Investments and investment situation in Ukraine - Investments

The Ministry of Education of Ukraine

Volyn Institute of Economics and Management

Cherkassky Training and Consulting item


on political economy

on the topic: Investments and investment situation in Ukraine admitted to protect student of OA-1

Opara NG




2000 g.Soderzhanie


2. Investments and their place in the economic system


3. The gap between savings and incentive to


4. collective investment. 19

3.1. Equity investment funds. 21

3.2. Mutual funds. 22

3.3. Private pension funds. 22

3.4. Investment banks. 23

5. Internal sources of investment. 23

4.1. Profit as a source of investment.


4.2. Depreciation.


4.3. Budget funding.


4.4. Bank loan.


4.5. Funds from the public.


6. The strategy of investment activity in Ukraine. 28



Study of the problems of the economy of investment has always been the focus of economic science. This is due to the fact that the investments affect the deepest foundations of economic activity, defining the process of economic growth in general. In the present conditions they perform important means to emerge from the current economic crisis, structural shifts in the economy, the provision of technical progress, improve quality indicators of economic activity in the micro and macro levels. Activation of the investment process is one of the most effective mechanisms for socio-economic transformation.

Urgent now is to deepen the theoretical study of market forms and mechanisms of investment activity at the micro and macro levels. An important problem appears theoretical justification criteria of efficiency of investment costs, interrelationship and interdependence of capital investments and structural changes in the economy, setting priorities in the sectoral structure of investments, as well as in major national economic areas: primary production (own production), industrial and social infrastructure. Of equal importance is the study of the sources and means of investment resources in the current economic transition in Ukraine.

Prevailing now in Ukraine economic situation considerably complicates investment activity: requires the development of adequate market economy investment mechanism, organically combining forms of private and public investment, optimize the relationship between different subjects of investment activity, the development of appropriate legal and regulatory framework and other measures governing the investment process, as the level of the individual firm, company or industry, and at the level of the national economy as a whole.

These questions are indigenous, they are closely related to the fundamental social and economic processes of social development, with the tasks to overcome the economic crisis. Therefore, the study of modern features of the investment activity of various business entities is one of the main priorities of economic science.

In this paper, we assume that investment - is the main tool of formation of micro- and macro-economic proportions determined by the rate of economic growth. The regulatory impact of society on the formation and structure of the use of investments can only be made by identifying sound economic incentives and regulations. Development of the national economy of Ukraine, as part of the world economy, based on the obligatory consideration a number of important general laws in the field of investment activity, but at the same time, it creates new essential features of a change in economic priorities, the development of the national market. Therefore, the motion of investment should be viewed as the result of the interaction of these factors.

Development of investment and priorities in their use can be used in the teaching of economic disciplines. In economic practice can be used based recommendations for improving the economic mechanism of investment activity, identifying criteria optimization of the accumulation and consumption, the use of the priority areas of investment potential and others.

1. Investments and their place in the economic system.

The system of reproduction, regardless of its form of society, investment plays a major role in the renewal and increase of productive resources, and, consequently, the provision of certain growth. If we imagine the social reproduction as a system of production, distribution, exchange and consumption, investments, mainly related to the first link - production, and can be said to constitute the material basis of its development.

The very concept of investment (from Lat. Investio - dress) means investing in economic sectors in the country and granitsey1. Distinguish financial (purchase of securities) and real investment (capital investment in industry, agriculture, construction, education, and others.).

Real investments represent investments of capital in any sector of the economy or the company, resulting in the formation of new capital increment or cash capital (buildings, equipment, goods inventories, etc.). Financial same - capital investment (public or private) in stocks, bonds, and other securities. Here, the real capital growth does not occur, there is only a purchase, transfer of title of ownership. There is, thus, transfer (i.e., transfer operation).

The concept of investment resources covering all produced means of production, ie, all kinds of tools, machinery, equipment, factory, warehouse, transportation and distribution network used in the production of goods and services and their delivery to the end user. The process of production and accumulation of the means of production is called investment.

Capital goods (means of production) differ from consumer products that meet the needs of the past itself, while the former do so indirectly by providing consumer goods. In fact, in terms of content, the investment is capital with which multiplies the national wealth. It should be borne in mind that the term "capital" does not mean money. However, managers and economists often speak of "money capital", referring to the money that can be used for the purchase of machinery, equipment and other means of production. However, the money, as such, do not produce anything, and therefore they can not be regarded as an economic resource. Real capital - tools, machines, equipment, buildings and other production facilities - an economic resource, money, or financial capital, such resources are not.

Investments - is that "lay" for tomorrow to be able to consume more in the future. One part of the investment - is consumer goods that are not used in the current period, and are deposited in the reserve (investments to increase the reserves). Another part of the investment - are the resources that are directed to the expansion of production (investment in buildings, machinery and equipment).

The system of national accounts statistics of Ukraine on investment (capital investment) includes only material costs (for cars, buildings, structures), but does not include major investments in "knowledge", "intelligence", research and education. Such an approach, in which the investment is included in a direct material components, may not accurately determine the actual volume of investments.

Thus, under the investment are those economic resources that are directed to the increase in the real capital of the company, ie the expansion or modernization of production facilities. This may be due to the acquisition of new machinery, buildings, vehicles, as well as with the construction of roads, bridges and other engineering structures. This should also include the cost of education, research and training. These costs represent an investment in "human capital", which at the present stage of economic development are becoming more and more important, because, ultimately, it is the result of human activity act and buildings and structures, and machinery and equipment, and most importantly, the main factor of modern economic development - intellectual product, which determines the country's economic position in the global hierarchy of nations.

Investment structure can be represented by the following scheme (see. Figure 1).

Scheme 1.

Structure of investments

The system of relations expanded reproduction investments perform vital structural feature. From that, in any sector of the economy invested funds for its development depends on the future structure of the economy, or will be the predominant engineering plants producing agricultural machinery and engineering factories producing military equipment and supplies. Or, further, the prevalence is on the side of construction companies, specializing in the construction of large industrial complexes or on the side of construction companies erecting comfortable accommodation.

Private investment is mainly focused on the task fully profit. Consequently, the level of profitability of each sector of the economy, sub-sector, individual enterprise level of investment is determined by the preference of the industry sub-sector enterprise.

Profitability - is the most important structure-forming criterion determining the priority investments. Non-state sources of investments are directed primarily at the highly profitable industry with the rapid turnover of capital. In these circumstances, the sectors of the economy with a slow return on investment, remain nedoinvestirovannymi. Excessive investment leads to inflation ("overheating" of the economy), the lack of same - to deflation. These extreme poles of economic policy should be adjusted effective strategy in the field of taxation, government spending, monetary and fiscal measures implemented by the government.

The transition to market relations in the sphere of investments is primarily concerned with its sources. Investments may be at the expense of their own financial resources of the investor (depreciation, profit, cash savings, the savings of citizens, legal persons and other.) Raised funds investors (banking, budget, bond loans, as well as funds received from the sale of stocks, bonds, , mutual funds and other contributions of citizens and legal entities), budget allocations and investment of borrowed funds (credits, loans).

To learn how to change the structure of the generated investment resources, with the development of market relations in Ukraine can be judged according to Table 1.

As can be seen from Table 1, the structure of investment resources, down in Ukraine in recent years, is not optimal and it is clearly shown by the data on one of the most industrially developed regions - Dnepropetrovsk. Thus, the share of one of the main sources of investment - depreciation is extremely low, and in 1992. held in total 0.41% in 1993. - 2.1% in 1994. - 3.2% in 1996. - 38% indicates that the refraction of the situation in the desired direction. During the period under radically changed the role of profit as an essential resource for the formation of investment funds: it increased from 4% in 1992. to 49.4% in 1993. 7.3% in 1994. and 43.6% in 1996. although such sharp differences within small time, of course, can not be a positive influence on the investment climate, which is marked stable only in a more or less well-established structure of investments. Approximately the same part is made in the years under consideration, their own money savings investors in 1992. - 19% in 1993. -21%. The changing role of borrowed funds: from 76% in 1992. to 19% in 1993. 11.3% in 1994. 12.8% in 1996. True in 1992. in this article were funds allocated to their budget sources, since 1993. budgetary funds allocated in a separate article. A very significant change in the trend of the times is the role of such items as income from shares, which, of course, should continue to grow, from 0.02% in 1992. to 2.86% in 1993. 2.7% in 1994. and 0.5% in 1996.

By the nature of the formation of investment in modern macroeconomics, in connection with the construction of models of the economy, in particular, the multiplier models, made to distinguish between autonomous and induced investment.

Under autonomous investment refers to the formation of new capital, regardless of the rate of interest or the level of national income. The reasons for the emergence of autonomous investment are the external factors - innovation (innovation), mainly related to technological progress, the expansion of foreign markets, population growth, coups, wars. The most typical example of autonomous investment are the investment of public or non-governmental organizations associated with the construction of military and civilian facilities, roads, etc. Under the investment induced understand the formation of new capital by increasing the level of consumer spending. Autonomous investment give an initial boost to the economy, causing a multiplier effect, and induced, as a result of increased income, lead to its further growth.

Table 1.

Sources of investments in the Dnipropetrovsk region

for 1992-1996. *

Sources of investment units as% of total


1. Depreciation charges

2. Profit

3. Proper money savings

4. Borrowed funds (including loans)

5. Income from shares



1. Depreciation charges

2. Profit

3. Proper money savings

4. Borrowed funds

5. Income from shares

6. Budget funds



1. Depreciation charges

2. Profit

3. Contributions to the statutory funds of other enterprises

4. Bonds

5. Shares and Deposits

6. Other borrowed funds

7. The budget and extrabudgetary funds



1. Depreciation charges

2. Profit

3. Contributions to the statutory funds of other enterprises

4. Bonds

5. Shares and Deposits

6. Other borrowed funds

7. The budget and extrabudgetary funds


million. BEF.







million. BEF.








million. BEF.









thous. UAH.






































* The table is based on the statistics of the Dnepropetrovsk oblstatupravleniya.

The process of formation and use of investment resources covering a specific period, which is called the investment cycle. If we consider a real investment, it includes the following stages: research and development; design; construction; mastering. It can be represented by the following scheme (Scheme 2).

Investment plays a central role in the economic process, they determine the overall growth of the economy. As a result of investment in the economy increased production volumes, rising national income, develop and go forward in the economic rivalry between industries and enterprises to the greatest extent meet the demand for certain goods and services. The resulting increase in the national income partially re-accumulates, there is a further increase in production, the process is repeated continuously. Thus, investments, at the expense of the national income as a result of its distribution, determine its own growth, expanded reproduction. At the same time, the more efficient investment, the greater the increase in national income, the greater the absolute size of storage (at a given his share), which can be re-invested in production. At sufficiently high efficiency of investment growth in national income can provide increase in the share savings with an absolute increase in consumption.

It would be wrong to link the growth of national income only industrial investments, although it is obvious that they directly determine the increase in production capacity and output. It should be noted that this growth has a significant impact, albeit indirect, and also investments in non-material production, the global trend is that their importance in further increasing the economic potential increases.

A large proportion of investment accounted for the construction sector of the economy. Therefore it is necessary to clarify the role and importance in the reproduction process categories such as capital investments and capital construction.

Capital expenditures represent a set of costs associated with the creation and maintenance of fixed assets of the economy, intended for economic development. They represent a broader concept than capital construction.

Capital construction is part of the capital investments. In the process of capital construction is carried out only part of the capital investments equal to design and estimate the cost of construction and installation work on the project.

Figure 2

The structure of the investment cycle

Investment cycle


Construction - one of the largest sectors of the economy, which includes construction and installation contractors, design and development, design organizations and enterprises, scientific research institutions, building structure, organs of economic construction management, as well as a varied number of small and medium-sized private and collective construction firms . The peculiarity of the construction is the construction of immovable objects of fixed assets; create products is fixed and is used in the place of its location. The construction process is different, as a rule, long duration, capital intensity and material, production is individual, as is intended for a single customer. Every construction project is carried out on an individual project and is tied to a specific territory, so the means of labor and labor are constantly moving from one object to another. Very diverse nature of the facilities under construction and work performed, the value of which is determined by the specific cost - estimated cost. The end result is a building construction products, which is placed in service production facilities and fixed assets for the full estimated cost. The share of these products in the gross national product is about 9% .1

A significant part of the capital investments made bypassing the stage of construction, for example, in the form of the cost of acquisition of vehicles, agricultural machinery and equipment, does not require installation, etc. With the help of investments subject to regulation proportions and rates of development of individual sectors of the economy.

Capital investments cover the cost of construction and installation works, acquisition of equipment requiring and not requiring installation provided in the estimates for the construction, industrial tools and inventory included in the estimate of construction, machinery and equipment, office equipment, non-construction costs, other capital cost and performance.

Reproduction of fixed assets of the economy takes place through three main channels of investments: the state capital investments; capital investments undertaken by the enterprises and companies; investments made by the resources of investment funds and companies formed on the basis of the accumulation of funds of the population.

Of the total amount of investments accounted for most of the capital investment in expanded reproduction, which is the main source of national income. The magnitude of these investments, known as net investments can be judged by the increase in fixed assets, although the exact correspondence between them for each period of time may not be. An illustration of this situation here can serve as a circuit 3. Increase in fixed assets for a certain period, usually a year, calculated on the value of completed construction projects on the balance sheet and capital investments this year is tempered by the banks, which are embodied in the completed and handed over fixed assets after completion of construction required for a specified time.

Another source of capital investments is sinking fund. The average depreciation of fixed assets, especially on working machinery and equipment, in the Ukrainian economy is quite high, and in 1991 was 45%, including in industry - 51.3%, agriculture - 27.1%, construction - 64.5 %. In 1993, the rate of depreciation of fixed assets fell slightly and amounted to 33.1%, including in industry - 37.8%, agriculture - 20.7%, construction - 42.1% .2

A significant deterioration of the equipment adversely affects the quality of products. Existing standard life on average 16-17 years, and in fact - even more. Average standard terms of service, such as equipment, it is advisable to reduce to 9-10 years.

In a growing economy (a) Gross investment exceeds depreciation, which means that the amount of capital increases. In a static economy (b) gross investment completely replace capital consumed in the production process of annual production. In a stagnant economy (c) gross investment is not enough to replace the capital consumed in annual production. The result is a reduction of capital in the economy.

accelerate the disposal of obsolete equipment, and, consequently, the increase in the compensation. Then the amount of depreciation would increase compensation. Then the amount of depreciation would increase

In the US, for example, the average age of the means of labor in the economy, at present, is 10.1 years compared to 17.1 in 1940, the average life of the equipment only 6.3 years, buildings and structures - 13.4 year.



At 1 January Annual GDP at December 31,

a) Growing




At 1 January Annual GDP at December 31,

b) Steady-state economy



At 1 January Annual GDP at December 31,

a) Reduce


Figure 3. Growing, static and stagnant economy

Distinguish between sectoral and territorial, technological and reproduction structure of capital investments.

For technical renovation of production is very important use of capital investments for the reconstruction of existing enterprises. In this regard, it is important to establish a suitable relationship between investment in new construction, reconstruction, modernization and expansion of existing production facilities.

In the US, for example, at the turn of the 90s., Was changed technological and reproduction structure of industrial investment: on the active elements of capital - machinery and equipment - in the early 80s accounted for 62% of the investment, and in the early 90's - 85 %. To upgrade equipment - respectively 52 and 75% 2. In Germany, at the moment, more than 80% of investments directed towards the modernization and replacement of equipment, and only 20% - to expand moschnostey.3

About how this structure is composed of capital investment in the economy of Ukraine, can be judged by the following data (Table 2)

Table 2.

Structure of capital investments in Ukraine in 1980-1995 gg., In% as production facilities *

Indicators 1980 1985 1990 1991 1992 1993 1994 1995

Capital expenditures, total

including those aimed at the modernization and reconstruction of existing enterprises

the expansion of existing enterprises

new construction

on individual objects existing enterprises





































* The table is compiled according to: The economy of Ukraine in 1991. Statistical Yearbook. K. Technique. 1992, s.397

The national economy of Ukraine in 1993. Statistical Yearbook. K. Technique. 1994, p.219

National Economy of the Ukrainian SSR in 1990. Statistical Yearbook. K. Technique. 1991, s.406

Statistical Yearbook of Ukraine for 1995. K. Technique. 1996, s.275

1Statistical Abstract of the United States, 1993, p.429

2Makkonnell K., S. Brue, Economics, Volume 1, Moscow, Nauka, 1993, s.238

3Ekonomika foreign countries, MA, Graduate School, 1990, s.270

As can be seen from the analysis of the data in Table 2 the share of capital investments aimed at reconstruction, expansion and modernization of enterprises increased from 70.2% in 1980 to 76.5% in 1991, while the share of funds allocated for the modernization and reconstruction of this volume increased even more dramatically, from 39.8% to 61.1. New construction is correspondingly decreased from 29.8% to 16.6%.

The share of capital investments in the reconstruction we have improved, but still lower than in developed countries, primarily the United States. To reconstruction of enterprises took its rightful place, you need to include it as a mandatory step for long-term development of each company, the same way as planned overhaul of the building and equipment of the enterprise. It is desirable that the implementation of reconstruction and modernization, and would coincide in time with the overhaul.

By the separation of capital investments for new construction and reconstruction of adjacent their division into extensive and intensive investment type. Attachments extensive type called investments aimed at increasing production based on the existing equipment and technology. Investments of this type require the use of additional quantities of raw materials, work, energy, proportional to the increase in production, which leads to an increase in the number of jobs and reduce capital intensity and cost of production. Under intensive type investments are those investments which include the introduction of new or improved techniques and technology, the use of internal reserves of production, reduction of losses.

Increased efficiency of capital investments possible primarily through investment intensive type. Unfortunately, the statistics are not yet distinguish between the two types of capital investments. It seems that in practice, statistical reports such distinctions should be introduced. This could serve as an important criterion for investment incentives and tax policies.

Intensive growth factor type of investment is rapidly increasing material standard of living. Since increasing the production apparatus increases productivity. So today's welfare is largely the result of yesterday's investments and current investments, in turn, lay the foundations for future increase productivity and welfare.

There is a problem of choice between consumption today and tomorrow. The greater part of produced today we save up and invest, the more we will be able to consume tomorrow. On the contrary, the more resources we use today ("will drive"), the less we will have a chance of significant growth in production and higher consumption in the future. This is the main reason why the low level of savings can be a serious problem for the entire economy.

"In the US, the rate of accumulation of 15-16% of national income in Western Europe 20-22%, in the former Soviet Union, according to many experts, based on world prices in dollars, it has long been held at the level of 45-50%. 50% - is the norm of the present war. "1Nalitso thus excessive accumulation share in national income. But it must be borne in mind that in the United States are not included in the accumulation of military spending, as was the case in the Soviet Union. The rate of accumulation in the civilian sectors in the United States was higher than in the former USSR. Therefore, the accumulation in the USSR was of ruinous nature, as most of the accumulated funds directed at military targets, in other words, at the level of living of the population are affected very negatively.

Moving investment from centralized to decentralized sources led to a loss of control of the investment process, to the spontaneous formation of individual and local programs of accumulation and reproduction, to use for this purpose is quite small means, even when compared with the opportunities that are available to businesses. A considerable part of decentralized storage is not used as a result of, first, a rise in price of advanced machinery and equipment, and secondly, the lack of material resources, and third, the lack of adequate interest and motivation to rapid technological renewal, because market mechanisms are not yet operating at full capacity, cooperation with suppliers of energy, raw materials and components is broken, there is no reliable customers. Therefore, much of the money remains unrealized, and accumulated financial resources several times higher than the actual amount of investment. With proper market motivation it gives hope for the opportunity not only to maintain and develop vital investment structures, but also to step up investment process itself.

To do this, you must really turn the gain controls investment, encourage her not only the removal of taxes on investment, but also the formation of a sufficiently large budgetary and extra-budgetary funds for investment and innovative, interdisciplinary and inter-regional cooperation and integration, the creation of favorable conditions for foreign investors. In this case, structural adjustment in the economy should be sent at least 50% of long-term bank loans.

If Ukraine does not happen financial stabilization, we will, in the end, we are doomed to the restructuring scheme, typical of the "third world", with the total submission of our economy developed economies, with all the ensuing consequences.

2. The gap between the incentive to save and invest.

Savings and investment in our industrial society are usually carried out by different people and for different reasons. It was not always so. Even today, if a farmer devotes part of his time drainage works, instead of a cart used to do the culture and harvest, he saves and at the same time investing. He saves as refraining from consumption in the present in order to ensure greater consumption in the future. The size of these savings is determined by the difference between the value of its net real income and consumption expenditure. However, he invests, for improving farm production capacity represents a net investment. According to the wearing of a simple farmer, we are seeing not only a coincidence of savings and investment, but also the reasons why, in the name of which he carries out these processes. He refrains from consumption in the present (saves) just because he wants to carry out drainage works (ie, invest). If there were no opportunity to invest, he would never have thought to save.

In our modern society the net capital formation, or investments made by industrial or commercial enterprises, and especially corporations. If a corporation or a small enterprise have great investment opportunities, their owners will be tempted to put back most of their income. Therefore, industrial savings largely depends directly on industrial investment.

However, savings are also carried out by different groups of the population: individuals and families. A person can have the intention to save because of the very different reasons: because he wants to provide for themselves in old age or accumulate a certain amount for future expenses (holidays or purchase of a car). He can feel the unreliability of its position and strive to provide themselves on a rainy day. It can be guided by the desire to leave a state to your children or grandchildren. It may be 80 years of a miser who does not have our glaciers and performs accumulation of passion for money as such. Whatever the motivation of the person from the sensible, carrying savings, they often have little to do with investment opportunities. This is due to the fact that in our everyday language, the word "investment" does not always have the same meaning as assigned to it in economic discussions. We call "pure investment", or capital formation, that is a net increase in real capital (buildings, equipment, material inventories, etc.). Babbitt also speaks of "investment" when he buys a piece of land, outstanding securities or any other property title. For economists, this is purely a transfer operation. The fact that one invests, someone else dezinvestiruet. Net investment takes place only when creating a new real capital.

Net capital formation takes place mainly in the industrial and commercial enterprises. Its value varies greatly from year to year, from decade to decade. It is not permanent, changeable behavior exists because investment opportunities depend on the new coatings, new products, new territories and borders, new resources, new population, as well as increasing the level of production and income. Investment depends on the dynamic and relatively poorly identifiable elements of growth: the development of technology, from politics, optimistic and pessimistic estimates, government taxes and spending, legislation, etc.

The high degree of moral and physical deterioration of fixed assets requires urgent measures to increase the investment activity, the highest and best use of all possible sources of financing of capital investments.

Financing of investments carried out by internal and external sources. Internal sources include the own funds of enterprises and savings, budget allocations (from the federal and local budgets), as well as long-term debt (government and commercial). External sources are private foreign direct and portfolio investment and foreign loans and borrowings (including guaranteed by the government).

4. collective investment.

The development of industry and agriculture in Russia depends on the ability to attract financial resources for these purposes. The inefficiency of the state budget financing of the economy eloquently proven experience of previous years: money do not go to where they are most effective, and where lobbyists more pliable and ministry officials.

Therefore, the revival of the domestic economy is largely dependent on the ability to create an environment where billions of rubles belonging to citizens, will pass easily through financial intermediaries from the category of savings in the category of long-term investments, and where will produce the most profit. In the world of the three types of financial intermediaries:

?depozitny - commercial banks, savings and loan associations, mutual savings banks, credit consumer cooperatives (credit unions):

?kontraktno Savings - life insurance companies and property, pension funds;

?investitsionny - mutual funds, mutual funds, trust funds, investment companies closed.

What is the collective investment differs from, say, bank deposits, which also brings together the money of depositors and may purchase securities? The difference is that the owner has the right to require a bank deposit it back with interest, no matter how well the bank invested depositors' money (of course, if the bank does not go bankrupt). It is the bank assumes the risk that his investment may not bring necessary for the payment of interest income. And when the collective investment risk lies with the investors themselves. But also profit the favorable developments they get, they do not have to share it with shareholders.

The need for collective investment arises because traditional financial instruments are not available to small investors because of high prices, the complexities of working with them or unwillingness to issuers and intermediaries to tinker with small transactions. Infrastructure of many of the state debt is designed so that the participants in this market is inconvenient to work with the small investors, as part of the government securities market simply is not intended for investment on the part of the population. As a result, the proportion of individuals in the structure of yield and reliability of the GKO / OFZ negligible - about 0.5% of all investments in these securities.

But even in the case where the release OGSZ was originally designed for the population, the results of their placement showed that they mostly revolve on the wholesale market between large banks and investment companies. And individuals have purchased, according to various estimates, from 30 to 50% of all outstanding OGSZ. And private investors are usually not involved in the secondary circulation of these bonds, buy them and wait for coupon payments until maturity.

As for the corporate securities market, there is the activity of individual private investors and even lower. Shares acquired enterprises citizens primarily during voucher privatization in 1993 1994's. But public interest in corporate securities will increase as the creation of appropriate conditions - in particular, to improve financial performance of companies and market infrastructure, empowering citizens to purchase "quality" and stable growth stocks.

The relevance of collective investment is also related to the fact that in order to reduce the risk of the investment portfolio should diversify. But how many of securities in a fit if he is small? One, two, and ten people are unable to buy even the minimum lot at an investment tender or at a major brokerage company. Taken together, the means of thousands of small investors - is a force capable of acting as a buyer or seller, in particular, on the Russian Trading System (RTS).

In addition, investor returns are largely dependent on good management of capital. And to manage the combined capital to hire qualified professionals.

The successes of themselves in collective investors pooling small owners, professional asset management and risk diversification depend strongly on the maturity of the financial market, the development of its infrastructure. Priorities in this field are defined in the "Concept of development of the securities market in the Russian Federation", approved by Presidential Decree 1008 from July 1, 1996

It recognizes the need for Russia's active and visible policy of the state in relation to the development of the securities market. Particularly relevant is the development of institutional investors as financial intermediaries between the people and businesses are able not only to attract private sector investment, especially in privatized enterprises, transfer them to an "effective owners", but also to create a secure financial instruments investing public, to prevent social explosions and conflicts related to operations in the securities market.

"The comprehensive program of measures to ensure the rights of depositors and shareholders," approved by Presidential Decree 408 dated March 21, 1996 to institutional investors, requiring the full support of the state, carried the equity investment funds, mutual funds, credit consumer cooperatives (credit unions) , private pension funds and investment banks.

All of them (except for investment banks) in one way or another is already in Russia, but so far have not been sufficiently spread and gain the trust of the population. The population remains very cautious and conservative after the collapse of pyramid schemes and banking crisis, making sure that the state is weak regulates the sector and poorly protects the rights of investors.

For a year after the adoption of the "Comprehensive Program" there have been significant changes in the legislative provision, especially mutual funds, has drafted a bill on investment funds, non-state pension provision, on private pension funds, credit consumer cooperatives to be taken.

In addition, it is extremely important in the activity of all forms of collective investment to implement uniform principles laid down in the "Comprehensive Program". We are talking about strengthening state control over their activities, asset management department of storage, multilateral cross-checking, increasing requirements for transparency of information, improving the reporting system.

4.1. Equity investment funds.

How does equity investment fund? Created a public company, which is engaged in marketing its shares and raised the money invested in the securities of other issuers. Source of income for the shareholders of the fund is its investment activity (in "just" joint-stock company brings income and industrial and commercial activities).

4.2. Mutual funds.

In mutual funds, in contrast to the equity investment, investors are not shareholders (with all their obligations and rights, including for-profit in the form of dividends). They convey their money in trust and staying by their owners are entitled to participate in the profits.

Since the contract is concluded between the management company and the investor, these funds are called contract. In France they are called mutual investment funds in Germany - a common investment fund in Italy - mutual funds, general funds in Switzerland Accommodation in Russia - mutual funds.

Noteworthy pleasant fact - this financial institution, perhaps for the first time in Russia there was not in a legal vacuum, but only after it has been prepared by a solid regulatory framework. Federal Commission for the Securities Market in about half, took more than 20 regulations ..

4.3. Private pension funds

In developed countries, non-state pension funds are active participants in the financial market. They, like other institutional investors, individual investors accumulate funds for future investment portfolio. But their place and role in the securities market are different from the role and place of, say, investment funds that first performed more conservative investments as their main task - to preserve and increase the retirement savings of the population, and, therefore, to minimize the risk for investors and participants NPF.

As collective investors NPF affect the development of the secondary securities market. For example, in the United States, the NPF invested mainly in securities in Russia, the situation is similar. At its core, NPF in the financial market are dealing with "long-term money." In developed countries, their investment horizon is several tens of years. No other similar investors. Banks and financial corporations are planning long-term investments on a much shorter time. Working with the "long-term money" implies long-term accumulation of funds, conservative investment policy assets, the need to protect the rights and interests of fund participants (future pensioners) and ensure the reliability of investments in APF. Without it discredited the very idea of ??private pension provision.

4.4. Investment banks.

Investment banks have appeared in the US after the 1929 crisis. Then the US Commission on Securities and Exchange Commission (SEC) has decided to separate investment banking from commercial, because the collapse of the banks was largely due to the fact that they sent the funds raised in corporate securities, which are considered quite risky investments. The Commission banned commercial banks to do so, but allowed the investment that customers just imagine where they will earn or lose their money.

And so far in the US transfer of funds investor in the management of the investment bank issued a bilateral agreement in which clearly defined the direction of investments and constantly repeated that the investor understands whom he gave the money and the bank will do with them.

In European countries, investment banking, securities-related, were not legally separated from the commercial. There universal banks. However, a fundamental difference range of clients, their needs and accordingly sets of services provided is the need for banks still share these activities, customer (commercial and investment) and professionals serving them. Investment banking at times becomes so independent that she was fit to be your own person.

5. Internal sources of investment

Traditionally, the Russian finance capital investments carried out mainly by domestic sources. We can assume that in the future they will play a crucial role, despite the intensification of attracting foreign capital.

Each family has to constantly solve everyday problems: what part of the budget spent on current consumption, and which to postpone for the future. Suppose that the family members earn 100 thousand. Rub. month. Part of this money can be spent on food and clothing and housing and communal services, and some can be postponed. Assume that the family spends 80 thousand. Rubles. within a month, and the remaining 20 thousand. puts the bank or exchange to US dollars to invest for future expenses. In this case we say that the family savings rate is 20%.

Nationally the overall level of savings depends on the level of household savings, organizations and government. Means individuals are not the only source of savings for the future. Suppose that a certain company made a profit of $ 1 mln. Rubles. This profit can be paid to owners, reinvested (company may acquire these funds new equipment or production areas), or put into a bank account. In any case, the company saves some of its profits in the same way as the family saves part of their earnings. The government can also make savings in cases where tax revenues exceed government consumption (which includes the salaries of civil servants, defense expenditures, payments to pensioners, etc.). In this situation, the government have funds that can be used for investment, for example, in the construction of new roads or the development of telecommunication.

The amount of savings in the country directly affects the amount of investment in the country. It has already been noted that investments represent the cost of purchasing the equipment, buildings and housing, which in the future will be expressed in the rise of the productive power of the economy. When part of society saves its current yield, this means that part of the production can not be directed to consumption and investment.

Most often savers (investors) and investors belong to different economic groups. When the family lays part of their income, she puts her money in the bank. The Bank lends money company wishing to carry out investments. In this case, investors (individuals) and investors (companies) are connected through a financial intermediary (bank). Sometimes depositors and investors are one and the same person. If the company saves part of its profits and uses it to buy a new machine, it is both saves and invests money. Sometimes the company saves its profits by increasing bank deposits. Bank then lends the money to another company that wants to make the investment. In a closed economy, the amount of savings corresponds exactly to the amount of investment. What part of the national income is saved, and this part can be invested. Thus, we can say that in a closed country domestic investment are domestic savings.

When a country is included in the global financial system, develops the situation is not so clear. If a certain Russian company wants to make an investment, it may take the necessary funds in the domestic and in foreign banks. Today, out of the total funds used by enterprises and organizations on the development and improvement of production, 20% is directed to the social development of 8%. The largest share in the amount of funds used were payments to the budget of 45%. At the same time, the total amount of own and borrowed funds of enterprises, received in 1995 the main source of financial resources remains a profit of 56%, the share of depreciation is 24% of the allocations from the budget and extra-budgetary funds account for about 9%, bank loans over 11%.

Considering the prospects for the use of own and borrowed funds to finance investment companies, the following problemy.5.1. Profit as a source of investment

Lack of financial resources of the enterprise trying to make up due to higher prices for their products. All profits increase in the national economy was determined by the price factor. However, increasing prices, enterprises are faced with the demand restrictions, leading to problems with product sales, and as a consequence, to a decline in production. This may put on the brink of bankruptcy, many enterprises. For example, in a difficult situation turned Volga Automobile Plant. To provide the necessary funds for investment, he has consistently raised the price of the car "Lada", whereby they have more value than many higher-quality foreign models. On this sale of products VAZ becomes problematic, and the fate of the plant uncertain. Government to take measures that will facilitate the formation of enterprises the necessary financial resources for industrial development, especially because today they are a major source of investment in the economy. Empower enterprises to help decision for complete exemption from tax profit allocated for investment, which is valid from 1 January 1992. This could then live a good incentive to increased investment activity. However, in the context of high inflationary expectations and a lack of competition in most sectors of the market about the manufactured products, the release of funds for investment by itself does not have a significant impact on investment decisions.

5.2. Depreciation deductions

Rising inflation devalued own funds accumulated due to depreciation and actually devalued the source of investment. To increase the stability of their own savings companies the government in August 1992 decided to revaluation of fixed assets to bring their book value in line with the prices and conditions of reproduction. Growth in the value of fixed assets of enterprises and their depreciation proportional to the rate of inflation can increase the sources of its own funds to finance investments. One of the important measures to increase domestic investment activity could be anti-inflation protection sinking fund through regular indexation carrying value of sredstv.5.3. Budgetary financing

The sharp increase in the budget deficit can not be expected to solve the problems of investment due to centralized sources of financing. With limited budgetary resources as a potential source of investment the state will be forced to move from irrevocable budget financing to credit. Harden control over the use of soft loans. To guarantee the repayment of the loan will be implemented system of collateral property in real estate, particularly land. The legislative framework established by the Law on this pledge. State centralized investment is expected to guide the implementation of a limited number of regional programs, the creation of particularly effective structure-forming objects, maintaining the federal infrastructure, disaster management, emergency situations, solving the most pressing social and economic problems. On stage, you move out of the crisis priorities in terms of budget financing will be:

?vydelenie public investment to stimulate the development and support of primary agricultural areas, providing the solution of food and fuel and energy problems;

?podderzhanie scientifically productive capacity;

?vydelenie subsidies for social purposes underdeveloped areas with extremely low standard of living of the population who can not suspend its own silami.5.4 fall. Bank loan

Long-term loans, especially in the emerging business, could become an important source of investment. However, inflation makes long-term loans unprofitable for banks. Its share in total lending continues to decline and was on July 1, 1995 only 3.6% versus 5.2% at the beginning of the year. In the first half of the banks (including Sberbank) was issued 192.375 billion. Rubles. long-term kreditov.5.5. Funds from the public

Raising funds for settlement in investment through the sale of shares of privatized enterprises and investment funds, in particular, could be considered not only as a source of investment, but also as a way to protect the personal savings against inflation. Stimulate investment activity of the population can be achieved by the establishment of investment banks higher compared to other banking institutions interest rates on personal contributions, fundraising population for housing, the provision of citizens participating in the investment company, the priority right to purchase its products at factory price, etc. n. For the influx of people's savings to the capital market requires a broad network of intermediary financial institutions and investment banks, funds, insurance companies, pension funds, building societies, and others. However, it is important as far as possible to protect those who are willing to invest their money in the stock values ??by setting strict state control for companies aspiring to attract public funds.

The main factor affecting the state of internal funding opportunities investment is financially economic instability. Inflation devalues ??accumulation enterprises and households, which significantly reduces their investment opportunities. Nevertheless, lack of internal investment potential can be considered relative.

6. The strategy of investment activity in Ukraine.

Today the effectiveness of investment policy determines the state of production, the position and the level of technical equipment of fixed assets of enterprises of the national economy, the possibility of economic restructuring, social and environmental problems. Investments are the basis for the development of enterprises, individual industries and the economy as a whole. During the economic crisis, investment activity in Ukraine has decreased considerably investment demand fell significantly faster than the production of gross domestic product. One reason for this was the fact that inflation is significantly devalued investment funds. Over the past years, despite a significant slowdown in inflation, reduced part of long-term loans granted to economic entities of all forms of ownership in the total credit in the economy of the country. In 1991 this figure was 12.8%, in 1994 - 11.3%, 1996 - 11.1% and in January-November 1997 - about 10.0%. This indicates the absence of commercial banks lending to economic incentives productive investment, there is an increased risk in the provision of such loans and burdening banks' loan portfolios policy loans, timely return of which is problematic. Large banks' credit resources are pulled as the market T-bills (T-bills), where interest rates are more attractive compared to loans for investment projects.

In 1997, to support the construction of major infrastructure and production facilities necessary to 2,377 mln. This amount is much higher than the capacity of the state budget and requires a balance in terms of volume, source and time. 1998 could be the year of the beginning of the economic revival of the country with the restoration of advanced investment activity. Since the second half of 1997, a decrease in the rate of decline in gross domestic product and industrial production.

During the first 11 months of 1995 the volume of industrial production decreased by 1.8% against 5.0% for the same period in 1996. The inflation rate was 8.6%. There have been positive changes in the structure of capital investments in the direction of increasing the volume of parts aimed at the development of productive capacities. A new depreciation policy, which allows you to accumulate significant investment resources directly to enterprises.

Ukrainian financial market has a number of absolute values: stable currency and stable prices. With some confidence we can say that Ukraine, as the Democratic-mechanical state, formed its monetary and banking system, which is a solid foundation for financial stability, which forms the basic conditions for the deployment of investment-tion processes in Ukraine. Of great importance is the fact that the stability of the hryvnia - is the result of market mecha nisms of self-regulation of economic processes of society. And the result of the stability of the hryvnia - a range of new processes in the capital market, including real increase in time deposits of the population of Ukraine, which can be an important source of national investment.

Ukraine has achieved normalization of the banking system. From 01 October Ukrainian banking system has passed the international standards of accounting and reporting. The level of bank capital at the beginning of October reached 4.2 billion UAH., And the end of 1999 the banking system of the country will work within the framework of European standards with respect to the norm of capital in one commercial bank.

Stability - this is one of the key pledges of the foreign exchange market. In May 1997, Ukraine became the 138th country to sign Article 8 of the Agreement with the International Monetary Fund on a full convertibility hryvnia in ongoing operations. These have been removed all the problems of repatriation of proceeds of any type of investors from Ukraine. In order to demonstrate the stability of the national currency for the year 1997 was chosen tactics confirmation of the course of conduct in the framework of the exchange rate band 1.7 - 1.9 UAH. the US dollar.

In mid-1996, the National Bank of Ukraine abolished the 50 percent mandatory sale of foreign currency in the Ukrainian market. The result is a classically-organized and well-known to investors the currency market. In economic policy, in 1998 the stability of the money will also be an important indicator of the overall investment climate, economic development part of the update.

The most important part of economic reforms is a large-scale privatization. In late 1997, nearly completed small-scale privatization is largely privatized medium-sized enterprises and more than 50% of all state assets that are subject to privatization, have been privatized.

Now in the process of sale, except for small and medium enterprises, there are about 300 large enterprises with capital of more than 100 mln. USD. Among them are quite attractive from an investment point of view, objects. For example, refineries, oil and gas mining, power generation and supply companies, ferrous and non-ferrous metallurgy, mechanical engineering and other industries.

The priority areas to attract and support strategic investors may be determined by those where Ukraine has a traditional production has the necessary resource potential and forms a significant market demand for such products, namely, the production of cars and trucks; tractor- and harvester combines; aviation and rocket science; shipbuilding; closed cycle to produce fuel for nuclear power plants; development of power generation capacity; oil and gas production, particularly in the Black Sea shelf; resource and energy saving technologies; processing of agricultural products; transport infrastructure.

Investments are (in the figurative sense) as the gateway to scientific and technical progress. The scientific potential of the country, which used to be characterized by world-class achievements in different fields of fundamental science and technology, with the resumption of investment activity will get a second wind. Effectively solve the problem of reducing resource and energy is only possible by the widespread introduction of new technologies of modern technology, linking together the interests of research and practice through the needs of the market.

In market conditions on new technologies and new technology can only make money when they contribute to the improvement of life. In this case, scientists in their new environment, international competition in open markets should remember that time is a major factor in today's economy. However, oddly enough, many consider while neischerpa-emy resource.

Modern conditions of economic development require an active policy to attract foreign direct investment. In Ukraine, created the legislative framework in the field of regulation of investment activity, which gradually improved to achieve greater inflow of foreign investments and improve the efficiency of their use.

Approved March 19, 1996 the Law of Ukraine "On Foreign Investment" for a foreign investor in Ukraine set a level playing field with the Patriotic nym investor. The Act to foreign investors are given government guarantees to protect their investment.

In particular, foreign investment in Ukraine will not be nationalized. The government does not have the right to confiscate foreign investments, except as implementation of emergency measures during natural disasters, accidents, epidemics, epizootics. In this case, the foreign investors are guaranteed adequate and effective compensation.

Foreign investors are entitled to compensation for damages, including lost profits and moral damage suffered as a result of the actions, omissions or improper performance of the state bodies of Ukraine or officials stipulated by the legislation obligations to foreign investors.

In the event of termination of the investment activities of foreign investors are guaranteed the return of his investment in kind or in foreign currency investment without paying customs duties, as well as income from these investments in money or goods. The State also guarantees unimpeded and urgent transfer abroad of profits and other funds in foreign currency obtained legally as a result of foreign investment.

If in the future special legislation on foreign investments will vary safeguards foreign investment, some above Law, for ten years from the date of entry into force of such legislation at the request of a foreign investor safeguards apply protection of foreign investments, the Law of Ukraine "On Foreign Investment" . Thus saith the law.

Important legal documents that govern the relationship between the subjects of investment activities are intergovernmental agreements "On promotion and mutual protection of investments." Such contracts are a guarantee of giving a fair status and protect their investments in the territory of another State. They signed with 44 countries. A number of draft agreements are negotiable.

A positive effect on attracting foreign investment cooperation and assistance to Ukraine from the International Monetary Fund and other international organizations.

In order to support the development and implementation of public policies to attract foreign investment in Ukraine's economy, the use of modern world economic experience to accelerate the integration of Ukraine into the international economic relations established by Presidential Decree consulate ltativny Council on Foreign Investments in Ukraine.

To find the financial resources and the implementation of investment projects established Ukrainian state credit and investment company. The Company may exercise the functions of support and financing of investment projects.

In July 1996, created the National Agency of Ukraine for Reconstruction and Development, the main purpose of which is to create favorable conditions for the development of international economic cooperation, cooperation with international financial institutions and relevant intergovernmental and regional organizations, organizations of foreign states in the sphere of attraction and use of external financial resources .

In order to avoid disputes between foreign investors and executive bodies and local self-government, in order to facilitate their rapid extrajudicial regulation by Presidential Decree established the Chamber of independent experts on foreign investment under the President of Ukraine.

To facilitate the settlement of disputes that arise during the implementation of investment projects with the participation of US companies in October 1997, Presidential Decree established the Ukrainian part of the Special rapid response team (after the controversial results of the tender for granting licenses for provision of mobile services GSM-900 US Motorola has gone from the market of Ukraine, which caused some political discomfort in relations Kiev-Washington).

However, despite create certain legislative base, institutional infrastructure, the attractiveness of the economic potential of Ukraine (relatively rich in natural resources, advantageous geographical location, availability of skilled "cheap" labor force, achievements in scientific research, a large capacity of the domestic market), inflow of foreign investment in Ukraine - minor. In comparison with the countries of Eastern Europe, foreign investment, which arrive in the Ukrainian economy, 3-7 times less.

Two-thirds of the world's investment accounted for 10 countries. The largest investors - the US, UK, Germany, Japan and France. In developing countries (mainly Asian) was invested 100 billion. Dollars. USA. To share the same 100 countries - the least-recipients (including Russia and Ukraine) - accounted for only 1.0% of foreign direct investment that our country can not be considered a normal situation.

Total direct investment, which actually received, whether in Ukraine (according to the quarterly State Statistics Committee of Ukraine) since 1992, as of 01/10/97 year is 1797 million. This investment from the United States - 332.6 million. (18.5%), Germany - 173.3 million. (9.6%), the Netherlands - 180.5 million. (10.0%), Great Britain - 140.5 mln (7.8%), Cyprus - 127.4 million. (7.1%), Russia - 121.8 million USD (6.8%), Liechtenstein - 103.5 mln (5.8%).

The largest volume of foreign investments in million. Dollars: Kiev - 555.1; Kiev region - 170.6; Dnipropetrovsk region - 141.5; Crimea - 119.8; Odessa region - 119.0; Cherkasy region - 106.3. In investing in equally desperate need of all regions of Ukraine.

Foreign investors have shown the greatest interest in such sectors of the economy (million. US. Dollars), as the food industry - 366.5; domestic trade - 303.6; engineering and metalworking - 152.2; finance and credit - 152.3; construction and building materials industry - 116.9; chemical and petrochemical industries 114.1; representing 67.1% of total volume.

Foreign investment enterprises invested in 6247, of which only 1,854 (29.7%) of the products.

The total demand of economy of Ukraine (projected) State-S THE 40 bln. Dollars. In the investment needed almost all sectors of the economy: metallurgy - 7 billion. Dollars., Ix, machine building - 8.5 billion. US., Transport - 3.7 billion . US., chemicals and petrochemicals - 3.3 billion. dollars.

Volumes of foreign investments in 1997 amounted to about 530 million. US., Or 100.7% of foreign investment in 1996.

Investments of Ukraine on 01.10.97 year implemented in volume 137.8 million. US., Including the CIS and Baltic countries - 52.2 million. US., The other countries of the world - 85.6 million. Rec.

The data and trends that follow from them, the pigs, are evidence of the completion of a short period of romantic-wearing to invest in the Ukrainian economy. In a real situation is negatively affects the behavior of independent investors a number of issues that require immediate settlement.

The main props of the state investment policy for the near future are: increase Kapita-ial investment business entities at the expense of profits and new depreciation policy; the growing influence of the state to enhance the investment process through an increase in budget funding of capital construction of large infrastructure projects and the introduction of credit fundamentals of budgetary financing of investments; creating conditions for long-term loans of commercial banks, regulation of investment and innovation funds, the transition from certification to cash privatization; increase in investment resources, which are formed in the stock market at the expense of people's savings; introduction of economic mechanism of risk insurance domestic and foreign investment; the formation of institutions on the integration of industrial and banking capital, raising funds for effective investment projects in priority sectors of the economy.

To facilitate the search for effective investment objects and investors in many ministries and departments of Ukraine formed databanks investment targets in the context of economic sectors and regions (eg, the Ministry of Economy database includes more than 2,000 such objects).

Based on the information embassies of countries - potential investors and materials that come into the government, formed a database of foreign investment firms (more than 200), which is used by Ukrainian producers to search for foreign investors.

The increase in income of foreign investment in Ukraine's economy would contribute to the formation of separate export-industrial zones (option of free economic zones).

States should make every effort to restructure the economy, stabilization of the general political and economic situation, which will help improve the investment climate in the country.

The successful monetary reform monetary inflation means suspended - for 11 months of 1997, its level - 8.6%, lifted non-tariff methods of regulation of export-import operations, work on the stabilization and liberalization of foreign trade activities, customs and balanced pricing policy, carried out reform of the tax system downward pressure on the manufacturer, the improved regulatory framework.

In accordance with the Decree of the President of Ukraine dated 18.08.97, 298 "On urgent action to speed up reforms and bring the economy out of the crisis in Ukraine" is preparing a series of laws aimed at stimulating investment, improving the activities of investors, including foreign ones, in particular spheres of economic activity, namely:

- On changes and amendments to the Law of Ukraine "On Foreign Investment", which implies exemption from import duties of foreign investment in the form of devices, about-ment ,, are made to the charter capital of enterprises with a ino-strange capital;

- About the changes to the Law of Ukraine "On State Duty" in reducing the state duty for notary certification pledge agreements;

- The restoration of benefits to joint ventures production sphere with foreign investments registered before 1 January 1995;

- On changes and amendments to the Land Code of Ukraine regarding the provision of foreign investors of property rights of liability on the land for the company, as well as the possibility of selling it privatization objects together with the land.

Planned adoption of the Law of Ukraine on production sharing agreements, which should accelerate the attraction of foreign capital for the development of oil and gas in Ukraine.

After the adoption of the law on accounting and reporting will be held the final harmonization of national reporting system accordingly to international standards.

2. State credit.

State credit reflects credit relations concerning the state of accumulation of funds on the basis of repayment to finance government spending. Creditors are the natural and legal persons, the borrower - the state through its agencies (Ministry of Finance, local (municipal) authorities). Borrower Dunn form of credit allows you to mobilize additional financial resources to cover the budget deficit without the use for these purposes issue of paper money, for non-inflationary monetary circulation through open market operations, the formation of the financial market. With the development of the inflationary process public funds from the public to temporarily reduce its purchasing power. Withdrawn from circulation, the excess money supply, ie, occurs outflow of money turnover on pre-specified period of time. Excessive increase in government debt at the same time can lead to payments on obligations, which amounted to a value greater than the proceeds of the loan, which has a negative impact on the finances of the state.

Local authorities to mobilize funds on a credit basis, which can be used for the improvement of urban and rural construction, reconstruction of health facilities, cultural, educational, housing and domestic purposes and others. As a result of reduced demand of these bodies at the expense of the state budget.

Cash received from the issuance of local bonds is usually credited to the extrabudgetary funds. To implement, for example, a project municipality may allocate part of the funds from the local budget, take a bank loan (which is not always beneficial) or the use of extrabudgetary funds received from the issuance of local bonds.

Such bonds are considered reliable and liquid securities. Their reliability is achieved in two ways: through the general tax assistance, as well as the income of existing facilities or construction of real estate. In view of the interest rates on local bonds is close to the interest rates of government bonds.

Investors who purchase local bonds, municipal authorities supply necessary for the implementation of projects borrowed funds. If it were not for these revenues, the municipalities would have to use part of local budgets, and the funds can be obtained by increasing local taxes. Thus, the issue of local bonds can solve several problems at once: municipalities receive necessary for them to project loan funds; they do not need to use the local budget, thus increasing local taxes; investors receive a reliable property and marketable securities that generate some income, local people are important for its existence and is the object of his goods, works or services.

In view of the above, most of the revenues from local bonds are not taxed or taxed at a reduced rate. This circumstance makes the local bonds attractive to large institutional investors, in spite of their low profitability.

For lenders, government loan - a form of savings, investment in securities, bringing additional income. Large and guarantee the conditions of the credit transaction by the state. Government securities market provides the primary investors (lenders) a number of unique features, such as a guarantee of full and timely payments; the possibility of simultaneous placement virtually unlimited amounts of money; high liquidity; relatively high yield; an effective system of cashless payments on securities and other.

State loan is divided into types, reflecting the specific relations and influence a number of factors. Types of state credit are defined:

n the composition of borrowers and lenders;

n the specific reasons for the emergence of the state needs to mobilize funds;

n place of the loan; form of its registration;

n methods of attracting financial resources and ways of their return;

n maturities State of its obligations;

n-risk lender and the borrower.

Depending on the characteristics of the borrower's state credit is centralized and decentralized. In the first case, the borrower is the Cabinet of Ministers and Central Fiscal Authority (Ministry of Finance), the second - the local authorities (Council members). Decentralized loans held to cover part of the cost of the local budget, and targeted loans to finance specific projects related to socio-economic development of the region, city or area. Local loans provided material, financial and immaterial assets located in the municipal property.

The place of the loan, the state credit Div-by the internal and external loans. In Ukraine, Treasury Bills are short-term, if they are issued with a maturity of up to 1 year, medium-term - from 1 to 5 years, long-term - from 5 to 10 years. In each case specifies the conditions, forms and terms of state credit.

Depending on the form and procedure of registration of credit relations are distinguished: government bonds and loans bezobligatsionnye. Release all sorts of treasury obligations, bills, lending by the central bank of the state budget (if allowed by law in some countries, such as Denmark, the law generally prohibits the State from taking any loans from the National Bank) - examples bezobligatsionnyh loans.

Bond - a security certifying the introduction of its own funds and confirming the commitment of a legal entity, it has issued, to compensate it for the nominal value of the security provided for in the period in it, with the payment of a fixed percentage (unless otherwise provided by the terms of issue).

Mostly issue bonds internal state and local loans. They can be either registered or bearer, interest and non-interest bearing (target), winning, freely tradable or limited range of treatment, savings, treasury. Bond issue may involve voluntary arrangement among businesses and individuals, as well as a mandatory purchase their entities.

State Treasury Bills - type of securities, confirming that the holders of their cash budget and giving the right to receive a fixed income over the period of ownership. Placed on a voluntary basis among businesses and individuals.

State securities are divided into two groups: the paper that can handle the secondary market; paper without entering the secondary market. On the secondary market can do: Treasury bills (bills), bonds. Not traded on the secondary market bonds (or other type of securities), designed the external debt; as well as the usual bonds of local authorities.

Sale of securities of the Cabinet of Ministers may exercise the authorized banks. Transactions with government securities in the open market by the National Bank.

When purchasing government securities value has income from it, which depends on the type of security, its nominal value terms, conditions of release, the degree of risk of inflation. The main uncertainty comes from the possibility of changes in expected inflation. If inflation rates are rising, the creditors bear losses, and the borrower makes a profit.

To the lender (businesses and individuals) on the acquisition of securities of governments, there are other risks, such as credit, market, interest rate.

The credit risk inherent in securities related to the likelihood that the financial capacity of the issuer (the state) will decrease, so that he is unable to meet its financial obligations. Credit risk associated with the obligations of the state derives from the features of the debtor or issuer, the nature of the economic objects, on which rests the obligation of the ability to levy taxes and borrow.

Market risk arises due to unexpected changes in the securities market or the economy as a result of which the attractiveness of government securities as an object of investments (investments) can be partially lost, so that their sale will be possible only at a discount or to a certain extent in the compulsory .

Interest rate risk - the risk that changes in interest rates and the associated risk reduction of their market price. The reasons for this - fixing the interest on the bonds on a contractual basis at the time of their release, and the relative freedom of fluctuations in market interest rates up and down.

In the process of investing in securities generally be observed diversification of investments, ie, reduce the risk of serious losses. This can be achieved in the distribution of attachment between the plurality of different securities. Attachments advisable to limit by type of securities, economic sectors, regions, maturities of debentures.

Ukraine as a sovereign state is also using loans as short-term and medium-term (bond issues).

The issue of bonds of domestic government loan (OGVZ) carried out in order to attract temporarily free funds of legal entities and individuals, including foreign ones, to recover the deficit of the national budget.

In addition to finance budgetary needs, another important goal of the issuance of government bonds is to increase the inflow of foreign currency. This helps to strengthen the national currency, as soon mobilized thus can be used in foreign currency for import and export calculations. It should be noted that the state does not always have to issue these bonds to foreign loan or bonds in foreign currency. In developed countries, it affects the flow of currency by imposing a certain percentage of its bonds, denominovannye in the national currency. If the interest rate of government bonds higher rates on similar securities of other countries, foreign investors may prefer the first, since the income from them above. For the acquisition of such bonds, foreign investors have to buy the national currency of the country in which the bonds are issued attractive, and pay her for these bonds. The increase in sales of the national currency means that the demand for the currency has increased and, consequently, increases the price for it. In this case we say that the course of the national currency increases.

Finally, the third major purpose of issuing government bonds is to provide a deterrent effect on inflation. In this case, the cash received from the issuance of government bonds temporarily withdrawn "from the market", ie, "hold." If the back is too much cash, it increases the opportunities for buyers to spend money on goods and services, that is, there is an increase in demand. Last causes an increase in the prices of goods and services, ie increasing inflation. In order not to give the customer demand to grow rapidly, it is necessary to reduce the amount of money that can be spent on the purchase of goods and services. You can do this by creating incentives to ensure that the preservation of money and income from it was more profitable than their expenditure on the purchase of goods. This is exactly what is achieved to some extent through the issuance of government bonds.

The above objectives can be achieved, provided that government bonds are able to meet a number of requirements, in particular, the requirements of reliability, certainty and liquidity. Government bonds tend to satisfy the above requirements. They are considered the most reliable type of market, since it is assumed that the state guarantees the fulfillment of its obligations under the bonds issued by them "with all his might" (7). In developed countries, investment in government bonds is considered as a relatively risk-free attachment. Mentioned bonds are also characterized by a high degree of certainty. That is, investors know that they are dealing with a state that public administration is increasingly stable and consistent and that the occurrence of surprises, which would significantly worsened the situation of investors are excluded.

Due to the reliability and certainty, government bonds also have liquidity. They can easily be bought and sold, if necessary, they are without any restrictions accepted as means of payment or security for liabilities.

With these characteristics, government bonds, of course, are of the greatest interest to large institutional investors - commercial and savings banks, finance companies, insurance companies, pension funds, investment funds and companies. These investors manage more money and therefore are interested to invest in a safe, certain and marketable securities.

However, again because of the presence same characteristics mentioned above, government bonds are the least profitable. Interest rates on government bonds are the lowest among all the debt securities. However, in a sense, and this has the advantage, as long as all other debt securities have a higher degree of risk, at a measure of certainty and may be more or less liquid, the establishment of the interest on them is based on a comparison of differences in the above criteria between the institutional debt securities and bonds issued for the same period. Thus, the interest rate on government bonds serves, among other things, also the function of general market index, based on which the interest rate and other debt securities, whoever they were not issued in the country.

Interest rates on the bonds of other issuers are directly dependent on the interest rate on government bonds.

Bonds are issued by a decision of the Cabinet of Ministers of Ukraine Ministry of Finance, are government securities and placed among investors on a voluntary basis. The issue of bonds is carried out in the form of records of accounts regularly with their maturity from 1 to 12 months.

Primary placement of bonds made by selling them at auction to investors - bidders. At the initial offering the bonds are sold at a discount basis (at a cost lower than the nominal) on proposed at the auction price (price cut), but not lower than the prices set by the Ministry of Finance on the day of the auction. Bond issue shall be considered valid if the initial public offering to sell a certain proportion of the total number (for example, at least 10 percent, and so on). Primary investors are entitled to due process of law to sell bonds on the secondary market through a stock exchange.

The National Bank as the central depository, in coordination with the Ministry of Finance may sell on the secondary market bonds were not sold at the initial offering, within their maturity at a price not lower than the price on the day of the auction. The Government undertakes to redeem the bonds at the end of their treatment of an eye.

Investors receive income in the form of the difference between the prices of sale (redemption) and the purchase prices of bonds.

Outstanding bonds can be used in the calculation of the primary holders of goods (works, services), as well as act as a subject of encumbrances. Having exhausted their design function when the specified number of transfer signatures, bonds go into free circulation in the stock market and can be purchased by legal entities of Ukraine and other countries. Financial market allows for the transformation of government bonds to cash and other financial assets.

Redemption is performed by the National Bank at par value of bonds increased by the amount of the interest rate established in the issuance of bonds. The Ministry of Finance upon the expiration of the bonds allocated the necessary funds to the National Bank.

Development of the government securities market aims - to reinforce the positive trends to stabilize monetary relations; expand non-inflationary deficit of the state budget through the issuance of marketable securities; further development of the secondary securities market.

Open market operations in government securities are also produced and to manage liquidity in the banking system.

State loan forms part of the domestic government debt. A large proportion of public debt consists of foreign loans, which are associated with the development of international credit.

List of references.

1. The Law of Ukraine "On Paper the tsnn i fondovy 'brzh."

2. The Law of Ukraine "About nvestitsynu dyalnst."

3. Gitman LJ., Junks MD Basics of nvestuvannya. Trans. W Eng. - M .: Dlo 1997.

4. nvestits in Ukran. Pid ed. S. I. Vakarina (Mzhnarodny Monetary Fund). - K .: "Concord", 1996.

5. Mertens AV nvestits: Course lektsy on suchasny fnansovy teor. - K .: Kivske nvestitsyne Agency, 1997.

6. Peresada A. A. Basis nvestitsyno dyalnost. - K .: Libra, 1994.

7. EM Borodin, Yu S. Golikova, NV Kolchin, Z. Smirnov Finance businesses. Moscow, 1995

8. Jae K. Shim, Joel G. Siegel Financial Management. Moscow, 1996

9. Robert H. Holt Fundamentals of Financial Management. Moscow, 1993

10 Felzenbaum "Foreign investment in Russia." Questions of Economics;

11. STORY "The investment policy of the state." Magazine "ECO" 1 1998;

12. Filatov, "Problems of investment policy in the industrial economies in transition." Questions of Economics, 1995;

13. Vitin, "Mobilization of financial resources for investment." Questions of Economics, 1994;

14. "Collective investments" in 1997;

15. Gilyarov and D. Endovitsky "Modeling in planning long-term investment strategy." Magazine "Auditor" 10 1997;

16. Urinson "Growing investment policy." The magazine "The Economist" 9 1997;

17. "On the socio-economic situation in Russia." Business and Life, 1994;

18. Urinson "Prospects for investment activity." The magazine "The Economist" 2 1997;

19. Noreen "Investment activity in the Far East." Magazine "Foreign Economic Activity" 7 1997;

20. "Economics and Life". number 5 for the year 1996.

21. "Meeting of the legislation of the Russian Federation", No. 4, dated 10 October 1992, the official publication of the Presidential Administration of the Russian Federation, Moscow.

22. Sachs. "The market economy and Russia." M., "Economy", 1995

23. Shaposhnikov. "General Economic evaluation of investment programs and projects" magazine "The Economist". Number 5, 1996.

24. Shahnazarov. "Investments: Situation and Prospects." The magazine "The Economist", 1, 1994.

25. "Economics of Foreign Relations" Textbook for 1995.

26. Journal "International Business Russia" 1, 1997.

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