Ministry of Finance is Definition, functions performed, organization

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:42

MinFin is an abbreviation for the Ministry of Finance, the main financial oversight body in the Russian Federation. At the moment, the Ministry of Finance of the Russian Federation regulates the financial, budgetary, tax, banking, foreign exchange and insurance public sectors. In fact, today the order of the Ministry of Finance of Russia has the highest priority of execution after the order of the President of Russia and determines the financial strategy of the state.

How the financial regulatory body appeared in Russia

In the ninth century, when Kievan Rus was at the peak of its development, the state needed people who would control financial flows. It was necessary not only to store money, but also to keep records, as well as to use it effectively. For these purposes, the prince had treasurers. It is noteworthy that the treasurers were not considered full-fledged officials until the 16th century, but had a purely trusting relationship with the prince.

Already in 1512, Prince Vasily III formed a unified set of rules for storing and producing valuables, servicing the state treasury, processing and fixing financial transactions using the statetreasury. These rules were enshrined at the legislative level and later became known as the "Treasury Order".

Before Peter I, the treasury system remained unsettled. But soon after coming to power, he changed the system of financial management, putting the Senate at the head of the treasury. The state financial regulator rapidly developed and improved, so already in 1802 the Ministry of Finance of the Russian Empire appeared, which became the prototype of the modern Ministry of Finance.

Establishment of a full-fledged regulatory mechanism

After the turmoil during the Socialist Revolution in 1917, the People's Commissariat of Finance of the Republic was created, which gave the local provinces great freedom in organizing and managing the budget. The autonomy operated until 1946, when the Ministry of Finance of the USSR appeared in the USSR, which combined all the financial regulators of the republics included in the Union.

After the collapse of the USSR in 1992, the former Ministry of Finance of the USSR had to be divided into two departments - the Ministry of Finance of the Russian Federation and the Ministry of Economy of the Russian Federation. Subsequently, the Ministry of Economy of the Russian Federation was renamed the Ministry of Economic Development of the Russian Federation.

What activities does the Ministry of Finance carry out?

The first thing to start reviewing the activities of the Ministry of Finance of Russia is the state provision. All government departments that use finance in their activities should be guided by the general rules for conducting financial activities, whichestablished by the Ministry of Finance. Accounting records of all enterprises and organizations of various forms of ownership are also kept according to the rules established by the Ministry of Finance of Russia. Moreover, the Ministry of Finance regularly checks departments and institutions for violations of established rules.

To ensure effective management in the field of financial supervision, the Ministry of Finance of the Russian Federation closely cooperates with the State Duma of the Russian Federation, as well as with its relevant committees.

Another important part of the work of the Ministry of Finance is foreign policy. For example, the Ministry of Finance of the Russian Federation exercises control in the field of securities, customs regulation, auditing, precious metals and stones, investments and even real estate. Separately, it is worth mentioning non-state pension funds, whose regulation is also carried out by the state financial regulator.

The organization of the Ministry of Finance implies the division of the department into separate departments, each of which is responsible for its own direction. However, in addition to this, the Ministry of Finance of Russia has several autonomous subordinate bodies:

• Federal Treasury - performs the function of administering the federal budget.
• Federal Tax Service - controls taxation.
• Federal Customs Service - controls the activities of customs services.
• Rosalkogolregulirovanie is a federal service that regulates consumer prices for alcohol.

Who is in chargeMinistry of Finance in 2018?

Today the head of the Russian Ministry of Finance is Anton Germanovich Siluanov. It is noteworthy that since May 2018 he has also held the position of First Deputy Prime Minister of the Russian Federation. His father German Mikhailovich headed one of the departments of the Ministry of Finance after the collapse of the USSR. Therefore, Anton Siluanov decided to continue his father's work and already in 1985 became a graduate of the Moscow Financial Institute with a degree in Finance and Credit.

Immediately after graduating from the institute, Anton Germanovich got a job at the Ministry of Finance, where he confidently climbed the career ladder and improved his professional skills. After a dozen positions changed in 2003, Anton Siluanov became Deputy Minister of Finance of Russia, and then at the end of 2011 was appointed Minister of Finance and was introduced to the Security Council of the Russian Federation.

With the personal life of Anton Germanovich, too, everything went well. He lives in a happy marriage and raises his son Gleb, born in 1999. Anton Germanovich has repeatedly admitted that he maintains accounts on the social networks Instagram and Facebook under pseudonyms. The current Minister of Finance has an interest in riding motorcycles, is fluent in German and has a large record collection.

Actual problems of the Ministry of Finance: areas of special attention

After Vladimir Putin's victory in the presidential election, immediately after the inauguration, he turned to the renewed Government of the Russian Federation with new decrees that have already been receivedcommon name "may". In these decrees, the president voiced many urgent challenges that the Russian government will have to face in the near future. Among the theses voiced were those that required an immediate response from the Ministry of Finance. This is a pension reform, as well as changes in legislation in the field of shared construction.

Role of the Ministry of Finance in pension reform

The Russian government has concluded that the current state pension system is outdated and will not be able to function normally in the near future. According to the authorities, the real incomes of pensioners will decrease, so the state needed to work out new mechanisms for pension accumulation. The work to create the reform was entrusted to the Ministry of Finance.

The subject area that needed to be reformed was so large that the draft law was developed with the participation of all ministries and government departments.

The result of the work was the order of the Ministry of Finance of the Russian Federation on the creation of a bill to amend certain laws of Russia in the field of appointment and payment of pensions. The main thesis of the initiative was to increase the retirement age for men to 65 years, and for women - up to 63 years. For a painless transition from the old legislation to the new one, it was decided to raise the retirement age gradually starting from 2019.

Already on September 26, 2018, the bill was adopted by the State Duma of the Russian Federation. However, before adoption, more than 300 changes were made to it by profilecommittees, as well as the President of the Russian Federation. In particular, Vladimir Putin sent a letter to the Ministry of Finance, in which he proposed raising the retirement age for women not to 63, as previously planned, but to 60.

Opinions divided

The adoption of the bill caused a great public outcry and mass protests. Several political and social forces even wanted to hold a referendum on the abolition of pension reform.

A new approach to pension savings should bring the economy of the Russian Federation into the top five largest economies in the world. However, for this, the annual volume of GDP must increase by at least 5.5%. The Ministry of Finance considers this a completely feasible task.

The problem of shared construction

Large theft of funds, defrauded investors, high-profile criminal investigations - this and much more has been accompanying the Russian equity construction market since time immemorial. But from 2019, the situation should change, as the new order of the Ministry of Finance of the Russian Federation completely changes the principles for building apartment buildings.

An effective solution from the Ministry of Finance

If earlier, equity holders transferred funds directly to the developer, that is, the developer, and were actually completely dependent on him, now equity holders will deposit funds into special bank escrow accounts. The effectiveness of this approach is that the developer will not have direct access to the developers' money.

Now developers will have to raise funds from outside, and the best solution for this will be a loanin a bank backed by borrowers' money. It is noteworthy that escrow accounts are automatically insured by banks, and in the event of force majeure, equity holders are paid their money in full, but insurance is valid for amounts not exceeding 10 million rubles. Of course, this decision was not easy for the Ministry of Finance, but in this matter the regulator put the interests of equity holders as a priority.

Experts in the real estate market have already acknowledged that the reform will bring significant losses to the real estate market, but will protect investors from fraudsters. According to analysts, many small construction companies will be forced to leave the market due to lack of investment. Moreover, when receiving a loan from a bank, the developer will pay additional interest, which will ultimately increase the value of the finished property. Companies have repeatedly sent letters to the Russian Ministry of Finance with a demand to mitigate the reform of shared construction. The final version of the bill took into account all the appeals of interested parties.

There is another opinion. Over the past few years, the demand for ready-made real estate has grown in the Russian real estate market and, according to financial forecasts, will continue to rise. In this regard, real estate prices will not increase, however, they may fluctuate for the first time after the entry into force of the reform.

Currency issues

Since 2017, the Ministry of Finance of Russia, with the participation of the Central Bank of the Russian Federation, began to purchase foreign currency on the domestic market in order to stabilize the ruble exchange rate and reduce external influence on the Russian economy. In the summer of 2018, the Central Bank had totemporarily cancel the budget rule and stop purchasing foreign currency for the Ministry of Finance due to the high volatility of the Russian currency. This measure helped reduce the demand for the Russian currency on global financial markets and maintain a stable ruble exchange rate.

It is noteworthy that the purchases of foreign currency under the budget rule will be carried out according to the planned volumes. From September 7 to October 4, the Central Bank purchased a record 426.9 billion rubles for the Ministry of Finance.

The Ministry of Finance also increased the volume of foreign currency purchases during the summer and autumn of 2018 due to the rise in oil prices on international stock markets in order to minimize the impact of black gold on the Russian currency and the country's economy as a whole.

Not just sanctions

2018 was a year of trials not only for the Russian Ministry of Finance, but for the entire economy of the country. In addition to the sanctions, which impose some restrictions, Russia has embarked on a long and painful reform phase to improve economic performance. The role of the Ministry of Finance in the reconfiguration of the economy cannot be overestimated, because in fact it is this regulatory body that forms the economy of the new time. Employees of the Ministry of Finance understand this and are trying to do everything possible to improve the lives of Russian citizens.

Forecasts for the future

Every year, financial analysts of the Ministry of Finance collect statistical data and predict future economic performance. The latest major depreciation of the Russian currency has prompted analysts to seriously think about the future of the ruble.

First of all representativesThe Ministry of Finance notes that the nominal exchange rate of the ruble is underestimated. The growth of the global economy will lead to the fact that in 2025 the exchange rate of the Russian ruble against the dollar may be 66.4 rubles, and by 2035 it will rise to 73.9 rubles.

However, all these predictions may come true if the international economy does not again experience a global crisis, lack of oil resources and other economic collapses. In this case, it is impossible to predict economic performance.