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FINANCE AND FINANCIAL SYSTEM

The status of any international organization as a person in inter­national law is dependent upon the treaty constituting the organiza­tion. The usual theory accounting for the international legal personality of international organizations explains that states dele­gate some of their sovereign powers, thus some of their international personality, to international organizations so those organizations can fulfill their designated functions in international relations.

Although it is theoretically conceivable that such delegation could be tacitly concluded in customary international law, in fact, every international organization is the result of an explicit international agreement. It is to the treaty, effectively the constitution, of each international organ­ization that one must first turn to define the organization's functions and powers. Of course, a treaty's provisions may be amplified, as necessary, by implications from custom and general principles of law.

Regardless of its status in international law, an international organization's legal personality may be separately defined by municipal law at least for domestic purposes. So, for example, in the United States, presidential executive orders, pursuant to the International Organizations Immunities Act, designate various international or­ganizations as legal persons for the purposes of U.S. law. Like a foreign state, an international organization may be entitled to extend diplomatic immunities to its personnel.

Unlike states, however, which by definition have their own territories, populations, governments, and capacities to conduct interna­tional affairs, the attributes of international organizations are usually quite limited. Their competence is restricted to certain designated functions.

So, for example, few international organizations have any executive capabilities; these usually remain with the member states. International organizations often serve merely as gatherers of infor­mation, organizers of conferences, and makers of recommendations.

A few regional international organizations like the European Eco­nomic Community have been delegated some real legislative powers and, in the cases of the European Courts of Justice and of Human Rights, some effective judicial authority.

Task 9. Speak on:

1. Subjects of international law.

2. Sources of international law.

PUBLIC FINANCE

A. TEXT

FINANCE AND FINANCIAL SYSTEM

Finance is the provision of money at the time when it is needed. It is a system of monetary relations leading to formation, distribution and use of money in the process of its turnover between economic entities.

The financial system is the network of institutions through which firms, households and units of government get the funds they need and put surplus funds to work.

Savers and borrowers are connected by financial intermediaries including banks, thrift institutions, insurance companies, pension funds, mutual funds, and finance companies.

Finance in an economic system comprises two parts: public finance and finance of economic entities.

Public finance is the provision of money (by the community through taxes) to be spent by national and local government authorities on¹ projects of national and local benefit. It is a collective term for the financial flows and also the financial institutions of the public sector.

Public finance has the following four functions: a) the provision of essential services; b) the encouragement or control of particular sectors of the economy; c) the implementation of social policy in respect of social services, and d) the encouragement of the growth of economy as a whole.

The major instrument of any financial system is the budget. In a market-oriented economy, the budget is the most important tool for achieving national priorities and goals through the allocation and distribution of resources, and the maintenance of a stable mac-roeconomic environment.

The budget is an estimate of national revenue and expenditure for the ensuing fiscal year. When expenditure exceeds the revenue the budget has a deficit.

Revenue and expenditure forecasting is the most fundamental step in the process of budget preparation. Adequate planning of recurrent and capital expenditure depends critically on an accurate forecast of revenue availability: The determination of the expected overall deficit in the public sector and therefore the macroeconomic impact of fiscal policy requires accurate forecast of tax collection and expenditures.

In Russia, public finance is a sum of budgets of all levels of subjects of the Federation, extrabudgetary and reserve funds.

An accurate revenue forecast is most critical at the federal level of government but it is also important for all subnational governments because over the last several years they have worked with increasingly autonomous budgets.

Budget preparation at the federal level involves a number of institutions. The Ministry of Finance (MoF) is the central coordinating institution in charge of compiling and presenting the budget. It has major inputs from² ministries in various sectors of the economy and the state tax bodies.

B. DIALOGUE