Financial Balance

the consolidated financial plan, a component of the balance of the national economy of the USSR. The financial balance ensures that state revenues match expenditures; it expresses in summary form the requirements of the economy for monetary resources, the sources of the funds, and the methods of accumulating the funds. The financial balance is used as an effective instrument of overall planning in specifying economic priorities, apportioning resources, and ensuring the elaboration and balancing of the state’s financial program in its most general form.

In the initial planning stage, the compilation of the financial balance promotes the necessary balance between the state’s revenues and expenditures; it also aids in selecting the optimal version of the national economic plan, that is, the version that corresponds to the economic objectives and targets and ensures a balanced development of the country’s economy. In the next stage of compilation, the stage in which the system of financial plans is formed, the state budget of the USSR serves as the principal means of coordinating financial relations. The state uses the budget to integrate the financial plans, to determine the role of each plan in carrying out the fiscal policy, and to establish the financial and budgetary relationships arising from the specific targets of the national economic plan.

The financial balance consists of two balanced parts: state revenues and state expenditures.

State revenues comprise monetary accumulations (profits of state enterprises and organizations, turnover tax, contributions to the social insurance fund), amortization deductions, and revenue from collective farms, consumer cooperatives, and public organizations (primarily in the form of income tax). Also included are revenues from foreign economic operations, receipts from the population (for the most part, state taxes, payments on freely circulating loans, revenues raised through lotteries, and voluntary contributions), and bank resources used for increasing credit funds.

State expenditures comprise capital investments, capital repairs, increases in the amount of working capital put at the disposal of enterprises, allocations to economic incentive funds, and subsidies. Also included are outlays for sociocultural measures, science, administration and management, and national defense; expenditures on foreign economic operations; increases in bank credit funds; outlays for setting up state material and financial reserves; and operating and miscellaneous expenditures.

The financial balance plays an important part in the long-range planning of public finance. Covering a period of five or more years, the balance expresses the state’s long-range financial program and serves as the basis for determining the directions of fiscal policy over an extended period.