URGENCH STATE UNIVERSITY

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TOPIC: THE FINANCIAL SYSTEM AND ITS COMPONENTS

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• OUTLINE

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• The Essence and Importance of the Financial System
• Sectors of the Financial System and Their Structural Components

The financial system is the aggregate of various spheres of financial relations in which different monetary funds are formed and used in the course of economic activity.The financial system is also a system of forms and methods for the formation, distribution, and use of monetary funds of the state and enterprises.

Sectors and Components of the Financial System

STATE AND LOCAL FINANCE

FINANCE OF ECONOMIC ENTITIES

State Budget

Targeted Extra-Budgetary Funds

Public (State) Credit

Finance of Commercially Operated Economic Entities

Finance of Non-Profit Economic Entities

Finance of Financial Intermediaries

The state budget is the main financial plan of a country for the current year and has the force of law.

The main revenue of the state budget is derived from taxes, which in our country account for more than 90% of total budget revenues.

STATE BUDGET

Republican (National) Budget

Budget of the Republic of Karakalpakstan and Local Budgets

• Types of Targeted Extra-Budgetary Funds (in the case of Uzbekistan)
• The main targeted extra-budgetary funds operating in Uzbekistan include the following:
• State Pension Fund — finances pension and social allowance payments.
• State Employment Promotion Fund — finances employment support and vocational training programs.
• Funds for Fines and Collections under the Bureau of Compulsory Enforcement — finance compulsory enforcement activities.
• Road Fund — intended for the construction, repair, and maintenance of highways.
• Environmental Fund — used to address environmental issues and protect the natural environment.
• Social Insurance Fund — provides payments for temporary disability, maternity, and childbirth benefits.

Advantages�Independence in financing targeted programs.�Reducing the burden on the state budget.�Strengthening control over the efficient use of funds.

• Sources of Revenue
• Mandatory payments and contributions (from employers, enterprises, and citizens).
• State subsidies and grants.
• Income earned from the placement/investment of the funds’ own resources.
• Funds attracted from international financial institutions.

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® All rights reserved by Hasan Ahmedov

Targeted extra-budgetary funds are formed to provide financial resources for socio-economic sectors that are vital for the state and require substantial funding.

® All rights reserved by Hasan Ahmedov

State Targeted Funds Classified by the Criterion of Targeted Use of Resources

Socially Oriented State Targeted Funds

Economically Oriented State Targeted Funds

Public (State) credit is defined by specific forms of financial and credit relations through which funds are mobilized into the state’s centralized funds.

Public credit represents a distinct form of monetary relations between the state, legal entities, and individuals. In this process, the state primarily acts as a borrower, and may also appear as a creditor and a guarantor.

FINANCE OF COMMERCIAL ENTERPRISES AND ORGANIZATIONS

This refers to financial relations associated with the activities of economic entities that carry out their operations with the aim of earning profit.

FINANCE OF COMMERCIAL ENTERPRISES AND ORGANIZATIONS

Orientation of activities not toward profit generation, but toward achieving a specific objective.

Using generated income as a means to achieve the stated objectives.

Combining the economic efficiency of a market economy with the social effectiveness of activities.

DISTINCTIVE FEATURES

Financial Sources of Non-Profit Organizations’ Activities

Budgetary Allocations

Income Derived from Commercial Activities

Sponsorship and charitable contributions from commercial entities and private individuals

Contributions that may be received from founders on a regular and/or one-time basis.

Income derived from other sources not prohibited by law.