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Intergovernmental transfers and their forms

The government of any state often uses such an instrument as interbudgetary transfers. They are the sums of money that pass from one budget to another and, as a rule, are intended for the realization of certain goals.

The following forms of interbudgetary transfers are distinguished:

  • Subsidies;
  • Subventions;
  • Subsidies.

Subsidies are defined as equity participation in the financial provision of a specific project. Their amount and direction of expenditure are strictly determined by the estimate, can be provided not only to budgets of other levels, but also to business entities and even individuals.

Subventions are intergovernmental transfers that are transferred from one budget to another or to the needs of a legal entity. A characteristic feature of this form is the irrevocable and gratuitous basis, as well as strictly targeted spending of funds.

Grants are funds that are provided to budgets of other levels on a non-reimbursable basis, not requiring a return in the future, in addition, there is no need for targeted use.

The main difference between subventions and subsidies is the fact that in the first case, funds from the budget system are intended for specific purposes. If a certain direction is not observed, the recipient of the money must return them to the state budget in full. And subsidies and subventions differ from each other by the scale of investment, because the first concept involves only share participation, rather than full funding. Combines all of the above forms of the fact that all intergovernmental transfers are transferred free of charge.

If we talk about legislation, we can single out the main trend that reveals the direction of budget financing. For example, the federal budget allocates funds for the state support of the stability of certain subjects of the budgeting system in the form of grants, as well as transfers to budgets of other levels and extra-budgetary funds in the form of subventions and subsidies.

Often, the government forms a federal fund that provides co-financing of local expenditures in the form of subsidies in the case when budgets of other levels can not cope on their own. And the aggregate of subventions of the federal budget refers to the Federal Compensation Fund.

Each constituent entity of the Russian Federation organizes its own fund, which can also provide intergovernmental transfers. As a rule, they are intended to finance the stable operation of municipal units in the form of subsidies, and subventions and subsidies provided to local budgets and autonomous okrugs are based on specific contracts and agreements with higher budgets. The amount of funds in the form of grants is calculated on the basis of population indicators of a specific subject. To transfer them, a special fund for the financing of settlements or municipal raions of regional level was created.

Local budgets also deal with the provision of interbudgetary transfers in the form of grants to ensure the financial stability of needy settlements, subsidies to solve important municipal tasks. In addition, allocations are made to the budgets of individual constituent entities of the Russian Federation for the organization of a regional fund. To provide subsidies at the local level, funds have been created to support settlements in specific areas. And funds from local budgets to higher bodies (the budget of the constituent entities of the Russian Federation) are transferred only in the event that the revenue part of the tax collections exceeds the target figure.

Thus, it can be argued that intergovernmental transfers are an effective tool in the hands of government agencies, which helps to regulate the financial position of individual constituent entities of the Russian Federation.

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