the budget.

With the development of commodity-money relations, the need arose for new national funds of funds and, accordingly, new groups of monetary relations regarding their formation and use.

At present, regardless of the political structure and level of the economic structure of a particular state, finance has entered a new stage of its development. This is due to the multilevel financial systems, a high degree of impact on the economy, and a wide variety of financial relations.

Along with traditional public finances, local finances, off-budget special government funds, and finances of state enterprises have also developed significantly. Completely new areas of financial relations have emerged, such as the finance of interstate communities.

Finance as a scientific concept is usually associated with those processes that appear on the surface of social life in various forms and are necessarily accompanied by the movement (cash or non-cash) of funds. Whether we are talking about the distribution of profits and the formation of on-farm funds at enterprises, or about the transfer of tax payments to the state budget revenues, or about the contribution of funds to off-budget or charitable foundations - in all these and similar financial operations, cash flows occur.

While highly conspicuous, cash flow alone does not reveal the essence of finance. To comprehend it, it is necessary to identify those general properties that characterize the internal nature of all financial phenomena.

If we ignore the numerous forms in which financial processes take place, we can see what they have in common - the underlying relations between various participants in social production, or social relations. By their nature, these relations are production (economic), since they arise directly in social production.

Economic relations are extremely diverse: they arise at all stages of the reproduction process, at all levels of management, in all spheres of social activity. At the same time, homogeneous economic relations that characterize one of the sides of social life, being presented in a generalized abstract form, form an economic category. Finances, expressing production relations that actually exist in society, which have an objective character and a specific social purpose, act as an economic category.

The peculiarity of the relations that make up the content of finance as an economic category lies in the fact that they always have a monetary form of expression.

The monetary nature of financial relations is an important sign of finance. Money is a prerequisite for the existence of finance. If there is no money, there can be no finance, since the latter is a social form due to the existence of the former.

In this regard, it is inappropriate to refer to finance not only monetary, but also natural relationships. The existence of natural obligations in the era of feudalism, the collection of tribute by the slave-owning state from its citizens and conquered peoples, the naturalization of social relations under conditions of disordered monetary circulation by no means prove the natural nature of financial relationships. They talk about something else - the functioning of finance is possible only under certain conditions, the absence of which immediately narrows the scope of this category.

Finance? an integral part of monetary relations, but not all monetary relations are financial.

Finance differs from money, both in content and in the functions performed. Money? it is the universal equivalent, with the help of which the labor costs of associated producers are primarily measured, and finance? it is an economic instrument for the distribution and redistribution of gross domestic product and national income, an instrument of control over the formation and use of funds.

Each subsequent cycle of reproduction is possible only after the newly created value undergoes distribution, as a result of which targeted monetary funds will be created, which are the basis for satisfying various needs, and this happens in an impersonal form. The real movement of funds occurs at the second and third stages of the reproduction process. But only at the second stage, the movement of value occurs separately from the movement of goods and is characterized by its alienation (from hand to hand) or targeted isolation of each part of the value (within the framework of one owner). At this stage, the stage of the emergence of financial relations, the value of the social product is distributed according to its intended purpose and business entities.

The emergence of financial relations always makes itself felt by the real cash flow. The absence of such a movement at the stages of production and consumption of the reproductive process indicates that they are not the place where finance originates.

The real movement of funds occurs at the second from the third stage of the reproduction process - in distribution and exchange. However, the nature of the movement of value (in its monetary form) at these stages is different, which does not allow both sides to be attributed to the sphere of functioning of finance.

At the second stage, the movement of value in monetary form is carried out separately from the movement of goods and is characterized by its alienation (transfer from the hands of some owners to the hands of others) or targeted separation of each part of the value (within one owner). At the third stage, the distributed value (in monetary form) is exchanged for the commodity form, i.e. acts of purchase and sale are made. There is no alienation of value itself; it only changes its form - from money to commodity.

Thus, at the second stage of reproduction, there is a one-sided (without a counter equivalent) movement of the monetary form of value; on the third - two-way (counter) movement of values, one of which is in the form of money, and the other in the commodity.

At the third stage of the reproduction process, constantly performed exchange operations are served in two categories: first, money as a universal equivalent, and secondly, price. No other social instrument is needed here anymore. Consequently, there is no place for finance in exchange.

The area of \u200b\u200bthe emergence and functioning of finance is the second stage of the reproduction process, at which the cost of the social product is distributed according to its intended purpose and business entities. Therefore, an important feature of finance as an economic category is the distributive nature of financial relations.

However, this feature is not enough to fully characterize finance. The variety of distributional relations leads to the fact that at the second stage of the reproduction process, various economic categories operate: finance, credit, wages, price. Finance differs significantly from other categories operating at the cost distribution stage.

The initial sphere of the emergence of financial relations are the processes of the primary distribution of the value of a social product, when this value breaks down into its constituent elements and the formation of various forms of monetary income and savings occurs. Allocation of profit, deductions for social insurance, depreciation deductions, etc. in the structure of proceeds from the sale of products. is carried out with the help of finance and reflects the process of distribution of value in accordance with the intended purpose of each of its parts. Further redistribution of value between business entities (withdrawal of part of the profit at the disposal of the state, payment of taxes by citizens of the country, etc.) and the specification of its intended use (direction of profit for capital investments, formation of economic incentive funds from various sources) also occurs on the basis of finance ... Thanks to them, various processes of redistribution of the value of the social product are carried out in all structural divisions of the economy (in the branches of material production and the non-production sphere) and at different levels of management.

Distribution and redistribution of value through finance is necessarily accompanied by the movement of funds that take a specific form of financial resources; they are formed by business entities and the state at the expense of various types of monetary incomes, deductions and receipts, and are used for expanded reproduction, material incentives for workers, satisfaction of social and other needs of society. Financial resources are the material carriers of financial relations. The belonging of financial resources to a specific economic entity and the state allows them to be separated from the money of the population and, in particular, to draw the line between finance and wages.

Potentially financial resources are formed at the production stage, when new value is created and the old one is transferred. But precisely potentially, since the worker does not produce financial, but products of labor in commodity form. The real formation of financial resources begins only at the stage of distribution, when the cost is realized and specific economic forms of the realized value are isolated in the proceeds.

The use of financial resources is carried out mainly through special purpose monetary funds, although a non-stock form of their use is also possible. Financial funds are an important component of the general system of monetary funds, functioning in the national economy. The stock form of the use of financial resources is objectively predetermined by the needs of expanded reproduction and has some advantages over the non-stock form: it allows more closely link the needs of people with the economic possibilities of society; ensures the concentration of resources on the main directions of development of social production; makes it possible to more fully link social, collective and personal interests and the more actively influence production.

Consideration of financial resources as material carriers of financial relations makes it possible to distinguish finance from the general set of categories involved in value distribution. None of them, except for finance, is characterized by such a material carrier. Hence, an important specific feature of finance that distinguishes them from other distribution categories is that financial relations are always associated with the formation of monetary income and savings, which take the form of financial resources. This feature is common to financial relations of any socio - economic formations, wherever they function. At the same time, the forms and methods by which financial resources are formed and used have changed depending on the changes in the social nature of society.

The study of the economic essence of finance, the identification of the specific features of this category allows us to give the following definition.

Finance is monetary relations that arise in the process of distribution and redistribution of the value of the gross social product and part of the national wealth in connection with the formation of monetary income and savings from business entities and the state and their use for expanded reproduction, material incentives for workers, satisfaction of social and other needs of society ...

As part of the relations of production, finance belongs to the economic basis; their conditioning by value distribution underlines the historically transient nature of finance.

Finance can affect all stages of reproduction and the process as a whole. Objective prerequisites for influence are associated with two circumstances:

• - finance functions in all spheres of social production (production, circulation, consumption)
• - finance has the potential to be a catalyst for economic processes, which follows from the distribution function.

Distribution begins in the area of \u200b\u200bmaterial production. This area includes 3 stages, where the production stage is decisive.

• a) the sphere of material production, thus, influences the nature and scale of production;
• b) the sphere of circulation, it is represented by trade. It is characterized by the processes of buying and selling. The consumer properties of a product do not change, but its value changes. The product is sold, the company receives revenue. Then this proceeds are distributed to the funds of compensation, accumulation, consumption. Financial relationships precede and complete the process of buying and selling.
• c) the sphere of consumption, where they distinguish:
  • - commercial organizations;
  • - budgetary organizations

Currently, you can find mixed-type organizations where commercial structures allocate money for budget organizations.

There are opportunities for the use of finance that stem from the economic nature of finance. Since this is a distributional category, society uses it for its own purposes. The conscious use of finance in the interests of society and its individual elements transforms finance from an objective economic category into an economic instrument of management.

An economic tool is an economic category embodied in specific forms of manifestation and consciously used by society to achieve specific goals. An economic instrument, including finance, has two principles: the first is objective (resulting from the economic category), the second is subjective (an instrument for implementing the state's economic policy).

Finance affects in two ways:

• - quantitatively (characterized by the proportions of the distribution process);
• - qualitatively (characterized by the impact of finance on the material interests of business entities).

The quantitative side of influence is characterized by proportions in the distribution process. The qualitative impact characterizes the impact of finance on the material interests of business entities through various forms of organization of financial relations.

An economic incentive is a tool that is linked to the material interests of business entities. The conscious use of finance in social production leads to results in which the active role of finance in social production under market conditions is manifested. The general approach to assessing the results achieved with the help of finance allows us to consider the role of finance in 3 directions:

• - from the position of meeting the needs of expanded reproduction with the necessary financial sources;
• - from the point of view of using finance to regulate the value structure;
• - from the standpoint of using finance as an economic incentive.

Finance is an integral part of monetary relationships, but not all monetary relationships are financial.

Finance differs from money, both in content and in the functions performed. Money is a universal equivalent, with the help of which, first of all, the costs of labor of associated producers are measured, and finance is an economic instrument for the distribution and redistribution of gross domestic product and national income, an instrument of control over the formation and use of funds of funds.

The reproduction process is a collection of continuously repeating cycles.

Thus, the criterion for classifying certain relations as financial are:

• ? real cash flow, i.e. transfer from one owner to another;
• ? the distributive nature of these relations;
• ? place of origin - the second stage of the reproductive process.

Finance is an integral part of monetary relations, therefore their role and significance depend on the place that monetary relations occupy in economic relations. However, finance differs from money not only in content, but also in the functions performed, in which their essence is manifested. Functions are the “work” that finances do.

No one denies that finance is a set of monetary relations organized by the state, in the process of which the formation and use of funds of funds is carried out. And to the question of what is the source of the formation of numerous funds at different levels, the answer, as a rule, is the same - gross domestic product. The process of allocating GDP can be carried out using financial instruments: norms, rates, tariffs, deductions, etc., established by the state.

If we talk about finances in general, then, apparently, we should consider that they perform two main functions: distribution and control.

Distribution function is that the financial resources of the enterprise are subject to distribution in order to fulfill monetary obligations to the budget, banks, counterparties. Its result is the formation and use of targeted funds of funds, maintenance of an effective capital structure.

The distribution function manifests itself in the distribution of national income, when the so-called basic, or primary incomes are created. Their sum is equal to the national income. The main income is formed when the national income is distributed among the participants in material production. They are divided into two groups:

• ? wages of workers, employees, incomes of farmers, peasants employed in the sphere of material production;
• ? income of enterprises in the sphere of material production.

However, primary income does not yet form public funds sufficient for the development of priority sectors of the national economy, ensuring the country's defense capability, and meeting the material and cultural needs of the population. Further distribution or redistribution of national income is required, associated with:

• - with intersectoral and territorial redistribution of funds in the interests of the most efficient and rational use of income and savings of enterprises and organizations;
• - the presence, along with the non-production sphere, in which the national income is not created (education, health care, social insurance and social security, management);
• - redistribution of income between different social groups of the population.

As a result of the redistribution, secondary or production income is formed. These include incomes received in non-production sectors, taxes (personal income tax, etc.). Secondary incomes serve to form the final proportions of the use of the national income.

By actively participating in the distribution and redistribution of national income, finance contributes to the transformation of the proportions that arose during the primary distribution of national income in the proportion of its final use. The income generated in the course of such a redistribution must ensure consistency between material and financial resources and, above all, between the size of monetary funds and their structure, on the one hand, and the volume and structure of means of production and consumer goods, on the other.

The redistribution of the national income in the Republic of Belarus is taking place in the interests of the restructuring of the national economy, the development of priority sectors of the economy (agriculture, transport, energy, conversion of military production), in favor of the poorest segments of the population (pensioners, students, single mothers and large families).

Thus, the redistribution of national income occurs between the production and non-production spheres of the national economy, the branches of material production, individual regions of the country, forms of ownership and social groups of the population.

The ultimate goal of the distribution and redistribution of national income and GDP, accomplished with the help of finance, is to develop productive forces, create market structures for the economy, strengthen the state, and ensure a high quality of life for broad strata of the population. At the same time, the role of finance is subordinated to the tasks of increasing the material interest of workers and collectives of enterprises and organizations in improving financial and economic activities, achieving the best results at the lowest cost.

As a tool for the formation and use of cash income and funds, finance objectively reflects the course of the distribution process.

The control function is manifested in the control over the distribution of GDP among the relevant funds and their spending for the intended purpose.

In the context of the transition to market relations, financial control is aimed at ensuring the financial development of public and private production, accelerating scientific and technological progress, and improving the quality of work in all sectors of the national economy. It covers the production and non-production spheres, is aimed at increasing economic incentives, rational and thrifty use of material, labor, financial resources and natural resources, reducing unproductive costs and losses, curbing mismanagement and waste. Thanks to the control function of finance, society knows how the proportions in the distribution of funds are formed, how timely financial resources come to the disposal of various business entities, whether they are economically and efficiently used by them, etc.

One of the important tasks of financial control is to verify the exact observance of legislation on financial issues, the timeliness and completeness of the fulfillment of financial obligations to the budget system, the tax service, banks, as well as mutual obligations of enterprises and organizations for settlements and payments.

The control function of finance is also manifested through the multifaceted activities of financial bodies.

Employees of the financial system and the tax service exercise financial control in the process of financial planning, in the execution of the revenue and expenditure parts of the budget system. In the context of the development of market relations, the directions of control work, forms and methods of financial control change significantly.

Distribution and control functions are two sides of the same economic process. Only in their unity and close interaction can finance manifest itself as a category of value distribution.

Financial information acts as a tool for implementing the control function of finance. It is enclosed in financial indicators available in accounting, statistical and operational reporting. Financial indicators allow you to see the various aspects of the work of enterprises and evaluate the results of economic activities. On their basis, measures are taken to eliminate the identified negative aspects.

The control function, objectively inherent in finance, can be realized with greater or lesser completeness, which is largely determined by the state of financial discipline in the national economy. Financial discipline is a procedure for maintaining a financial economy, complying with established rules and regulations, and fulfilling financial obligations, which is mandatory for all enterprises, organizations, institutions and officials.

In addition to its distribution and control function, finance also has a regulatory function. This function is associated with government intervention through finances (government spending, taxes, government credit) in the reproduction process.

Some authors do not recognize the distribution function of finance, believing that it does not express their specificity, since the processes of value distribution are served by different economic categories. But the supporters of the distribution function do not at all believe that it is generated by the very factors of the functioning of finance at the second stage of the reproduction process, but on the contrary, they associate it with the specific social purposes of finance, emphasizing that no other category acting at the stage of value distribution is so "Pay-as-you-go" like finance. However, today the regulatory function in the Republic of Belarus is poorly developed.

In the conditions of market relations, finance should perform a stabilizing function. Its content is to ensure stable conditions in economic and social relations for all business entities and citizens. In this case, the issue of the stability of financial legislation is of particular importance, since without this it is impossible to implement investment policy in the production sector on the part of private investors. The achievement of stabilization is viewed by the Government of the Republic of Belarus as a necessary condition for the transition of a market economy to socially oriented economic growth.

Despite the long history of the existence of finance as a scientific concept, their essence has not been fully disclosed. The task of a more complete understanding of the essence of finance is complicated by the fact that it is deeply hidden behind the external forms of its manifestation, in which various financial phenomena appear on the surface of social life.

When studying the nature of finance, it is of paramount importance to have a correct understanding of fundamental theoretical problems and categories.

Such scientists and economists as V.P. Dyachenko, A.M. Alexandrov, E.A. Voznesensky paid attention to the study of the problems of the essence of finance. In the period of Russia's transition to a market economy, such scientists and economists as V.M. Rodionova, L.A. Drobozina, M.V. Romanovsky are engaged in the research of theoretical problems in the field of finance.

The study and correct understanding of the most important financial categories is hampered by the presence in the financial and economic literature of many different, sometimes opposing points of view on their necessity, essence, content and purpose.

In the theory of finance, one of the problematic issues is the question of the need for finance in general. The study of finance has been very little and superficial. There was a simplified, formal approach to solving this problem. So professors Voznesensky E.A. and Birman A.M. believed that "the main condition for the emergence and functioning of finance is the state."

Most economists conditioned the objective necessity of finance by the presence of the state and commodity-money relations without a solid justification of this provision in relation to the category of finance. "Finance does not exist outside the state."

But this is an overly simplistic approach to a category such as finance. Professor Rodionova V.M. believes that the conditionality of a part of financial relations by the factor of the existence of the state does not give grounds for considering its activities as the cause that generates finance. In her opinion, a prerequisite for the functioning of finance is the availability of money, and the reason that gives rise to their appearance can be considered the needs of business entities and the state in the resources that ensure their activities.

However, there is one more factor without which finance cannot function. This is social reproduction, with its continuously repeating and interconnected cycles. At present, almost all economists recognize the need for finance and their important role in the performance of the state's functions.

However, the question of the essence of finance and the boundaries of their distribution remains unclear.

Some economists considered finance as a collection of monetary resources or funds at the disposal of the state and enterprises. In the fifties, the understanding of finance as monetary relations that ensure the distribution of the aggregate social product, national income, was established. It persists to our time. monetary finance cost revenue

The transition to a market economy takes place in the conditions of the functioning of a variety of objective value categories and monetary relations that permeate all aspects of life, monetary relations mediate the sale and purchase, wages, the sphere of application of free money, and various relations with foreign countries.

Here the question arises - are all monetary relations finances or are there some kind of boundary for their distribution?

Economists A.M. Alexandrov, E.A. Voznesensky and others proceeded from the fact that finance and credit, having a monetary form and providing a distributional process in social reproduction, represent a single category "finance in the broad sense of the word." Academician Chantlandze understood finance in an even more expanded sense, including banks, commodity prices, stock exchanges, money markets, gold, banknotes, bills of exchange, and securities. And in a narrow sense, he attributed only budgetary funds to finance.

Most economists, however, believe that finance is a special area and only a part of monetary relations that have their own specific characteristics. The main features that determine the category of finance should be considered:

• ? the monetary nature of financial relations;
• ? the distributive nature of financial relations;
• ? financial relations are always associated with the formation of monetary funds that take the form of financial resources;
• ? non-equivalence of distribution relations (this distinguishes finance from purchase-sale relations);
• ? irrevocability and free (This distinguishes finance from credit).

Based on these signs, one can see that finances arise and function at the second stage of the reproduction process - at the stage of distribution and redistribution of the value of the social product. It follows from this that the broad interpretation of the essence of finance is questionable. Distribution and exchange are different stages of the reproductive process, which have their own, special economic forms of expression. Therefore, it is illogical to attribute monetary relations of different nature, arising at different stages of reproduction, to the same category - finance. Limiting the place of finance to the distributive and redistributive stage of reproduction introduces rigid boundaries for the functioning of finance, but this does not mean that finance limits its action at this stage of reproduction. Finance actively influences all stages of the reproduction process through indirect factors.

Among the debatable is the question of the qualitative characteristics that determine the specifics of finance as an economic category. The debate is mainly about whether or not to include in the definition of finance such a feature as imperative. Moreover, the term "imperativeness" is interpreted by scientists in different ways: some see it as an active role of the state in organizing financial relations, while others see it as a reason giving rise to the functioning of finance.

If imperativeness is understood as the practical activity of the state aimed at organizing financial relations, developing forms of their manifestation and use, then such a use of the term does not raise objections, but does not add anything to the characterization of the essence of finance.

However, in some publications, imperativeness is interpreted as an essential feature of financial relations. It is emphasized that when characterizing the category of finance, this feature cannot be dispensed with, since it is the state that creates new distributive financial relations, that the direct cause of the emergence and development of finance is the activity of the state and its bodies. Such statements are inappropriate, because it is not the activity of the state itself, but the objective needs of social development that causes the existence of finance.

Among the controversial issues is also the question of the functions of finance. Many economists believe that finance has two functions - distribution and control. Although in the literature one can find statements that finance, in addition to these two functions, has others: production (different authors call it differently), stimulating, regulating, etc. But at the same time, the question of the functions of finance is being replaced by the question of their role in social reproduction, since these are different, albeit interrelated issues. Of course, finances play an important role in social reproduction, with their help, the efficient use of production factors can be stimulated, cost proportions can be regulated, conditions for an economy regime can be provided, etc. However, it is inappropriate to equate these results, achieved through the functioning of finance, with their functions.

Some authors do not recognize the distribution function of finance, believing that it does not express their specificity, since the processes of value distribution are served by different economic categories. But the supporters of the distribution function do not at all believe that it is generated by the very fact of the functioning of finance at the second stage of the reproduction process, but on the contrary, they associate it with the specific social purpose of finance, emphasizing that no other category acting at the stage of value distribution is so "Pay-as-you-go" like finance.

Some economists believe that finance has three functions: the formation of funds (income), the use of funds (income) and control. However, the first two, although they really exist, they are more reminiscent of the mechanism for implementing the distribution function than an independent way of operating the category of finance.

The presence of debatable issues necessitates further development of theoretical problems of the essence and functions of finance. A deeper knowledge of the economic nature of finance and its inherent properties will allow to more actively develop ways to better use this category in business practice, scientifically substantiate measures aimed at financial recovery of the economy and improving the system of financial relationships.