Pros and Cons of Public Borrowing and Public Debt for the Russian Budget System

Abstract

The article is devoted to the advantages and disadvantages of debt instruments to finance government needs. This topic is relevant because the current economic situation in conjunction with the tasks of breakthrough development requires a sufficient level of sustainability of public finance. To substantiate in detail the possibility of using public debt the article describes the basic peculiarities of budgeting mechanism: what a budget is, its revenue and expenditure, effective budget balancing in case of budget deficit. Within the given framework, the author focuses on the essence of public debt and borrowing, determines their place in the budgeting mechanism, reviews foreign experience and identifies advantages and disadvantages of this tool which makes it possible to assess the necessity of applying this mechanism. The conclusion is made that using public borrowing is appropriate because it provides an opportunity for budget maneuvering and helps to mitigate negative consequences of economic shocks but it is necessary to take into account the current economic situation along with the risks of financial stability, thus to conduct a balanced debt policy.

Keywords

• economy
• financial policy
• public debt
• public borrowing
• financial stability