Budget investments are money that is allocated by the state to municipal institutions through an increase in capital. Legislation governs this relationship. The main goal is to stimulate the economy and generate income.
They are provided on an irrevocable basis. In this case, the state’s ownership right to the share of the authorized capital of the institution where the investments are going is drawn up.
The main activities
Budget financing of investments is one way of issuing a loan to legal entities. They can be:
- economic;
- environmental;
- social;
- aimed at the security and defense of the state.
The Budget Code of the Russian Federation defines several areas of activity as part of the allocation of funds from the treasury. So, the forms of budget investments are as follows:
- the actual investment from the state;
- allocation of funds as part of investments in state (municipal) unitary, budgetary organizations in fixed assets;
- assistance to legal entities and individuals;
- loans from the budget to other legal entities (tax loans, deferred payments, etc.).
Forms of investment from the budget
By making investments, the state receives in return a share of the authorized capital of the institution where investments are made.
This form of cooperation between enterprises and organizations is beneficial for everyone:
- The company has the opportunity to receive finance for the development of activities. The participation of the state in the authorized capital of a legal entity attracts investors who hope to control costs on its behalf.
- The Federation also benefits directly from participating in the capital of a commercial company. In this case, it maintains control over its work, makes a profit that corresponds to investments, supports production.
Providing budget investments
Any investment should be effective, including government. If the organization that received them conducts inefficient activities, does not pay dividends, does not have high social significance, the state withdraws from participation in it by selling its share of shares.
The legislation contains the conditions under which budget investments are allocated to budgetary institutions and commercial organizations:
- the presence of a business plan for the project;
- the availability of competently drawn up design estimates;
- plan for the transfer of land and structures;
- competently drafted contract between the institution that receives the investment and the executive body, which represents the state.
If there are no contracts, budget financing of investments is not allowed.
Who is eligible for investment from the state
Realization of budget investments is carried out by allocating money to organizations and enterprises for development from the state treasury. This development in the vast majority of cases is carried out through the implementation of investment projects.
Only those organizations that are owned by the state, as well as commercial companies implementing federal programs, are entitled to receive funds from the budget on the basis of irrevocability.
The issuance of funds is carried out taking into account the level of decision-making:
- federal level: assistance only to federal programs and facilities that are in federal ownership;
- regional level: programs and facilities of regions and municipalities.
Targeted budget support is disguised as:
- guarantees (investments from the budget);
- loans from there.
Investment in state property
Budget investments are allocated to budgetary institutions in the following ways:
- Financing targeted programs. These are long-term projects, the term of which is established by the Government of the Russian Federation or by a representative of the executive branch.
- Financing capital construction facilities, which are owned by the state. These objects are not in target programs. Under capital investments this means investing in fixed assets of the organization, including the cost of construction, major repairs, modernization, re-equipment of production.
Private property investment
The procedure for budget investments for commercial organizations provides for both the issuance of funds on the basis of irrevocability (then the state receives a share in the authorized capital) and through the provision of loans from the treasury.
This loan is one of the tools to stimulate the modernization and renewal of production (investment).
The most popular loan is a tax investment loan. In essence, this is a deferment of tax payments.
Terms of issuing such a loan:
- recoverability;
- issued for a period of 1 to 5 years;
- interest payments are in the range of 50-75% of the key rate of the Bank of the Russian Federation (previously it was called the refinancing rate).
It is provided both in the form of a reduction in income tax and other taxes.
It is made out to the enterprises:
- with a completed application;
- in the presence of a package of documents that confirm the need for this loan.
If a positive decision is made, an agreement is signed between the company that needs investment loan and local executive authorities.
The agreement gives the right to reduce tax payments by up to 50% each time the need to pay comes. She does this until the moment when the credit limit specified in the contract is reached.
The need for budget investments
Budget investments are the support of both legal entities (business) and municipal institutions.
Most often, these investments are presented in the form of:
- investments in securities of state-owned companies;
- loans to legal entities;
- investments in fixed assets of institutions;
- buying real estate that becomes state property.
The main point of such investments is to stimulate the economic growth of various sectors of the economy, especially socially significant.
The growth of the economy entails the creation of new jobs, which will result in a decrease in unemployment.
In other words, investments in companies at various levels contribute to economic stability.
It remains only to formulate a clear strategy for controlling the use of budget funds.
