Lecture 1 . Economic content and concepts of Finance 1.1 Theoretical approaches concerning the concept of finance 1.

2 Economic content of Public Finance 1.3 Functions of finance

1.1. Theoretical approaches concerning the concept of finance. There are several expressions related to the word finance that we read or hear about: public finance, private finance, finance and capital markets, etc. The word Finance has a Latin origin. In the texts originating from XIII and XIV centuries we may find words like finatio, financias and financial precuniaris which all mean "payment in cash. In Germany, in the XV - XVII centuries the word Finanz is met, which also means payment in cash, and Finantzer, which describes the usurer (moneylender, broker, stingy). In France in the XV century, such expressions as hommes de finances and financiers were used, to indicate the kings tax-gatherers and the treasurer. It is assumed that the word finance derives from the word finis, often used in the meaning of "payment period". As we know it now Finances means the entire heritage of the state and finance income of the state. In time the word finances has acquired a broader understanding. Now it has many meanings including the state budget; crediting; monetary operations; banking and exchange operations etc. The concept of Finance is closely related to the concept of State. It is linked to the use of money and all other forms of value in the process of national income distribution. Finance has appeared on a certain stage of societys development. Since the emergence of the first elements of finance - the appearance of monetary relations in the early civilizations - it became part of the system of economic relations. Under the influence of changes in initial historic conditions and the developing economic environment the present concept of finance has evolved. The conditions of formation and development of finance are: a) The emergence and development of commodity-money relations, so as to allow the formation and use of state resources in the form of cash; b) The emergence of state that required new resources to undertake necessary functions within the already existing relations. In this context there are two distinct phases in the evolution of the concept of Finance: I stage classical corresponding to the pre-monopolistic capitalism period. II stage modern corresponding to the age of imperialism. Classical concepts reflect the liberal doctrine, which states that business and economy should be conducted according to the principle of laissez-faire, laissez-passer. The basic tasks of public finance are: to ensure the necessary resources for maintaining the normal operations of public institutions; to keep the taxes and loans with a neutral character; to keep the balance between revenue and expenditure, which was the keystone of the policy. A budget deficit, that always generates inflation, was seen as an unwanted phenomenon. At the stage of policeman states (stat jandarm), with the doctrine of economic liberalism prevailing, the concept of finance has a highly legal and juridical character. According to some economists, after the Great Depression of 1929 - 1933, the policeman state is replaced by the welfare state, which broadens the scope of concern. It asserted the interventionist concept applying to the economic activity of the state, where the public authority

plays an important role. This change in positions resulted in deepening external and internal contradictions of the capitalist mode of production. For the modern state, public finances are means of intervention in the economy. According to some contemporary economists, it is the economic concept that prevails in the modern approach to public finances, according to others the sociological concept. In all the social-economic orders were finances existed, they appear as social relations of economic nature that exist in the process of distribution of national income. They are in close connection with the fulfillment of state functions and tasks. In all four social-economic orders finances took the form of value, money, but in each order, they have had a different role. In the process of obtaining and allocating its resources the state needs to fulfill its duties and obligations. Out of this the social relations are developed in a society. These relations are of an economic nature and express the distribution of a part of the gross domestic product (GDP), by the state, between different social categories. These relations arising in the process of mobilizing and allocating the necessary resources of the state in the form of money, are the financial relationships or, in short, finance. In present the sense of the word "finance" has become broader. Along with the meaning of money it comprises state budget and local budgets, banking and stock exchange, trade and compulsory or voluntary insurance of goods and people. In other words, finance should cover all economic and social spheres, in which all relations can be quantified in money terms. When we approach the problem of "finance" in general, we agree to include within this concept credit, private finance, insurance; and when we refer to the concept of "public finance" we should include only those relations which arise between the state on the one hand, and its members, the taxpayers on the other hand. But also we include here the public and semi-public beneficiaries and sometimes monetary resources directly. In approaching the concept of finance it is necessary to distinguish between public finances, which are associated with the state, administrative units and other public institutions, aimed at meeting the general interests of society members, and private finance, which is associated with enterprises, banks, insurance companies etc. and their financial resources intended for producing goods and services for a profit. Either public or private finances are described by following types of relations: a) Relations expressing the transfer of money resources (budget) without title-granting or exchange for an equivalent from the members of society to the state and conversely, from the state to the society members. These relationships form the traditional public finance. In Moldova, they are best expressed through the state budget and local budgets; b) Relations expressing the transfer of money resources in the form of mandatory contributions to the specialized agencies of the state and conversely, in the form of pensions payments, other assistance and social services for population; c) Relations expressing the voluntary transfer of money resources to central or local public institutions in exchange for rendering some services (in the field of education, healthcare, culture, etc.);

d) relations expressing the creation of money resources by mediated borrowings from banks or specialized financial institutions - these are credit relationships which include state loans for which state appeals internally or externally to finance and refinance the budget deficit and public debt. In this context, state loans have a dual character: first, they represent credit relationships by their nature and secondly, they circumscribe public finances, since through these funds state finances its budget deficit. So, all public spending including the "cost" of spending covered from debt is supported entirely from public funds (future taxes); e) Relations expressing the mandatory and voluntary transfer of money resources from policyholders to insurers in exchange for future reward in case of a random event. These relations of insuring goods and people determine the insurance relationship; f) Relations that form within the activity of enterprises producing goods and services in pursuit of receiving and maximizing their profit. From the types of relations mentioned above, points a, "b" and "c", and partially the letter "d" (state borrowing) describe public finances. Private finances are described by "d", "c", "e" and "f" letters. Hence, private finance comprises credit relations, and relations created in the compulsory and voluntary insurance, because the activities of commercial banks, insurance companies, stock exchanges, brokerage firms and financial institutions specializing in this respect have the same ultimate purpose, which is the achievement and maximization of profit, while the role of public finance is to meet the general interests of society. It follows, therefore, that the traditional public finance includes only those relations that determine the formation of financial resources of the state through coercion and without immediate consideration, while in the overall finances include credit, insurance relationships and private finance. 1.2 Economic content of Public Finance. The activity of a company is determined by a complex of actions and relations that are promoted by the participants of this activity (individuals, groups of individuals, institutions). This work is materialized in the formative processes (producing a good, collecting information, rendering a service etc.) and in the transfer flows, expressing the desire of each member of society to meet his consumption needs, to secure and improve their lives. The objects of transfer flow (goods, services, information etc.) and means used in their production can be expressed in material form and or in cash form. The introduction of cash in the transfer flow individualized at a certain point of social and economic progress and generated money relations, which further developed into financial relations. The Financial relations have a broader coverage, because they do not necessarily require a legally binding instrument (contract) and do not have as a rule a continuity character. Financial relations are relations of allocating money to a global product or its components, these relations representing monetary transfers, in both ways, between the budget and companies or between companies. Financial relations are part of economic relations, because they represent relationships of exchange of properties, modifying the heritage of the partners or at least its structure.

Financial relations are established in an organized place, on a legal basis and as a rule have a continuity character (by law establishing the requirements, the amounts and terms that characterize that relationship). Not all monetary relations, which appear in the distribution of GDP are financial relations. Financial scope is broader than that of monetary relations that includes only monetary relations expressing a transfer of value, not those that reflect a change in the forms of value. Here are some clarifications to the transfer of value that generates financial relationships: y The appearance of financial relations is determined by the transfer of value in monetary form by legal entities (companies, institutions) or individuals (workers, peasants). The transfer of value has from the beginning a character of purchasing power transfer; Transfer of value shall be made without direct consideration, for example when a freelancer transfers the income tax to the budget, the money doesnt become the debt of the state and doesnt have to be directly paid to the freelancer; Transfer of value to and from the funds that are constituted in the economy is realized partly by repayment, for example part of money paid by individuals and legal entities to the state goes on settlement of domestic borrowings.

There are three categories of financial relations: y y Relations that express a transfer of money resources without title-granting or exchange for an equivalent. They are classical relations: taxes and charges; Relations that express a loan of monetary resources for a determined period of time for which the interest rate is charged. These are credit relationships, mediated primarily by banks; Relations that express a mandatory or voluntary transfer of money resources in return for a reward in case of a random phenomenon (insurance).

As already mentioned in the first paragraph, in literature the term of finance is used in 2 senses: a) Broadly it includes all three types of abovementioned relationships; b) Restricted sense includes only financial relations based on principles of sampling without monetary consideration of funding resources.

Tacking into account their characteristics, the financial relations, just like finances, can be classified as: - Public financial relations - Private financial relations Public financial relations are: 1. Classical public financial relations are made usually compulsorily without direct consideration and are non-refundable (formation of state budget); 2. Special public financial relations: a. Credit relationships. These are not mandatory (except the enforced loans) and are reimbursable (except the perpetual loans); b. Insurance relationships: i. Insurance of goods, persons and civil responsibility. Are mandatory (enforced by law) or voluntary, refundable (conditioned by risk, random event), with consideration; ii. Social security. Is required by law or voluntary, refundable (conditioned by risk, random event), with consideration. Private financial relationships: 1. At the level of economic agents; 2. At the level of population (households). Manifested as economic relations arising from the distribution of GDP, independent to the will and consciousness of people, finances are a component part of the economic basis of the society. Generalizing the information above, we can form the following DEFINITION: Finance represents the economic relations, expressed in monetary form, connected with the creation, use and distribution of centralized and decentralized cash funds in order to meet specific functions and objectives. Centralized finance refers to monetary relations in connection with the creation and use of state funds, accumulated at various links of the country's budget system. (public finance) Decentralized Finance refers to monetary relations that provide the circuit of money flow of enterprises , and relations of distribution and redistribution of the money funds in financial and production groups; transnational corporations (TNC), holdings, individual entrepreneurs, the investment activity of citizens, households. (private finance) Finally, finance expresses the monetary relations between: 1. Enterprises in the process of creation of material values and completion of goods and services; 2. Enterprises and public institutions (ministries, departments, agencies) in the process of formation of centralized funds of money means and their distribution; 3. State and enterprises, in the moment of financing costs from taxes and duties paid to the budget system; 4. State and citizens, upon tax payment and other payments; 5. Enterprises, citizens and budgetary funds, in the process of payments and obtaining monetary resources;

6. Links of the budget system; ( ) 7. Insurance companies (for goods and people) to pay insurance premiums and the recovery of damages; 8. The funds of enterprises with different forms of ownership; 9. Different participants and directions of activity in the financial and production groups, international corporations, etc. ( ) 10. Different directions and phases of activity of individual entrepreneurs; 11. People dealing with investment activity and issuers, etc.

1.3 Functions of finance. Finances carry out their social mission through the functions they exercise simultaneously, and namely via the functions of distribution and control. a) Distribution function of finances comprises two separate phases: 1.Creation or formation of funds; 2.Distribution or allocation of funds. The first stage, funds formation, consists in the creation of cash resource funds. In one of the first stages primary revenue is formed, as part of the process of distribution of national income among the participants of the material production process. The sources for funds formation are grouped into 2 categories: y Salaries of persons employed in the productive sphere; y Income of enterprises resulted from the productive sphere. After this, public funds formation follows up. Their formation is generated by: y Autonomous enterprises and state-owned companies; y Commercial entities with private and joint capital; y Cooperative organizations and profit making associations; y Public institutions and their subordinated units; y Population; y Legal and natural persons being residents abroad. Public funds of financial resources are created from: duties, taxes, social security contributions, insurance premiums, fines, penalties, rents, dividends, income of public enterprises, income from the realization of the state fixed assets, assistances, donations, loans etc. The second phase. the distribution function of finances consists in the allocation of financial funds among beneficiaries legal and natural persons. It consists of the secondary distribution or redistribution of national income. When social needs expressed in the demand for financial resources from public funds, exceed the supply of financial resources, the competent public authorities pick out the requests from central and local bodies and in terms of certain criteria establish the priorities. Phases prior to distribution are: y Assessment of social needs of the period; y Quantification of existent social needs; y Hierarchy of social needs relying on economic and social policy, and budgetary classification of the respective state.

Destinations of public financial resources are those provided under functional classification of expenditures in annual budgetary laws. Distribution of financial resources represents the establishment of public expenditures by destinations: y Education, healthcare, culture; y Social insurance and social protection; y Households; y National defense; y Public order; y Economic activities; y Public debt; y Other destinations. The importance of the distribution function of finances must be assessed: 1.In terms of dimensions of value transfer from different legal and natural persons to public funds and from these towards various beneficiaries; 2.In terms of changes that take place in the economy as a result of financial resources transfers, as well as of certain economic, social, demographic, ecological or other effects produced by the same transfers. All these are related to the redistribution of financial resources on the internal/domestic level. In contrast with this, a re-allocation of financial resources on the international level is frequently made: y Receiving external loans; y Granting external loans; y Payment of dues and contributions to international bodies; y Receiving or giving, depending on the situation, external aid on state level, for the removal of serious consequences brought about by natural calamities, accidents, wars, revolts, etc. The necessity of creation of financial resource funds at the state disposal, with a view to executing its functions and responsibilities, is seen in all countries as a very important one, irrespective of the level of economic development, branch structure etc., which shows that the distribution function has an objective character. The process itself concerning the redistribution of these resources has a subjective character. The source of public financial funds changes depending on the degree of social sectors development as well as on the policy promoted by the state. These quantitative and structural changes of public funds may favor the quickening of economic growth, higher satisfaction of material and spiritual needs of the population or sometimes even worsen the living conditions of the population. The destination of public financial funds undergoes alterations under the action of many internal and external factors. b) Control function of finances The necessity of control function of finances is derived from the fact that the constituted financial resource funds which are at the state disposal belong to the entire population. The function of control refers to the management of funds formation in the economy, their

distribution towards beneficiaries and the efficiency of state-owned economic units and public institutions to make use of available resources. In our country, bodies specialized in control have the task to verify the entirety of national property, the legality, necessity and timeliness of expenditures. State control comprises all areas of social life and mainly: economy, culture and education, healthcare and social protection etc. In our country, the control through leu is exercised through the fulfillment of all functions of money. Control trough leu is a manifestation of economic and organizational function of the state. The financial control represents the control function of public finances. Control function of finances is closely connected with the distribution function, but unlike the latter it has a wider area of manifestation, since it refers not only to the formation and allocation of funds in the economy but also to the way these resources are used. Financial control is performed in the distribution stage, when it checks the sources of financing. It doesnt limit only to the distribution phase, but it is extended also on the production, exchange and consumption. Financial control over production is made because this is the most important phase that influences all other stages. The ratio between the newly created value and the value of newly obtained products represent the efficiency with which the equipment and work force were used. At the exchange phase, financial control verifies if the resulted products are sold as merchandise, if commodity price corresponds to the cost of commodity. In the consumption stage, financial control refers to the productive consumption of stateowned economic units, as well as to the final consumption of public institutions. In the R.M. the function of control is exercised by: the Court of Auditors, the Ministry of Finance, the National Bank. Control tasks in the finance field are held by the Parliament, the State Government and other bodies.

Lecture 2 Financial mechanism and financial system 2.1 Financial Mechanism 2.2 The characteristic of financial system 2.3 The financial economic levers 2.1 Financial Mechanism
Each economy has its own branch structure, specific forms of organization, it brings into operation specific methods and principles of management. Also, each economy has its own working mechanism that can have both similarities and differences compared to the mechanisms of other countries. There are similarities among the working mechanisms of national economies from different countries concerning the common historical conditions and political-ideological, social, economic or other objectives: y Prevalent form of ownership (private or public); y System of economic management; y System of profit distribution; y Political-ideological system (democratic, multi-party or totalitarian, single-party), acceptance of only one ideology or tolerance of several; y Participation in political, military alliances or in unions with economic character. There are also differences between economic mechanisms: y Level of productive forces, size of reserves owned by the national economy, natural conditions and territorial dimensions; y Social structure, degree of maturity of social relations, production and economic democracy; y Degree of economic independence compared to foreign countries from the perspective of consumption of productive resources (proportion of coverage of used raw materials, energetic resources, specialists, technologies and capital from internal/domestic sources) and from the perspective of commercial activity (the ratio between the domestic production that is consumed domestically and the one that is exported); y Long-term objectives of economic policy. The efficient combination of these elements leads to a healthy functioning of the state economy. Forming the economic mechanism, they influence not only economy, but other dimensions of the state as well. Economic mechanism represents the ensemble of methods and tools of management or regulation of the national economy, performed by the decision makers of society, who follow specific goals and objectives that cover the entire organizational system of the state. Financial mechanism is a component of the functional structure of the economic mechanism and expresses the way of organization and circulation of financial flows through which the mobilization, allocation and utilization of financial funds constituted within the national economy is realized. Functions of finances (that of distribution and control) are realized via financial mechanism. The functionality of financial mechanism consists in its capacity to ensure, from the

technical point of view, a normal circulation of financial flows and at the same time to allow and stimulate the economic activities carried on by economic agents irrespective of their form of ownership. In this context, it is advisable to become acquainted with the relevant economic laws, and mainly with the market laws. In countries with planned economy, the directive-plan represents the main management or regulation tool of economic processes. In countries with market economy, the free market is the one that plays the central role in the regulation of economic processes, while the states function is to ensure the normal functioning of this economic mechanism. Thus, in the latter model state acts as a: Public authority ensures the public order, national defense, maintains foreign relations, and has also an influence over material production, consumption, distribution of GDP by allocating a portion of it to form the funds of public financial resources; y Economic agent as producer and consumer of goods and services; y Organizer and sponsor of insurances; y Creditor and debtor etc.
y

The State influences some of the economic activities by employing public resources, as well as applying some economic-financial tools (taxes, transfers and subventions, credits and interests, prices and tariffs, discounts and exchange rate etc.), also by creating institutional and legal frameworks necessary for carrying on the economic activity. Financial mechanism is made up of the totality of economic-financial structures, methods, principles and levers through which the state forms, uses and distributes money funds that are needed for the execution of its functions and obligations, as well as for ensuring freedom of action for economic agents. The structure of Financial mechanism comprises: Financial system; Economic-financial levers used by the state to influence the economic activity; Administrative methods of management used in financial field; Institutional framework composed of institutions and bodies with responsibilities in financial area (democratically elected bodies of central or local administration, state institutions specialized in financial domain); y Legal framework composed of the ensemble of normative acts (laws, decrees, decisions and other settlements with normative character), that regulate the financial field both in the drawing phase and the allocation one.
y y y y

Such a non-homogeneous structure and lack of algorithm in the financial mechanism bring about difficulties in approaching the subject theoretically. For that reason, it is hard to assess the efficiency of dissected components, but the efficiency of the economic mechanism can be evaluated in terms of certain macroeconomic indicators and their dynamics. We mention the fact that financial mechanism is not yet established to the end, but it has potential to development, it has a dynamic character and a changing structure. Application of financial mechanism depends on the need to use it and national interests.

2.2 The characteristics of financial system

In the market economy, state influences the economic processes via public sector that differs in size and structure from one country to another and from one period to another.

The financial system concept has a very complex subject matter, and can be interpreted in several aspects, and mainly: y As a system of economic relations, expressed in money, through which the circulation of financial resources takes place; y As a system of financial resource funds that are formed in the economy and are used for well-defined purposes; y As a system of institutions that participate in the establishment of relations, formation and distribution of funds, as well as elaboration, implementation and control of financial plans; y As a system of financial plans (tools of management and regulation), that reflect certain plans to be implemented in the economy during a determined period of time. I. As a system of economic relations, financial system is presented as a totality of financial relations that take place in the process of formation, distribution and utilization of money funds. Financial system if formed of:
y y

Public financial system; Private financial system.

Public financial system comprises:

1)State and Local Budget; 2)State Social Security Budget; 3)Budgets of autonomous public institutions; 4)Budgets of public institutions financed totally or

partially from the State Budget and

Local Budget or Social Security Budgets; 5)State Treasury Budgets; 6)Budgets formed from reimbursable external funds; 7)Budgets formed from non-reimbursable external credits; 8)Public credit. Private financial system comprises:
y y y

Bank credit; Insurance of goods, persons and civil liabilities; Finances of enterprises.

II. Financial system as a system of financial resource funds The financial funds system is the basis of cash flow in any economy, is controlled by the financial-monetary mechanism and follows a certain financial-monetary policy. We can obtain an overview of this system grouping these funds according to some criteria: 1) According to the level at which they are formed: a) At central (or macroeconomic) level, funds are formed and administrated by the central authorities and institutions, aiming the achievement of some macroeconomic or social objectives (budget fund of state central administration; social insurance funds; credit fund); b) At medium (or intermediate) level (budget funds of regions, cities and villages); c) At microeconomic level (funds of enterprises, institutions) having as their goal the normal functioning and development of the entity.

According to the destination of resources from financial funds: a) Replacement and development funds, which include enterprises funds for production activity, investments; borrowed funds for current and investing activities and extra budgetary funds used for activities with investments character; b) Consumption funds, that include: budgetary and extra budgetary funds for current consumption, social insurance funds, certain part of enterprises funds used for activities with social character or bonuses for stimulation of employees and a part of monetary resources of population which go for current consumption. c) Insurance funds are formed mainly for social insurance, insurance of goods, persons, civil liability, are used for current consumption or for investment activities. d) Reserve funds, are formed upon the decision of some economic and social entities for financing of unpredictable needs. 3) According to the property form that characterizes the financial funds: a) Public financial funds (budgetary fund of state central administration; state social insurance fund); b) Private financial funds (funds belonging to commercial entities, banks, insurance and reinsurance private companies and joint ventures, monetary resources of population). 4) According to the title of drawings (prelevari) which form the fund: a) definitive drawings with obligatory character (taxes, fees); b) reimbursable drawings with optional character (bank deposits); c) external reimbursable or non reimbursable transfers (aids, donations).
2)

2.3 The financial economic levers

The notion of financial lever has its roots in the meaning of lever from mechanical physics the force which gives an impulse. A mechanism of governance of an economy is composed of a lot of financial instruments, each of them having the task to achieve certain objectives, and mainly: 1. Estimation of public financial resources needed (the demand for resources) and of possibilities of their purchase (the supply of resources) at the level of entire society and at the microeconomic level (enterprises, public institutions). The tools that are used take the form of predictions, financial programs and plans, and result in financial balances, state budget, local budgets, revenue and expenditures balances of enterprises. The tools mentioned offer the useful information to bodies responsible for the determination of financial potential of the society; 2. Determination of financial effort needed for realizing some objectives or actions; determination of expected effects and the effort-effect relation. The instruments consist in different methods and techniques which serve to estimate the economic efficiency and effectiveness of certain expenditures. 3. Formation of public funds of financial resources, their distribution & control. The tools represent the methods of drawing resources into public funds (taxes, non-fiscal incomes, borrowings), respectively the methods of their distribution to different beneficiaries (allowances, subventions, budgetary transfers, credits); 4. Influencing and directing economic processes, social conditions, demographic phenomena by public authorities in order to harmonize general and individual interests, national and local interests. These instruments have a double function: formation & distribution of financial funds and influence on economic, social and other processes. Financial-economic levers represent economic and financial tools, which are used by the state to stimulate the economic interest in a given field (economic branch or sub branch, social-professional group, geographic area) or raise interest among the individual

members of economy (producers, consumers, employees) in order to achieve a given objective or to support the development in wanted directions. Characteristics of economic-financial levers: y Are designed to act automatically when economic events take place or when they are applied by the public institutions; y Drawing and payment methods act as levers only when ensuring the distribution function of finances and positively influencing certain fields of economic activities; y Through them, the state can interfere in the economy in different forms: regulation of production volume and monetary mass, stimulation of credit extensions, reduction in consumption of harmful products etc.; y The option of choosing a lever depends on the government policy in such issues as economic growth, level of revenues and prices, state budget and the phase of economic cycle. Financial levers can be of great importance in the process of formation and distribution of financial resource funds if they perform some functions, take part in the functioning mechanism of the economy, contribute from the economic point of view to solve problems in a better way than it would be done by applying administrative methods. The action of financial-economic levers consists not only in the stimulation of economic interest among the participants of the economic processes for realization of certain objectives, but also in the material sanctions applied by them, in cases of non-compliance with certain legal or contractual obligations. Sanctions determine a particular limitation of advantages from which the economic agents could benefit. Sanction is equivalent with negative incentives. The use of financial-economic levers does not exclude the necessity of using administrative methods, and namely: a. Making predictions, economic programs and plans; b.Keeping an accounting evidence; c. Establishing prices and tariffs by the state; d.Regulating the process of borrowing from public funds; e. Regulating the currency exchange rate; f. Supervising imports and exports; g.Sanctioning illegal speculations and tax avoidance. The levers can be expressed on micro- and macroeconomic level, some of them having a fiscal-financial character (taxes, customs taxes, internal credits, subventions), others having a monetary character (exchange rates, tariffs, prices etc). Depending on their function in the process of distribution of national income, financial levers can be classified as: mobilization levers (taxes and fees), stimulation/limitation levers (customs taxes, tax on profit) and reparation levers (subventions, scholarships, pensions, allocations). Financial-economic levers have an important role in the mechanism of economy functioning and are like economic methods of governance. The improvement of these levers does not imply giving up some administrative measures in governing the economy. We have to see it as a balanced combination of economic methods with the administrative ones, that complete each other.