The main types of financial policy

Financial policy is a set of certain activities, forms and methods of influencing the results of production activities and ways of distributing finance. There are different types of financial policy, but they all correspond to the main principles:

• Dependence of all branches of management;
• Meeting the needs of all sectors of society;
• Strategic goals play a decisive role, and tactical ones should serve their achievement;
• Compliance with the current legislation of the country.

At the macroeconomic level, financial policy is the instrument by which the rate of economic growth stabilizes, and international relations develop. After all, thanks to a rational allocation of funds, the enterprise has a reserve, it can be used to improve the current position of the organization, in particular, to develop relations with foreign partners.

The following types of financial policy stand out:

1. Classical.
2. Neoclassical.
3. Regulatory.
4. Planning-directive.

Classical politics is based on the judgments of politicians like Adam Smith and David Ricardo. It assumes the complete removal of the state from market relations, that is, the government does not interfere in the affairs of the traders, thereby achieving freedom in the market. Of course, in connection with this, the powers of the state were considerably limited and the expenditure part was reduced. And the income was replenished by the system of taxation and regular receipts to the budget.

Different types of financial policy were developed by prominent economic figures. One of these 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 was introduced when calculating income tax. A huge role was assigned to the sphere of lending, and lending to the state, through 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: the single controlling body was divided into several independent units.

The neoclassical concept allows for state intervention and even recognizes it as necessary, but establishes boundaries. It was assumed that the economy and the social sphere should develop independently. In practice, it turned out differently, the regulation of these spheres only increased, as the government began to use other financial instruments, in addition to the existing ones, including setting the exchange rate and adjusting prices for securities and essential products. This is done to ease the tax burden, especially on poor citizens.

In countries with an administrative-command economy , a planned-directive type of policy was applied. He assumed complete regulation and control by the government over all spheres of life of the society. Any means of production were the property of the state. Thus, the government tried to concentrate all financial resources at their disposal. And the expenditure of funds was carried out in accordance with a strict estimate, which was drawn up on the basis of a general strategic plan. The management of the financial part was entirely the responsibility of the Ministry of Finance, which determined the needs of the population and allocated funds for social needs. Monopoly extended to all aspects of market relations, including the system of pricing and lending.

It is possible to single out such types of financial policy as budgetary, customs, tax, investment, credit, monetary, price and other. Each species undergoes some changes depending on the choice of a particular type. In connection with the above, it can be concluded that there are different types of financial policy, and each of them sets certain powers of the state. But their main goal is to stabilize the economic situation in the country and improve the well-being of citizens.