Off-budget funds — their place in a financial system

THE MINISTRY OF EDUCATION AND SCIENCE OF REPUBLIC OF KAZAKHSTAN

COURSE PROJECT

On theme: Off-budget funds — their place in a financial system

ALMATY 2012

Content

Introduction

1. Social and economic essence of off-budget funds, the reasons of their occurrence

1.1 Investment funds and the companies

1.2 Pension funds

1.3 Insurance funds

1.4 National fund of the Republic of Kazakhstan

1.5 Fund of development of small and medium business

2. The analysis of use of off-budget funds in Republic of Kazakhstan

2.1 Off-budget funds of local controls

Conclusion

References

Introduction

The state budget always was the important tool of influence on development of economy and social sphere. Functioning of the state budget occurs by means of economic forms — incomes and expenses expressing consecutive stages of redistribution of cost of a public product. Incomes and budget expenses are objectively caused categories, each of which has specific public value; incomes form financial base of activity of the state, expenses — to satisfaction of nation-wide requirements. By means of the budget the state has possibility to concentrate financial resources on solving sites of social and economic development, by means of the budget there is a redistribution of the national income between branches, territories, public work spheres. Any of links of the finance doesn’t carry out such multispecific and multilevel redistribution of means, as the budget. At the same time, displaying the economic processes proceeding in structural links of economy, the budget gives an accurate picture of how financial resources from different subjects of managing arrive in the order of the state, shows, whether there corresponds the size of centralized resources of the state to volume of its requirements.

Transition to market economy was accompanied by formation of essentially new financial system which were important link and are now off-budget funds of the state — set of the financial resources, at the disposal of federal, regional authorities or local self-government institutions and having a special-purpose designation.

Originally off-budget funds have appeared in the form of special funds or special accounts long before budget occurrence. The government with expansion of the activity needed in all the new expenses demanding means for the covering. These means concentrated in the special funds intended for the special purposes. Such funds carried, as a rule, a temporality. With performance by the state of the planned actions funds finished the existence. In this connection the quantity of funds constantly changed.

With strengthening of the centralized state the period of unification of special funds began. On the basis of association of various funds the state budget has been created. In modern conditions along with the budget value of off-budget funds again raises.

The main reason of their creation — necessity of allocation of extremely important expenses for a society and maintenance with their independent sources of the income.

The analysis of directions and results of activity of off-budget funds is an actual problem. Its value is essential now in connection with a constant budgeted deficit of the country and necessity of the purposeful decision of the social problems financed at the expense of these funds.

Object of research — the state off-budget funds.

Object of research — a legal basis of activity of the state off-budget funds.

The term paper purpose — to study essence and a legal basis of activity of the state off-budget funds.

economic budget fund insurance

1. Social and economic essence of off-budget funds, the reasons of their occurrence

1.1 Investment funds and the companies

The history of occurrence of off-budget state funds is connected with development of special kinds of the governmental activity to which publicity was undesirable. As a rule, it were operations of a temporality which became covered by special incomes for short term. Thus special funds or accounts have appeared much before occurrence of the uniform state budget. The quantity and the list of special funds and accounts weren’t constants then one accounts opened, and others were closed. As a whole the tendency to increase in quantity and volume of such funds, caused by new problems and the functions facing the state, especially as a result of occurrence, and then and expansion of its enterprise activity was observed. Plurality of funds created certain financial inconveniences — in one funds shortage of means, in others surplus, and demanded additional expenses on management of them. As such accounts and funds shouldn’t affirm parliament the government could use means passing through them absolutely uncontrolledly.

Creation of special funds allowed to involve additional means for expansion of a field of activity of the government in area always actual military expenses, scientific researches, regulation of economic development of the country, foreign trade activities and social payments to the population. The government had possibility at the expense of temporary the available assets accumulated in special funds, to cover cash ruptures and a budgeted deficit, and also to cover contingencies. Expansion of activity of the state has led to creation of a significant amount of the special funds which names, as a rule, explained also the purpose of an expenditure of means. Such plurality of funds complicated state activity, therefore with strengthening of the centralized state the period of unification of special funds begins. On the basis of association of various funds the state budget which after consideration and the statement its parliament turns to the law, obligatory to execution has been created. However many off-budget funds have kept the value and independence and existed along with the state budget. Special accounts were created for building, the governmental enterprise activity, management of monetary system and a public debt, system of national insurance.(2)

In the Republic of Kazakhstan unlike the foreign states, there was historically absolutely other system of realization of the State expenditure. It was made only two budgets: ordinary and extreme. The ordinary budget was formed from traditional, concerning constant expenses and went on financing of the expenses connected with realization of the basic functions of the state. The extreme budget actually carried out functions of special funds, it didn’t affirm, not published and contained as fiduciary. At the expense of its means the public debt was repaid, losses caused became covered by war, etc. Besides, at the expense of means of the extreme budget deficiency ordinary as the budgetary system of the USSR provided existence of one state budget became covered by acts of nature.

For the first time target budgetary funds began to be created in the Republic of Kazakhstan in transition of the country to new economic relations on the basis of the Law «About bases of the budgetary device and budgetary process» from October, 10th, 1991. The main reason of their creation — necessity of allocation of extremely important expenses for a society and maintenance with their independent sources of incomes. Among them the leading part was occupied by social off-budget funds.

At creation of social off-budget funds the problem was put to «unload» the budget from an essential share of social expenses which within the limits of the budget were financed with great difficulties. Simultaneously with the social other off-budget funds have been created also. Subsequently, having settled a positive resource from functioning of variety of off-budget funds, the Government of Republic of Kazakhstan has made the decision on their consolidation in the budget, thus having kept certain autonomy of such funds. They join in the budget separate articles, that is were transformed to target budgetary funds. Social funds have kept the status off-budget and have been officially confirmed by acts of the government and the president of Republic of Kazakhstan.

Pension fund of the Republic of Kazakhstan (PF RK) has been created with a view of the government by the finance of provision of pensions in the RK is independent financially-credit establishment.(1)

The social insurance fund (SIF) has been created with a view of maintenance of the state guarantees in system of social insurance and increase of control over a correct and effective expenditure of means of social insurance and it is independent financial-credit institution. Management of Fund of social insurance of the Russian Federation is carried out by the Government of Republic of Kazakhstan .(5)

National fund of Republic of Kazakhstan — the State fund of Republic of Kazakhstan which are set of financial actives, concentrated on the account of the Government of Republic of Kazakhstan in National Bank, and also in the form of other property, except for non-material actives.

Joint-stock company «Fund of development of business «Damu» (Fund «Damu») — the state fund in Kazakhstan, which main objective — stimulation of formation and economic growth of subjects of small and medium business in Republic of Kazakhstan, increase of efficiency of use of financial assets of the state directed on support of small and medium business.(3)

Important link of a financial system are off-budget funds of the state — the form of use of the financial resources involved by the state for financing of some public requirements not included in the budget and in a complex spent on the basis of operative independence is strict according to special-purpose designations of funds. Off-budget funds of the state are created on the basis of corresponding certificates of the supreme bodies of the power in which their activity is regulated, formation sources are specified, the order and an orientation of use of money resources are defined. The decision on formation of off-budget funds accepts Federal meeting RK, and also the state representative bodies of subjects of Federation and local government. Off-budget funds are in the state property, but they are independent. They have, as a rule, strictly special-purpose designation and is solved by two important problems: Maintenance with additional means of priority spheres of economy and expansion of social services of the population.

The pension fund, funds of obligatory medical insurance and population social insurance, on the one hand, are the financial segments allocated from the budget for independent, more effective functioning, with another — have taken the form of insurance funds. The social insurance fund initially was — and under the form, and as a matter of fact — insurance fund under home nursing of trade unions.(1)

The area of redistribution of budgetary funds is much wider, than off-budget funds, a framework which redistributions are limited by a fund special-purpose designation. Such limitation in redistributive function of this segment of public finances on occasion has a number of advantages before the budgetary form of redistribution of financial resources. At allocation in off-budget fund of a part of financial assets harmony of centralized sources and requirements is easier looked through, questions of management are more operatively solved by the given part of financial resources, inevitability of deficiency on these funds that it is impossible to reach in budgets in the conditions of an economic crisis is eliminated.

But for economic independence they are deprived conditions. Therefore the state social off-budget funds only under the form, instead of under the maintenance are funds of a mutual insurance of the population. Also has put at all that payers of insurance payments in an overwhelming part are employers, instead of workers. The economic nature of the means enlisted in specified off-budget funds, is not that other, as a part of cost of reproduction of labor. The order of payment of payments is the form of display of this essence. Nothing prevents to establish to state authorities a payment minimum level (which is the bottom level for any employer), including both a living wage, and a share of payments in off-budget funds, having shifted a duty to bring insurance payments from employers on workers. However the operating order is more simple and is habitual for mentality of our state and the population. In other countries insurance payments are distributed in regular more intervals between workers and employers, and in the separate states the overwhelming part of payments is paid by workers. The insurance nature of means of off-budget social funds is the solving reason of their allocation from the budget and basic difference from target budgetary funds.

Off-budget funds, being a component of financial system RК, possess a number of features:

— Are planned by governing bodies and have a strict target orientation;

— Money resources of funds are used for financing of the State expenditure which has been not included in the budget;

— Are formed basically at the expense of obligatory deductions legal and physical persons;

— Insurance payments in funds and the mutual relations arising at their payment, have the tax nature, tariffs of payments are established by the state and are obligatory;[10]

— Monetary resources of fund are in state ownership, they aren’t a part of budgets, and also other funds and aren’t subject to withdrawal on any purposes which directly have been not provided by the law;

— The expenditure of means from funds is carried out under the order of the Government or the special representative on that body (fund Board).

Off-budget funds are created by two ways. One way is an allocation from the budget of the certain expenses having especially great value, another — formation of off-budget fund with own sources of incomes for definite purposes. So, in many countries the fund of social insurance intended for social support of certain groups of the population has been created. Other funds appear in connection with occurrence new before unknown expenses which deserve special attention from a society. In this case under the offer of the government the legislature makes the special decision on formation of the given off-budget fund. 3]

Material source of off-budget funds is the national income. The prevailing part of funds is created in the course of redistribution of the national income. The basic methods of mobilization of the national income in the course of its redistribution at formation of funds — special taxes and tax collections, means from the budget and loans. 10]

Special taxes and tax collections are established by legislature. A significant amount of funds is formed at the expense of means central, regional and local budgets. Means of budgets arrive in the form of gratuitous grants or certain deductions from tax incomes. As incomes of off-budget funds can act and extra means. Available for off-budget funds the positive balance can be used for acquisition of securities and reception of profit in the form of dividends or percent.

Republican off-budget funds are formed at the expense of following sources:

— The special target taxes and tax collections established for corresponding fund;

— Deductions from profit of the enterprises, establishments and the organizations;

— Budget means;

— Profit on the commercial activity which is carried out by fund as the legal body;

— The loans received by fund at Central bank of RK or at commercial banks.

The investment fund represents the legal body who is carrying out activity on attraction of money resources by means of release and open placing of own actions and formation of an investment portfolio of securities at the expense of involved means. In Kazakhstan they are created in the form of the joint-stock companies in which legal or physical persons can be shareholders.

All activity of these funds is based on attraction of investments of a various kind securities and management of the generated portfolio with a view of reception of the corresponding income. He can’t be engaged in any other activity.

The fund involves money resources by means of issue of actions basically at the expense of small individual investors. On the obtained means the fund gets securities of the enterprises and banks and provides with the contributions the certain income under actions. The legislation of Kazakhstan defines creation and functioning of certain types of investment funds. Allocate two basic types: mutual fund and the investment company. The mutual fund is the open investment fund involving means of all wishing investors and having the obligation to redeem the actions emitted by it at the shareholders, can let out unlimited volume of actions and in case of need carry out their additional issue without the permission of general meeting of shareholders. It can’t let out preference shares. Also the mutual fund is characterized by that its actions address in the unorganized markets, the legislation establishes the obligation of daily definition of the prices for the shares.(6) The investment company is the closed investment fund which can involve means one or several legal and physical persons — founders and shareholders of the given fund, is not obliged to redeem the emitted actions at the shareholders, and its authorized capital can’t be increased through an additional share issue or is reduced through repayment of a part of actions without the decision of general meeting of shareholders. Actions of the investment company address at stock exchanges. The company has no obligation of daily definition of the prices for the shares, can let out preference shares.

Allocate also share (contract) and joint-stock (corporate) investment funds.

The share investment fund (contract) is subdivided on:

— Opened — the repayment of the share isn’t more than 1 time in 2 weeks;

— Closed — the shareholder has no right of the repayment of the share;

— Interval — the repayment of the share isn’t more than 1 time a year.

The investment fund has the right on:

— Participation in management of the joint-stock companies which actions are included into a portfolio of securities of the given investment fund;

— The conclusion of the contract with managing directors about management of a portfolio of securities;

— An establishment, change and the termination of relations of investment fund with all other persons, including the conclusion of the contract with the registrar; - The requirement and reception from operating investment fund on any questions of realization of the activity connected with management by a portfolio of securities of investment fund.

It is restricted to investment funds:

— To let out other kinds of securities, except actions;

— To involve extra means from banks for the term exceeding six months, at a rate of more than ten percent of cost of a net wealth of investment fund;

— To establish other restrictions in controlling interest acquisition;

— To give loans in any way;

— To sell securities belonging to it on the terms of their obligatory return purchase.

The most important restriction of investment fund consists that the fund is almost discharged of operative activity in management of own portfolio of securities. All activity on management of a portfolio of securities is assigned on operating investment fund.(7)

Operating investment fund — the legal body, carrying out professional work on management of a portfolio of securities and operating on the basis of the prisoner with investment fund of the contract on its management. Banks, except for investment, haven’t the right to carry out function of the managing director.

Basis of passive operations of the investment companies are the obtained money resources from realization of own securities, a share capital, reserve fund, company real estate.

Active operations of the investment companies are specific and differ from similar operations of other credit and financial institutes. The basic money resources obtained from sale of own actions, the investment companies of both types put in the action of various corporations and the companies. 80% of actives of the investment companies make actions, and last years, besides, they put means and in the bond of corporations. There is a specialization of investments: one companies concentrate the investments into ordinary actions, others — in exclusive, the third — in bonds. Besides it, there is a branch specialization when the companies get securities, for example, only the railway companies or machine-building, automobile, electronic corporations. The joint-stock fund forms authorized fund by issue of shares. Mainly joint-stock form of investment fund consists that stocks are easier for selling in the market, than shares, and also the shareholder of fund can demand the repayment of stocks in usual joint-stock company. The basic characteristics of joint-stock investment fund consist that it hasn’t the right to carry out other kinds of activity and to let out other financial tools, except simple actions. Fund securities don’t address in the organized market, the authorized capital consists of stocks.

Investment activity in each country has the characteristic signs depending on features of stock market. In the majority of the countries in structure portfolio prevail not investments stocks, prevail bonds and short-term securities.(2)

1.2 Pension funds

Pensions protect from risk of superannuation. Simply speaking, pensions provide the income for a while after the termination of labor activity.

As a result of reforming of pension system in the Republic of Kazakhstan the so-called memory pension funds forming the actives at the expense of attraction of means of the population have been created.

Its basic tasks are:

* Target gathering and accumulation of means for payment of pensions and children’s allowances, the organization of their financing;

* Participation on a contractual basis in financing of republican and regional programs on social support of the population;

* The Expanded reproduction of means of fund on the basis of self-financing principles.

Since 1993 he is subordinated to the social protection Ministry. In 1994 the Pension fund has been included in the budget, but four months later from it has been deduced. Since 1995 the Pension fund becomes off-budget. Pension fund means are formed basically at the expense of deductions of insurance payments of employers of the enterprises, establishments, the organizations, and also the citizens who are engaged in enterprise activity irrespective of patterns of ownership and kinds of activity. 3] The memory pension fund is the legal body who is carrying out activity on attraction of pension payments, and also on investment management of pension actives in an order established by legislation RК.

Accumulative pension funds accumulate obligatory payments of investors and place their any securities, forming thereby an investment portfolio of fund. They are divided on the accumulative state pension fund (ASPF) and accumulative nonstate pension funds (ANPF).

Except the above-stated kinds it is possible to allocate also opened and corporate APF.

Activity of pension funds is based on following principles:

— Private management of funds and possibility of a free choice of fund investors;

— Simplicity, reliability and a transparency;

— Strict regulation and supervision from the authorized state structures;

— Operational efficiency;

— Granting of the information to the investor about the size of its pension accumulation.

APF in the course of realization of the activity can make gathering of pension payments, receive commissions for the activity and carry out other rights according to conditions of the pension contract, conclude contracts with the organization exercising investment administration by pension actives.

The accumulated pension fund in Kazakhstan has no right to combine the primary activity with following kinds:

— Manufacture;

— Trade movable and real estate, except for securities and other financial tools;

— Insurance;

— Transfer to pledge of pension actives;

— Release of securities, except actions;

— Release of a gold share of fund.(8)

Pension funds of the Republic of Kazakhstan, table № 1:

Source: [15]

1.3 Insurance fund

The insurance company represents the commercial organization which is carrying out the activity on the conclusion and execution of contracts of insurance on the basis of the corresponding license. In Kazakhstan the insurance organizations are created in the form of joint-stock company, founders and shareholders can be physical or legal bodies — residents or non-residents of RК. The state also can act as the founder insurance, but only in the name of Government of RK. Thus the organizations, which have more than 50% of an authorized capital belonging to the state, can’t be among founders and shareholders.

The social insurance fund is central fund of resources of the nation-wide appointment, distributed both in territorial, and in branch cuts. It is created by an insurance method with obligatory participation of means of the enterprises and the organizations of different patterns of ownership and the persons who are engaged in enterprise activity. Means of Fund of social insurance are formed at the expense of deductions from payment fund on the state social insurance. In 1993;1995y. in the given fund 15% from a total sum of deductions arrived. Since January, 1st, 1996 this figure is lowered to 5%. Means of fund of social insurance are spent for any payment of grants (on time invalidity, pregnancy and sorts, single at a birth of the child, on burial). But the basic share of expenses of this fund is necessary on payment of grants.

The authorized capital of the insurance organization is paid exclusively by money in national currency. Thus it is forbidden uses for payment of actions of the involved and extra means. The insurance organizations form the resources at the expense of insurance payments and direct the saved up means for realization of investment investments. In Kazakhstan exist, define requirements on restriction diversification of investment portfolio of the insurance companies where it is underlined limits of investments in those or other securities. A diversification — process of formation of a portfolio of securities by such selection of characteristics of their reliability and profitableness which will allow to minimize the general risk of investments.

One of characteristics of features of the insurance companies is the specific form of attraction of means — sale of insurance policies. They put the received incomes, first of all, in the bond and stocks of other companies, the state securities. They also give long-term credits to the enterprises and the state. The maximum volume of obligations of the insurance organization under the separate contract of insurance shouldn’t be more than 10% from the sum of own capital and the insurance reserves intended only for realization of insurance payments, the obligations connected with execution under operating contracts of insurance.

Off-budget funds represents one of forms of redistribution and use of financial assets with which the state involves for financing of certain public requirements and spends on the basis of operative independence. These funds can act as investors and participants of the financial market because, first, use of money resources frequently doesn’t coincide in due course their formations, and secondly, incomes of investments are additional sources of financing of expenses of this or that fund. Payments for the pension fund and the social insurance fund, together taken, make 30% from payment fund. From the collected payments of 85% of means — Pension fund means, and 15% - Fund of social insurance. 12] The basic insurance companies in the Republic of Kazakhstan:

· Insurance company «London-Almaty»

· BTA-insurance

· BTA-care

· BTA-life

· Eurasia

· The oil insurance company

· The kazkommerts-policy

· Kommesk-omir

· Sentras insurance

· Kazakhinstrax

· The Sir-insurance

· Alliance-policy

· Nomad[9]

1.4 National Fund of the Republic of Kazakhstan

National fund of Republic of Kazakhstan — the State fund of Republic of Kazakhstan which are set of financial actives, concentrated on the account of the Government of Republic of Kazakhstan in National Bank, and also in the form of other property, except for non-material actives.

The purposes of its creation is:

· Maintenance of stable social economic development of the country,

· Accumulation of financial assets for future generations,

· Decrease in dependence of economy from influence of adverse external factors,

· Decrease in dependence republican and local budgets from a conjuncture of the world prices.

Functions:

The savings. Savings function provides accumulation of financial actives both other property and profitableness of actives of National fund of Republic Kazakhstan in long-term prospect at a moderate risk level.

The stabilization. Stabilization function is intended for maintenance of sufficient level of liquidity of actives of National fund of Republic Kazakhstan.(8)

The national fund of Republic Kazakhstan is created by one of the first on the post-Soviet territory the Decree of the President of Republic Kazakhstan from August, 23rd, 2000 № 402 «About National fund of Republic Kazakhstan». Though the idea of a coin box, a grist or the financial insurance for the future generations has arisen in 1992.

Trust management by National fund of Republic Kazakhstan carries out National Bank of Republic Kazakhstan on the basis of the contract on the trust management, concluded between National Bank of Republic Kazakhstan and the Republic Kazakhstan Government.

The concept National fund of Republic Kazakhstan is used in such documents as the Budgetary code of Republic Kazakhstan

To use National fund of Republic Kazakhstan it has been solved on the Norwegian model which is one of the world’s largest manufacturers of oil and which has created the State oil fund in 1990. The law «About modification and additions in some acts concerning functioning of National fund» has outlined the main functions of fund as — stabilization and savings.

Formation of fund has been provided as follows. In the course of execution republican and local budgets are possible excess of receipts from the organizations of raw sector over confirmed in republican and local budgets the sums of receipts. Here these means also it has been decided to enlist in National fund.(4)

Otherwise, if the budget tests a shortage of the planned means necessary means can be are taken from National fund.

The chairman of the board of National bank of republic Grigory Marchenko wrote to the president of the country: «Basically, this fund has been created basically for accumulation of means with which the state could answer in the future under obligations of solidary pension system, and the National pension fund was one of name variants at fund creation. As a whole the fund carries out both basic functions of such funds — savings (for the future generations) and stabilization (for indemnification of instability of prices on oil)».

Use of National fund

· The national fund of Republic Kazakhstan is spent:

In the form of the guaranteed transfer from National fund of Republic Kazakhstan in the republican budget on realization of budgetary programs (subroutines) of development for corresponding fiscal year;

In the form of the target transfers transferred from National fund of Republic Kazakhstan in the republican budget on the purpose, Republic Kazakhstan defined by the President;

On a covering of the expenses connected with management by National fund of Republic of Kazakhstan and carrying out of annual audit.

The national fund of Republic of Kazakhstan takes place in the resolved foreign financial tools, except for non-material actives, with a view of maintenance:

· Safeties of National fund of Republic of Kazakhstan;

· Maintenance of sufficient level of liquidity of National fund of Republic of Kazakhstan;

· High level of profitableness of National fund of Republic of Kazakhstan in long-term prospect at a moderate risk level;

· Receptions of investment incomes in long-term prospect. 13]

The list of the resolved foreign financial tools, except for non-material actives, is defined by the Republic Kazakhstan Government together with National Bank of Republic Kazakhstan under the offer of Council about management of National fund of Republic Kazakhstan

The national fund of Republic Kazakhstan can’t be used on crediting physical and legal bodies and as maintenance of execution of obligations.

The size of the guaranteed transfer from National fund of Republic Kazakhstan shouldn’t exceed the one third part of actives of National fund of Republic Kazakhstan as of the end of the fiscal year previous year of working out of the republican budget.

The sizes of the guaranteed transfer from National fund of Republic Kazakhstan for the three-year period are defined in established by the Government of Republic Kazakhstan an order and affirm the Republic Kazakhstan law.

The order of transfer of actives in National fund of Republic Kazakhstan and use of National fund of Republic Kazakhstan is defined by the Republic Kazakhstan Government.

The actives arriving in National fund of Republic Kazakhstan or withdrawn from National fund of Republic Kazakhstan, are subject to converting or reconversion in an order established by National Bank of Republic Kazakhstan.

Under forecasts, real growth of GDP of Kazakhstan in 2013 will be 6%, in 2014 — 6,1%, in 2015 — 7,6%, in 2016 — 6,6%, in 2017 году — 6,9% «, — said Minister of Economic Development and Trade of the Republic Bakytzhan Sagintayev. The given parameters correspond to maintenance on the average seven-percentage growth of economy for the intermediate term period.

The volume of National fund of Kazakhstan in 2015 will exceed 100 billion dollars. 14]

1.5 Fund of development of small and medium business

Joint-stock company «Fund of development of business «Damu» (Fund «Damu») — the state fund in Kazakhstan, which main objective — stimulation of formation and economic growth of subjects of small and medium business in Republic of Kazakhstan, increase of efficiency of use of financial assets of the state directed on support of small and medium business. For 2010 Fund «Damu» is a national institute of development, 100% of stocks belong to joint-stock company «Fund of national well-being «Samruk — Kazina».

Fund «Damu» mission — assistance to qualitative development of small and medium businesses, and also the microfinancial organizations of Kazakhstan in a role of the integrator and the operator of granting of financial, consulting services.

Preconditions for Fund creation became the Law of Republic Kazakhstan from July, 4th, 1992 «About protection and support of private business» and decisions of the President of Republic of Kazakhstan from May, 5th, 1992 «About a government program of support and business development in Republic of Kazakhstan for 1992;1994» and from June, 10th, 1994 «About a government program of support and business development in Republic of Kazakhstan for 1994;1996».

On March, 6th, 1997 — the President of Republic of Kazakhstan had been published the decree «Fund of development of small business» (with a view of strengthening of the state support and activization of development of small business — the Decree of the President of Republic Kazakhstan from March, 6th, 1997 № 3398 «About measures on strengthening of the state support and activization of development of small business» became a basis for joint-stock company creation.).

On April, 26th, 1997 — there was a Governmental order of Republic of Kazakhstan from April, 26th, 1997 № 665 «About creation of Fund of development of small business».

On August, 18th, 1997 joint-stock company «Fund of development of small business» has started to work.

From 2004y. the Fund has begun Program realization on financial leasing.

In 2004 the Program of development of small cities for 2004;2006 «As of January, 1st, 2007 under the given program started» 281 project for the sum of 1 484,4 million tenge is financed. 2 935 workplaces are created and supported. In 2006 the program has been executed and closed.

In 2006 the sustainable development Fund «Kazina» becomes the shareholder of Fund joint-stock company. For October, 1st, 2007 by Fund at the expense of own means on design financing and leasing it is financed more than 2000 projects for a total sum more than 21 800,0 million tenge. It is supported and created more than 20 thousand workplaces.

Within 2005;2007 from the republican budget to Fund at a rate of 29 billion tenge means for capitalization are allocated for support of small business.

In the end of 2007 the name of Fund from joint-stock company «Fund of development of small business» on joint-stock company «Fund of development of business «Damu» has changed. Powers on support of average business have extended.

2. The analysis of use of off-budget funds in Republic of Kazakhstan

2.1 Off-budget funds of local controls

The analysis of use of off-budget funds studies laws of rationing and an expenditure of money resources of funds in communication by social and economic appointment of each of them. A problem of off-budget funds — scoping, dynamics, structure of incomes and expenses of various funds, parities of separate sources of incomes (directions of expenses) and the analysis of efficiency of functioning of funds.

Statistics of various budgetary funds are:

— Total amount of incomes, including on sources;

— Other incomes;

— Total amount of expenses, including in directions;

— A miscellaneous cost;

— The rest of means for the period beginning;

— The rest of means for the period end.

According to the current legislation the Pension fund provides payment of pensions and some kinds of grants to the population which is not participating in labor process. Besides, the pension fund participates on a long-term basis in financing of federal, republican and regional programs on social support of the population and carries out the expanded reproduction of means of fund on the basis of principles: self-financing and commercial activity.

The statistics characterizes the quantitative laws developing in the course of formation and uses of means of the Pension fund, by means of system of statistics which concern:

* Total amount of receipts in the Pension fund, including on sources:

— Insurance payments;

— Means of Republican budget of RК;

— Means of the State fund of employment of the population;

— Other incomes;

* Total amount of expenses, including in directions:

— Financing of payments of pensions and grants;

— Administrative expenses of fund;

— A miscellaneous cost. 11]

The system of statistics of Fund of employment of the population reflects total amount of receipt (expenditure) of money resources, including on receipt sources (directions of expenses). The problem of statistical studying of functioning of Fund of employment of the population includes studying of dynamics of indicators of receipt (expenditure) of money resources of fund, studying of structure, structure and structural changes of separate making receipts (expenses) of fund, reflection of the general laws of formation of fund.

Receipt of means of the federal budget in the Pension fund is connected with payment of the state pensions and grants to military men and the citizens equal to them on provision of pensions, increase of pensions in connection with change of a cost of living index and salary growth, and also the grants established by the current legislation.

Other receipts of the Pension fund concern:

* voluntary payments of citizens and public organizations;

* incomes of commercial financial-credit operations.

In connection with absence of possibility train for a new profession or find work to people of prepension age preschedule pensions can to be appointed.

Local finance represents economic relations by means of which local controls will mobilize, distributes and uses according to the functions assigned to them a part of a public product in the monetary form. The local finance is an important making financial system of the state. They include the local budgets, special off-budget funds and the finance of managing subjects which is in the property of local controls. The structure and direction of the local finance are defined to functions of local governing bodies — maslikhat (meetings of deputies), local administration and local government.

Now, in the conditions of market relations, the field of activity of local bodies extends, and they get considerable independence in the decision of problems of social, economic, ecological, demographic character.

Important problems are assigned to local controls on implementation of social programs of the state. Financing of actions for population service basically is carried out at the expense of local financial resources. Branches of a social infrastructure render the population of service at the expense of funds which in an overwhelming part are formed of budgetary funds.

Financial relations in a local link are regulated by the Law «About the local government», «the Budgetary code of Republic of Kazakhstan», annual «the Law of the Republican budget» and other laws on economic and financial activity.

The important role in the local finance belongs to the local budgets, being financial base of many-sided activity of local governing bodies.

Local budgets (areas, cities, areas) in Kazakhstan occupy under incomes of an order of 47%, and on expenses about 49% from volumes of means of the state budget (2004). 78% of all regional and city (cities of regional submission) are subsidized (from such 193 budgets). According to the Budgetary code of Republic of Kazakhstan the local budget includes the regional budget, budget of city ??of republican meaning, capital, the area budget (a city of regional value).

The regional budget, budget of city of republican meaning, area (city of regional value) capitals is the centralized monetary fund formed at the expense of tax and other receipts, defined by the Budgetary code, and intended for financial maintenance of problems and functions of local state structures of regional level, a city of republican meaning, capital, area (a city of regional value) official bodies subordinated to them and state policy realization in a corresponding administrative and territorial unit.

In a budgetary kind of the organization of financial relations two tendencies coexist:

1) centralization of system of forms and management methods movement of financial resources as reflection of the more general development of the centralized beginnings in management of economy for the purpose of an overcoming the crisis and stabilization;

2) decentralization of the finance with strengthening of functions of local governing bodies in formation and use of financial funds[3]

The second tendency is proved by nearness of local bodies to local conditions, they are more interested in social and economic development of territories.

Principle of administration of financial relations is possibility of realization of control function of the finance: to a lesser degree certain financial relation gives in to formal control, its reference to the decentralized regulation, and on the contrary is more desirable, at good controllability — to the centralized regulation.

On the other hand, regions represent parts of the uniform economic complex which is in defined subordination and can’t exist out of it. The maintenance and character of regional reproduction is defined by the basic laws of development of all public reproduction. Necessity of centralism for management in reasonable, caused by a real condition of manufacture limits therefore is supposed.

Conclusion

The separate link as a part of public finances is formed by off-budget funds. These are means of the government and the local authorities, connected with financing of the expenses which are not included in the budget. Off-budget funds concern: social insurance funds, a pension fund, fund of employment of the population, other trust funds of the state and regional value (innovative, nature protection, regional development etc.).

Principal value of off-budget funds of any level — financing of separate target actions at the expense of social target deductions and other sources.

References

1. Искаков У. М., Бохаев Д. Т., Рузиева Э. А. Финансовые рынки и посредники. Учебник. — Алматы: Экономика, 2005. — 298 с.

2. Кидуэлл Д. С., Петерсон Р. Л. Блэкуэлл Д.У. Финансовые институты, рынки и деньги. Базовый курс. — Санкт-Петербург: Издательство «Питер», 2000. — 752 с.

3. Интернет — сайт Министерства финансов Республики Казахстан.- www.minfin.kz

4. П. И. Вахрин, А. С. Нешитой «Финансы»: Учебник для вузов. — М.: ИВЦ «Маркетинг», 2000.

5. П. И. Вахрин «Бюджетная система Российской Федерации»: Учебник. — М.:ИТК «Дашков и К», 2002.

6. «Финансы» / под ред. А. М. Ковалевой — М.: Финансы и статистика, 1999.

7. «Финансы. Денежное обращение. Кредит.»: Учебник для вузов / под ред. проф. Л. А. Дробозиной — М.: Финансы, Юнити, 1999 г.

8. «Финансы. Денежное обращение. Кредит.» Конспект лекций. — М.: «Издательство ПРИОР», 2000.

9. Internet site: http://www.insuranceshop.kz

10. Официальный сервер МНС www.nalog.ru

11. Internet-библиотека: www.conseco.ru

12. Internet-библиотека: www.eko.ru

13. Free encyclopedia — www.wikipedia.org

14. Site of news — www.nur.kz

15. Internet site: http://invest-market.kz