Lyubimtseva_S_N__Koreneva_V_N_L_93_Kurs_angli

government for raising revenue to meet expenditure.

R.: Yes, it's common knowledge that fiscal policy is a powerful tool in the hands of governments, it is a major factor determining macroeconorriic performance. Substantial evidence existsts,4 however, that some countries use this tool badly. As a result they have problems of internal and external balance, low growth rates and huge deficits.

F.: You are right, they do. But quite a number of governments seeking to overcome fiscal problems, work to design adequate fiscal policies. They give increasing attention to expenditure priorities and the structure of taxation.

R.: They introduce new taxes, don't they?

F.: Well, such measures are most unpopular. Governments give emphasis to raising tax elasticity, which enhances the ability of the tax system to generate increases in revenue without resort to new tax measures or rate increases. Countries try to broaden the tax base, reduce tax exemptions, and achieve a simplified and more easily administered tax system.

R.: More often than not, however,5 the budget deficit remains a problem for many countries. How do countries most often reduce the burden of budget deficit?

F.: It all depends on the country's economic and financial position. In principle, the ways are only too wellknown: borrowing from domestic bank and non-bank sources and borrowing from "the rest of the world", as economists say. Fiscal deficits can be rather easily reduced by countries having well-developed capital markets.

R.: True, but my feeling is that under fiscal crises, governments, first of all, cut spendings.

F.: Well, yes, some do. But governments seeking to pursue effective fiscal policy do their best to maintain the public deficit at a level consistent with other macroeconomic objectives like controlling inflation, promoting private investment and maintaining external creditworthiness. They work for most effective utilization of scarce government sector resources, for the allocation of resources to achieve growth and equity objectives.

R.: I see. Thus, tax and expenditure policy issues are central to an effective fiscal policy.

F.: Exactly. As far as I know, in Russia most of the revenue comes from four taxes. I mean the profit tax, the value-added tax (VAT), the personal income tax, and excise taxes.

R.: Yes, you are right. These taxes account for the bulk of the revenue. But in general, the system is still complicated, more than 150 taxes are collected in Russia: federal, regional and local.

F.: What about non-tax revenue, where does it come from in Russia?

R.: Mainly from privatization and sale of government securities. In spite of the efforts to improve the budget system, we still have a lot of confusion and intermingling of functions in our fiscal sphere.

F.: Streamlining of intergovernmental fiscal relations is a serious task for many governments. Notes

1are vested in various levels of government – переданы различным уровням власти

2It is argued that... – Утверждают, что...

3... is likely to be achieved – ... по всей видимости, будет достигнут

Конструкция «is likely + инфинитив» называется «именительный падеж с инфинитивом» или

«сложное подлежащее».

Этой конструкцией можно заменить сложноподчиненное предложение с главным предложением,

выраженным безличным оборотом типа it is said 'говорят'; it is reported 'сообщают'; it seems, it is likely

'похоже, по-видимому' и т.п.:
It is said that they know English well.	( They are said to know English well.

Оборот «сложное подлежащее» употребляется, когда сказуемое выражено:

1) глаголами to say, to state, to report, to announce, to believe, to consider, to hear, to suppose, to think, to expect, to know, to understand, to see в пассивной форме.

Перевод предложения со сложным подлежащим начинают со сказуемого, которое по-русски выражается неопределенно-личным оборотом «Известно ...», «Говорят...», «Сообщают» и т.д.

Дальше строится дополнительное придаточное предложение, в котором роль сказуемого будет играть инфинитив. Перфектный инфинитив переводится глаголом прошедшего времени:

Non-tax revenues are reported to have	Сообщают, что с прошлого года
considerably increased since last year.	неналоговые доходы существенно возросли.

2)глаголами to seem, to appear, to prove, to happen, to chance в активной форме: I happened to be there at the time. Случилось так, что в это время я был там.

3)оборотами to be likely, to be unlikely, to be certain, to be sure: They are likely to come.

Вероятно, они придут.

4Substantial evidence exists... – Имеются веские доказательства того, что ...

5More often than not, however... – Однако, гораздо чаще ...

VOCABULARY LIST

A. fiscal management [(f(sk(l 'm(n((m(nt] управление государственным бюджетом

fiscal sphere бюджетно-налоговая сфера notion ['nou((n] п понятие

major guidelines [(me((( '(a(dla(nz] основные направления long-term [(l(( 't(:m] adj долгосрочный

medium-term [(mi:d((m 't(:m] adj среднесрочный attainment [('te(nm(nt] п достижение (чего-л.) current ['k(r(nt] adj текущий

productive forces [pr( (d(kt(v 'f(:s(z] производительные силы exacerbate [(('z(s(be(t] v ухудшать(ся)

public debt [( р(bl(k 'det] государственный долг

unsustainable [((ns(s'te(n(bl] adj (id.) постоянный, трудно ликвидируемый swollen ['swoul(n] adj раздуть

fiscal policy бюджетно-налоговая политика fiscal deficit дефицит бюджета

fiscal relations бюджетные отношения fiscal federalism бюджетный федерализм

revenue-raising powers ['pau(z] полномочия по сбору доходов multilevel [( m(lt( 'lev(l] adj многоуровневый

justify ['((st(fa(] v оправдывать, (зд.) считать целесообразным public goods общественный товар

refuse ['refju:s] collection сбор мусора

incidence ['(ns(d(ns] n (зд.)сфера охвата create [kri 'e(t] v создавать

to administer [(d 'm(n(st(] taxes управлять сбором налогов В. essence ['es(ns] n суть, сущность

internal balance [(n (t(:n(l 'b(l(ns] состояние внутренних расчетов huge [hju:(] adj огромный

tax elasticity [(i:l(s 't(s(t(] эластичность налоговой системы enhance [(n'ha:ns, (n'h(ns] v увеличивать, повышать resort [r( 'z(:t] n обращение (за чём-л.)

to broaden [ 'br(:dn] the tax base расширять налоговую базу tax exemption [(( 'zemp((n] освобождение от уплаты налогов capital market рынок долгосрочного капитала

consistent [k(n 's(st(nt] аф'совместимый, согласующийся creditworthiness ['kred(tw(:((n(s] и кредитоспособность income tax подоходный налог

excise['eksa(z] (tax) акцизный налог, акциз account [( 'kaunt] for v составлять non-tax revenue неналоговые доходы securities [s( 'kju(r(t(z] n pl ценные бумаги confusion [k(n 'fju:(n] n неразбериха

intermingling [((nt( 'm(((l((] of functions (зд.) дублирование функций streamlining [ 'stri:mla(n((] n (зд.) совершенствование

EXERCISES

Ex. 1. Answer these questions:

A. 1. What does the notion "financial policy" mean?

2.Do many countries face financial problems these days? What are they?

3.What is fiscal policy?

4.What fiscal trends have been registered in the industrial countries since the early 1970s?

5.What does the effectiveness of fiscal management imply?

6.What is fiscal federalism?

7.What has been done in Russia so far in the field of fiscal relations?

8.What expenditure responsibilities are practised in Russia?

9.What measures should countries facing unsustainable fiscal deficits take?

B. 1. Is fiscal policy a powerful tool in the hands of a government?

2.What are the major taxes in Russia these days?

3.Does the tax system provide for collection of a great number of taxes?

4.Where does non-tax revenue come from in Russia?

Ex. 2. Give derivatives of:

financial adj	collect v	effectiveness n
measure n	shift v	government n
objective n	consumption n	distribute v

unsustainable adj transfer n defense n

produce v

Ex. 3. Find English equivalents for the following Russian phrases from the text:

A. мероприятия, направленные на ...; создать соответствующий финансовый механизм; направлять деятельность; обеспечить достижение основных экономических показателей; эффективное

использование ресурсов; проблемы обострились; уровень, который государство не может больше поддерживать; раздутый бюджетный дефицит; принять политику; финансовая стабилизация;

управление государственным бюджетом; информационные потоки; полномочия по сбору доходов; контроль за расходами;

B. получать доходы, покрывающие расходы; поддерживать желаемый уровень (чего-л.);

макроэкономические показатели; проблемы с внутренними/внешними расчетами; пытаться преодолеть бюджетно-налоговые проблемы; приоритеты в области расходов; укреплять (усиливать)

способность; расширять налоговую базу; уменьшать число освобождений от уплаты налогов;

легкоуправляемая налоговая система; бюджетный дефицит остается проблемой; сокращать расходы;

поддержка частных инвестиций; внешняя кредитоспособность; доходы поступают от...; ...

составляют большую часть всех доходов; приватизация.

Ex. 4. Say in a few words what the main text is about. Use the opening phrases from Ex. 4 (Unit 1). Ex. 5. Sum up the content of the mam dialogue. Use the phrases from Ex. 5 (Unit 1). Ex. 6. Read the dialogue, translate the Russian remarks into English and act it out:

Foreigner: Is it true that the structural transformation of the Russian economy since 1992 has been accompanied by major changes in the country's fiscal picture?

Russian: Да, в бюджетно-налоговой политике произошли значительные изменения. Нам пришлось значительно сократить государственные расходы. Бюджеты субъектов федерации стали самостоятельными. Мы уделяем много внимания налоговому законодательству. Однако существует необходимость более эффективного управления государственным бюджетом.

F.: The market forces in your country emerged faster than your capacity to adjust the budget management practices to new conditions.

R.: Многие другие страны оказывались в сходной ситуации. Россия – федеративное государство. Нам также приходится решать различные вопросы, связанные с бюджетным федерализмом.

F.: Speaking about fiscal federalism, I think that neither the federal government nor the regional administrations are content with the present pattern of interbudgetary relations. How are you going to resolve the problems?

R.: Вы подняли очень важный вопрос. Мы пытаемся справедливо и рационально распределить обязанности и полномочия между регионами и центром. Возвращаясь к вопросу бюджетно-

налоговой политики и финансовой стабилизации в целом, хочу подчеркнуть, что нам необходимо сокращать бюджетный дефицит, контролировать инфляцию, поощрять инвестиционную деятельность, эффективно использовать имеющиеся ресурсы, а также совершенствовать налоговое законодательство.

F.: Doing all this you should remember that the task of the government is to help people who are living below the poverty line, pensioners, invalids, jobless. Benefits that you are now distributing among all should be given to the needy.

Ex. 7. Work on vocabulary and grammar.

a) Study the key words for the unit in the dictionary at the back of this book:

macroeconomic performance, deficit, management, taxes, revenues, expenditure, policy, taxation, balance of payments, trade, debt;

b) Think of the verbs that are most commonly used with these nouns:

taxes, decision, budget system, burden, attention, emphasis, guidelines, target, objectives, macroeconomic performance, policy, spendings;

c) Think of the nouns that are most often used with these verbs:

to introduce, to generate, to perfect, to attain, to overcome, to utilize, to adopt, to pursue, to cut;

d)Make your own sentences with any five word combinations from (b) and (c).

e)Match the verbs from (a) with the nouns from (b) below:

a) to establish	b) difficulties
to face	efforts
to make	situation
to eliminate	deficit
to exacerbate	priorities
to improve	stability
to ensure	interbudgetary relations
to design	law
to enforce	policy

f) Write out from the main text international words like: concept, mechanism, etc. Transcribe and read them aloud.

Ex. 8. a) Supply the articles where necessary.

b)Write down 3-5 questions about the texts.

c)Compare the problems the two countries are trying to solve.

a)Financial Policy

... term is broad and its definition is likely to differ somewhat from country to country. On the widest definition, it covers ... fiscal policy (budgetary policy, i.e. policy on government revenues and expenditures), monetary policy, credit policy and management of government debt. The core of financial policy is fiscal policy. Some economists believe that fiscal policy is synonymous with ... state budgetary policy. There exists, however,... wider definition that would cover the policy on the level and composition of all central and local government revenues and expenditures.

Financial policy whose main goal is provision of financial resources for ... implementation of ... state

programmes of economic and social development is part of ... complex of economic policies influencing ...

level and pattern of economic activity and income distribution.

The economic policy of... Russian Federation is aimed at creating conditions for sustained economic growth by reducing ... inflation, by ensuring ... free operation of markets of goods and factors of production, by achieving ... balance of payments stability. These goals can be achieved mainly by elaborating and implementing ... adequate fiscal policy.

The fiscal policy implemented these days in Russia presupposes first of all the reform of... federal budget. The ongoing budget reform includes ... shift to the new budget classification, introduction of ... better system

of interbudgetary relations, changes of budget planning principles, shift to ... treasury system of budget execution. Over ... last few years the collection of tax revenue has tended to fall. Thus the Government's fiscal adjustment programme provides for a package of measures aimed at increasing revenue collection through the reform. Attention is being paid to improvement of ... tax legislation. The new tax administration system shall meet... following requirements: broad tax base, well-balanced system, equitabable and transparent character, symplicity of administration. The main aim of ... tax reform is to strengthen ... budget, to provide financial resources for the budget system in the amount necessary to finance ... state spendings for

... state apparatus, for defence, health care, and ... culture. Words you may need:

management of government debt управление государственным долгом core n сердцевина

treasury system of budget execution казначейская система исполнения бюджета b) Fiscal Policy in the UK

Fiscal policy in ... UK is guided by two strict rules:

•... Government will borrow only to invest and not to fund current spending; and

•net public debt as ... proportion of GDP will be held at ... stable and prudent level.

These rules mean that... taxpayers pay for ... current spending and require public borrowing to be kept under firm control.

The Finance Act 1998 established a new Code for Fiscal Stability, which requires fiscal and debt management policy to be carried out in accordance with five key principles:

• transparency in setting fiscal policy objectives, the implementation of fiscal policy and the publication of the public accounts;

•stability in ... fiscal policy-making process and in ... way that fiscal policy affects ... economy;

•responsibility in the management of the public finances;

•fairness, including between ... generations; and

•efficiency in the design and implementation of fiscal policy, and in managing both sides of... public sector balance sheet.

In practice it means that the public finance and fiscal strategy in ... UK will be aimed at setting overall spending limits for individual departments and planning and controlling public expenditure more strictly within ... framework of capital and current budgets.

Ex. 9. a) Supply the prepositions where necessary,

b)Write down 3-5 questions about the text.

Focus on Fiscal Consolidation

The past two decades have seen the development of a worrisome and unprecedented phenomenon – the ballooning of public debt in industrial countries during a period of general peace and economic prosperity. In the past, large but temporary budget deficits arose in response ... extreme circumstances, such as major wars or global economic depression. But these debt problems were transitory, because in their wake, governments tightened their belts and cut back ... spending.

A striking characteristic of modern fiscal imbalances is that they originate ... dramatically increased spending rather than falling revenues.

Economists identify several forces that may be behind these imbalances in industrial countries, including:

•The growth of public pension and social spending. Aging populations in industrial countries are growing dramatically, which means more elderly people to support, much higher health care bills, and a smaller share

... the population to work and pay taxes. These future liabilities dramatically worsen the budget prospects of industrial countries. According ... IMF staff estimates, public pension liabilities in 1994 exceeded 68 per cent ... GDP in all major industrial countries. The situation is even worse when commitments to provide future health care benefits are taken ... account. The bad news conveyed ... these figures is that public pension programs are much more generous than governments are likely to be able to support. Future generations of workers will thus face ... either much higher tax burdens to maintain the levels of benefits or sharply reduced benefits;

•Unemployment benefits;

•The productivity slowdown since the early 1970s;

•Increased exchange rate flexibility since 1973 and growing

•integration of world capital markets, which make it easier for governments to run large budget deficits. Persistently high levels of government debt are a threat ... economic health. The heavy public debt burdens in most industrial countries make it imperative ... governments to take unpopular and painful... people remedial actions.

Words you may need:

fiscal consolidation укрепление бюджетно-налоговой политики

worrisome adj вызывающий беспокойство balooning n раздувание, расширение transitory adj временный

in the wake of по следам, по пятам (чего-л.) to tighten one's belt затягивать пояс

public pension liabilities обязательства по выплате пенсий imperative adj настоятельный

painful adj болезненный remedial adj (зд.) коррективный

Ex. 10. Open the brackets putting the verbs in the correct form:

Transition economies recently (to make) impressive steps towards reducing fiscal imbalances. Cuts of cash expenditure (to bring) about a decline of fiscal deficits for the CEE countries as a whole to about 4 per cent of GDP in 1995 from 10 per cent in 1994 on average. This was mainly the result of large reductions in enterprise subsidies, military spending, and capital expenditures. Despite these spending cuts, however, outlays for social services (such as schools and hospitals) and social security (to remain) relatively stable, relative to GDP. Over the same period, general government expenditures (to fall) on average to 30 per cent of GDP from 38 per cent. While the economies in transition (to make) solid progress over the past few years toward fiscal consolidation, macroeconomic stabilization (to require) additional reduction of inflation and successful implementation of:

•structural reforms, including reform of the tax system and the public expenditure system;

•improved revenue collection through elimination of loopholes, tax evasion and exemptions, broadening of the tax base;

• greater political leadership of the reform process – especially by formulating long-term fiscal adjustment policies.

Words you may need:

transition economies страны с переходной экономикой on average в среднем

loophole n лазейка

tax evasion уклонение от уплаты налогов leadership n руководство

Ex. 11. a) Fill each gap with a suitable word from the box.

b) Sum up the text in 5-7 sentences and present your summary in class. repaid reliance leads

supply adversely bank occur reduced limit Financing the Deficit

Since the early 1970s quite a number of countries have been experiencing serious financial problems which have caused growing budget deficits.

Trying to find solutions to swollen budget deficits, governments undertake austerity programmes, work out harsh budgets, implement macroeconomic stabilization, establish priorities for government spendings, analyse effects of different ways of financing their budget deficits.

In principle, budget deficits may be _____ by borrowing from domestic bank and nonbank sources, and from the rest of the world.

Excessive_____ on any of these methods of finance may be dangerous because:

•Government borrowing from the central_____directly affects the monetary base and the money_____. Excessive growth in the money supply leads to high inflation rates and balance-of-payments problems.

•Substantial borrowing from the nonbank sector may _____ affect the structure of demand and growth potential. In particular, this borrowing may_____the availability of resources to finance private investment. Such "crowding out" of private investment may_____ through the impact of government borrowing on domestic interest rates.

•Reliance on external finance_____to the accumulation of debt, which needs to be serviced and eventually_____.

A prudent fiscal policy permits a public deficit, but it must be maintained at a level consistent with other macroeconomic objectives: controlling inflation, promoting private investment, and maintaining external creditworthiness.

Words you may need:

austerity programme программа жесткой экономии

harsh adj жесткий, суровый

"crowding out" вытеснение частных инвестиций государственными расходами

DISCUSSION

Ex. 12. a) Read and discuss the texts.

b)Write down five questions about each text.

c)Say what you know about the use of multiyear budgeting and budget classification in Russia.

a) Multiyear Budgeting

It has become quite common for ministries of finance around the world to practise some variety of multiyear budgeting. For example, Canada, Germany and the United Kingdom all have multiyear expenditure plans which get reviewed and approved every year. In these countries, the starting point for the next year's budget is the expenditure level approved for this year in the multiyear expenditure plan. Any changes to these previously approved levels have to be treated as additions to the budget, to be financed by raising total spending or by making offsetting changes in other programs.

In Germany, the annual budget is integrated in a multiyear financial plan, which is presented to parliament at the same time the annual budget is presented.

The most important objective of the multiyear financial plan is to monitor the possible existence of excessive demands on public resources.

In Canada, each year the federal government reviews and rolls forward the Fiscal Plan which comprises in more detail the current fiscal year and three more years. Each spending unit develops its own multiyear expenditure plan with the levels needed to keep the current level of services running for the next three years, which are then negotiated with the Treasury Board.

In the United Kingdom, the multiyear public expenditure survey also covers the next three fiscal years. Even when they do not have multiyear expenditure plans other countries carry out forecasts of the financial consequences of current expenditures (for example, the future liabilities implied by increases in pension plans) or capital investment projects (such as future expenditure on maintenance and operation). For example, in Denmark, there is an appendix to the annual budget showing the expenditure level for the next three years.

From: Fiscal Management in Russia, World Bank, 1996.

Words you may need:

multiyear budget многолетний бюджет offsetting changes компенсирующие изменения roll forward v переносить

b) Types of Budget Classification

A system of budget classification enables the myriad government operations and transactions to be organized into relatively homogeneous categories that facilitate the analysis of the impact, nature, and composition of revenues, expenditures, and other financing activities of government.

On the revenue, taxes are classified by the type of activity on which the tax is levied (income, sales, property and so on). Other current non-tax revenues are classified by the nature of the inflow, such as income from government property, sales proceeds, fines, and donations. Capital revenues are classified by the type of asset sold.

Grants are distinguished by whether they come from domestic or foreign governments and international institutions and whether they are for current or capital purposes.

On the expenditure, outlays are frequently classified by the responsible institution or organization. The two most useful types of classifications of government expenditures are the functional classification and the economic classification.

In functional classification, expenditures (and lending) are classified according to the main purpose or function, such as defense, education, and health. The three-level Classification of the Functions of

Government published by the Statistical Office of the United Nations is commonly accepted. The value of functional classifications is that they permit analysis of trends in government expenditures even when the organizational structure of government changes.

The economic classification groups expenditures into current and capital and by whether they are requited or unrequited; if requited, for what kind of goods and services, and if unrequited, by the type of person or institution receiving the payment. The objective is to show the kinds of transactions through which the government performs its functions and their impact on markets, financial conditions, and the distribution of income. These transaction categories are wages and salaries, purchases of goods and services, interest on the debt, subsidies to enterprises, transfers to households and other governments, and lending.

One of the most useful ways to analyze government outlays is by means of a cross-classification by economic character and function. This classification reveals the means by which government performs its functions and the impact these activities will have on the rest of the economy.

From: Fiscal Management in Russia. World Bank, 1996.

Words you may need:

functional classification функциональная классификация economic classification экономическая классификация requited adj возвратный

cross-classification перекрестная классификация

Ex. 13. Read the dialogues, sum up their content and act them out: a) Fiscal Policy in Transition Economies: a Major Challenge

Russian: It is recognized that fiscal policy has been at the centre of the economic reform programs pursued by economies in transition.

Foreigner. Yes, practically all programs that they followed in their initial stage included a fiscal component. The transition economies needed to create basic market-based institutions and practices in the fiscal area like taxation and budget process first of all.

R.: What were their first steps towards market economy?

F.: They began to reform the budget process, to reorder expenditure priorities, to revamp the tax system, to restructure and privatize the state-owned enterprises and the banking system.

R.: It seems to me that in the process they have faced tasks similar to those of market-oriented economies. F.: Well, if you mean the need to tame high inflation and balance-of-payments deficits, to eliminate structural distortions, to reverse poor investment performance and economic stagnation, then you are right. But the implementation of fiscal adjustment programs started in Eastern European countries in a peculiar economic situation, when they embarked on the reforms.

R.: Yes, the process of fundamental institutional change has brought about severe economic and social dislocation and macroeconomic imbalances. As a result, the high inflation, the dramatic fall in economic activity and the deterioration in revenue performance were unprecedented in modern times.

F.: It should be said in all fairness that most countries accomplished a relatively successful correction of the initial fiscal imbalance, which helped to dampen inflation expectations and solve other problems.

R.: What are they working on now?

F.: The economies in transition are engaged in a major effort to redefine the functions of government. The all-encompassing role of the state as regulator of economic activity is being cut back drastically. But the role