Management of Public Debt

Public debt management is a system of financial measures undertaken by the state to repay loans, as well as repayment of income on these loans, changes in terms and conditions of loans issued, and issuance of new debt obligations. This is one of the priority directions of the state financial policy .

The decision on the choice of methods for managing public debt is influenced, in the main, by such factors as: the share of expenditures on servicing the public debt in the total amount of expenditure items of the budget and the percentage of GDP and the amount of state borrowings.

When assessing the external public debt, the ratio between the amount of external borrowing and the volume of exports and the share of expenditures going to pay off the external debt to the amount of revenue from exports are used.

Public debt management is an ongoing process in which three stages are consistently identified: 1 - placement of securities to attract financial resources, 2 - debt repayment, 3 - public debt servicing.

State debt is extinguished at the expense of the budget, gold and currency reserves, money earned from the sale of state property, as well as with the help of new borrowings.

Public debt management includes two large groups of methods : financial and administrative.

Financial methods consist in choosing the forms and methods by which the state will repay the public debt, taking into account financial indicators. They are aimed at achieving the maximum efficiency from attracting loans and finding ways to reduce the costs associated with their repayment, to a minimum.

Administrative methods are based on the rapid implementation of orders of public authorities. Their function does not include assessing the effectiveness and effectiveness of actions related to the management of public debt.

The main measures to which the state resorts, when managing the national debt, are the following.

In the face of rising indebtedness and budget deficits, the country has the right to resort to such measures as refinancing the public debt - issuing new loans to pay off old debts.

Conversion is a change in the state of the profitability of existing loans. As a rule, the state resorts to reducing the size of loan payments in percentage terms in order to reduce the costs incurred in managing public debt.

Consolidation - implies the introduction of changes in the terms of loans related to their terms. Their change usually occurs in the direction of increase.

Unification of loans - consolidation into one of several existing loans. In this case, previously issued bonds are exchanged for new ones. Often unification is carried out together with consolidation.

The cancellation of a public debt is a radical measure in which the state renounces all obligations associated with the loan issued.

The management of public debt in Russia in recent years is characterized by a gradual decline in the relative and absolute indicators of public debt. The percentage of debt to GDP is decreasing at nominal value.

The government of the Russian Federation exercises public debt management , within the limits of its powers, which are established by the Federal Assembly of the Russian Federation.

It consists in the formation of policies for the state debt, the establishment of the debt boundaries, the definition of objectives and directions of impact on the indicators of micro and macrolevel, the establishment of the appropriateness of financing state debt through national programs. All this is implemented through a system of activities that are related to the issuance of debt obligations and its further maintenance. This requires an integrated approach from the state authorities and determines the multidimensional nature of the regulation of the emerging debt.