Budget efficiency is ...

When it comes to the effectiveness of investment projects, a priori, commercial logic is taken as the basis, which seeks benefits from their implementation. But at the same time, the possible public benefit is often overlooked. How to fix it? To get a more complete picture of the result of the implemented projects, the concept of budget efficiency was introduced.

general information

Not all investment projects are commercially viable for the business. Some of them are socially useful. Budget performance indicators are used to compare these two points and decide whether to implement a project. The best situation is when it is both useful and profitable. But this does not always happen. And very often you have to deal with useful projects, which, however, are not profitable. What to do in such cases? Matching comes to the rescue. That is, it is evaluated whether it makes sense to invest in something, is the social effect worth the money spent? For the state, the answer to this question is important when considering the rationale for supporting a particular project. Factors that give certain indirect and redistributive effects are taken into account. Moreover, this applies to both positive and negative points. Often factors do not take the market into account, but have a significant overall effect.

Let's look at some small examples for each group. As positive effects, you can cite the results of educational projects (you need to clean up after you have been in nature; how to do heart massage; personal hygiene). The negative can be attributed to the deterioration of nature and environmental safety. Indirect effects are those that arise outside the scope of an ongoing project, even if it takes into account market interactions. For example, the distortion of commercial estimates from the social value of manufactured products and resources. And this can already lead to problems in the formation of the resulting report (for example, by the authorities in front of voters or other investors).

How else is budget effectiveness evaluated?

Particular attention is also paid to the redistributive effect. They affect the costs and benefits of the project. It all depends on its focus. An example is:

1. Subsidies.
2. Guarantees.
3. Taxes, fees, duties.
4. Subsidies, transfers, subventions.
5. Tax exemptions.
6. Social deductions from salaries.
7. Revenues from licensing and other permits, contests, tenders.

Projects of significant public importance should be the focus of government attention. It is especially necessary to note those that correspond to the ongoing development strategy of state institutions. They should be provided with primary attention. But we should not forget about the effectiveness of budget spending. And how to look at their performance? This requires indicators. What needs attention?

About indicators

First of all, it is necessary to determine what level of budget activity is observed for a particular project. The choice here is small. There may be a state, regional and municipal budget. First of all, it is necessary to consider the following factors of influence:

1. Without / with the subject of the Russian Federation.
2. What is the effect of funds that are used to compensate for part of the coupon income on bonds that are issued by the company to attract investment.
3. The impact of the budget on participation in the project (as an example, in the authorized capital).

It should be noted that the level of the budget and the type of participation affects the methodological differences, as a rule, not in a significant way. Although there are certain difficulties. For example, isolating data on cash flows from budgetary calculations. In order not to go into theoretical abstractions, let's use the available and really applicable documents. And as such we choose PM Order of April 29, 2004 No. 838-RP. This methodology examines two forms of budget spending: loans and subsidies. Particularly considered in it are investments that have been made using bond loans.

To calculate the net present value, a very large formula for cash inflows was considered. Namely, the amount of income tax, duties and fees, rent for land and premises, dividends (for those years that are subject to transfer according to the business plan), excise taxes, as well as payments for repayment of loans (but not all). Although, it should be noted that this relates more to the local assessment of revenues. In general practice, a situation is widespread when the composition is somewhat wider.

And it's all?

Far from it. In addition to the above, there is a standard list of budget outflows. It is similar to the one just reviewed. But what about the budgetary efficiency assessment? For specific projects, its refinement is carried out. It should be remembered that the composition of the indicators used will depend on the structure of these two lists. For example, if the state gave the floor about securing the project, then the guarantee yield index will be applicable. For the calculation of indicators, specific, specific formulas are used.

In this case, Law No. 224-FZ of 07/13/2015 has a significant impact. It should be noted that he has quite a few critics. For example, if you touch on improving the efficiency of budgetary funds, you often hear the opinion that there is no need to blindly sort out developments from other countries. It is necessary to focus on those conditions and the situation that exists with us. Fortunately, it’s not so difficult to do this, because since the perestroika in the Russian Federation, millions of lawyers and economists have been graduated, for whom it would not be problematic to get it right. With so many people, it’s easy to find professionals who can highlight social accents and improve the efficiency of budget expenditures through legal and administrative improvements. After all, if the private sector copes well with something, then why should it bother it?

About expenses and income

Budgetary efficiency, if examined more closely, is not holistic. A simple examination shows that it is formed from income and expenses. The first category includes:

1. Rent allocated to the budget from Russian and foreign enterprises, as well as tax payments received.
2. Revenues from excise taxes and duties that are related to the resources used in the investment project.
3. Share premium received from the issue of securities for the implementation of the plan.
4. Income tax allocated to the budget from the salaries of domestic and foreign workers working on the project.

Costs, it should be noted, will be more. The list in this case looks like this:

1. Funds that go to direct financing of the ongoing project.
2. Money received in banking institutions, which will be offset by the budget.
3. The issuance of benefits for people who have lost their jobs due to the implementation of the project.
4. Budget assistance for price premiums for fuel and energy.
5. State and regional risk guarantees for domestic and foreign participants.
6. Funds that are allocated to eliminate the negative consequences that arise due to the implementation of the project.
7. Payments on securities that are government securities.

This is a short list, which may vary depending on certain individual characteristics.

About budgetary institutions

When it comes to projects, the realization of something big comes to mind. But it's not always the case. There may be a project for the modernization of the maternity hospital or the creation of a department for premature babies. And in this regard, the effectiveness of a budget institution becomes relevant. How to evaluate performance in difficult situations, even with the same maternity hospital? Indeed, if training and / or advanced training were simply conducted, this does not necessarily mean that the situation has improved. Indeed, a negligent attitude on the part of staff towards their duties can play a role. And here you are, how much new equipment you don’t buy, how much training you don’t do, if the premature babies are immediately written off and will not give a chance for life by connecting to rescue vehicles, the situation will not change. And the effectiveness of budget funds allocated for their salvation will, as mathematicians say, tend to zero.

Therefore, when tracking the result, it is necessary to take into account not only the commercial, but also the social factor. It must be remembered that, according to the Constitution, human life is the highest value. Moreover, this means not only the ability to function, but also to ensure that this happens in decent conditions. Nobody promises comfort, but nobody has the right to treat a person as garbage. This is one of the planes for increasing the efficiency of budget spending. Although far from uniform.

How can fiscal efficiency be improved?

This issue is especially relevant in the current crisis conditions, when the Russian economy is under pressure from sanctions and a number of other negative external factors (for example, low oil prices). Because of this, there are difficulties with the revenue side of the budget, and it is necessary to spend the savings of the last two decades at an appalling pace - in just a couple of years they sank several times. Therefore, this issue is relevant as never before.

First of all, it is necessary to note the need to create conditions and prerequisites for the maximum efficiency of the public finance management process. But we should not forget about the quantitative side. That is, there must be a certain set of results. And speaking about the efficiency of using budgetary funds, first of all, it is necessary to pay attention to the social consequences. It will not be superfluous to complete the legal field in which it is necessary to act. So, for example, there is Art. 34 of the Budget Code, which considers efficiency and establishes the principle of effectiveness. This is good, but there are often complaints that the concepts and definitions are not clearly spelled out. This is especially true for cases when budgetary efficiency is affected.

What needs to be done?

It is proposed that the budgetary effectiveness of the program that is being implemented be increased. How to do this? As one of the options, it is recommended to abandon budget planning. And the choice is to make in favor of a public finance management system that works according to performance criteria, using many different forms of control and evaluation, being oriented towards a certain effect. Fortunately, there are certain progress in this direction. So, in the latest amendments adopted to the budget legislation, the emphasis is not on expenses, but on the performance of functions, not on cost control, but on the implementation of the declared results.

A tendency to expand planning horizons is also useful when attention is paid not only to the short-term, but also to the medium-term.All possible assistance in this case is provided by the new methodology, which is called BOR - budgeting, focused on the result. So, it provides for the distribution of funds between objects depending on the result. That is, conditionally equal amounts are first allocated. And then, depending on the effect obtained, an adjustment occurs. Although in practice, of course, attention is paid to priorities and public expectations.

What is there now?

The current policy ensures a systematic transition to a higher quality level. Budget services are now funded through predetermined channels, and all necessary funds are sent to recipients to meet existing needs and requirements. General computerization greatly facilitates the situation. Using information technology allows you to have an operational view of the situation, quickly respond to needs and make informed decisions based on accurate and up-to-date data. All this has a positive effect on budget efficiency.

In addition, the reorganization of institutions, the optimization of the network of recipients of funds, regulatory and targeted financing are ongoing. Although there are significant disadvantages. First of all, it is necessary to recall the rather low quality of managers and the decisions they make. Now the emphasis is on providing greater freedom of decision to those in charge. Also, work is being done to avoid situations when one person directs financing, and another is responsible for using the funds.

Conclusion

In general, the topic of budget efficiency is quite interesting. And at the same time complicated. To study it completely only in theory is not an easy task. After all, it is necessary not only to get acquainted with the numbers and calculate formulas, but also to monitor the actual implementation of projects. For everything can be very good on papers, while in reality nothing has been done at all. What to do? It would seem that we should tighten control. But often the result of this is only exacerbation of problems or their entry to a new level. Therefore, it is necessary to ensure that abuses are stopped at the system level. That there was no opportunity for them at all. And where this is impossible, it is necessary to ensure transparency in the performance of all operations, so that everyone can record the abuse and transfer information about them to the competent authorities.