The Function of Public Finances
It’s easy to forget just how important public financing is to stabilizing an economy. Public finances are necessary, as contributing to the achievement of tasks and functions of the state, which could not be realized without financial leverage. Methods, by which public finances fulfill this role, flow from their functions:
• Distribution function
• Control Function
The distribution function appears in the process of social division (gross domestic product) and comprises two stages:
* The establishment of cash funds (resources);
* Redistribution (use) them.
In the first phase, take the place the formation of public funds, to which the companies, public institutions, other legal persons and individuals, whether are resident or non-resident participate .
Resources from what the public funds are constituted come from all economic sectors and all social sectors: public, private, cooperative, mixed. The resources funds of public financial are spread peremptory and with no return.
The distribution of public funds means the establishment of public expenditure by purpose: education, health, culture, social security and social protection, housing and communal farming, national defense, public order, public administration, economic activities, public debt.
The domain of control function is broader than the distribution function, as concerns, in addition to the creation and distribution of public financial funds and the use of resources.
The control function of public finances is not limited on how public funds constitute and their allocation to the beneficiaries, but monitors and the legality, necessity, appropriateness and effectiveness with which public institutions and economic agents with state capital use the resources of available money.
Therefore, the control is carried out not only on the activities of distribution function, but it is exercised and on production carried in the state, on exchange and consumption that takes place in this sector.