The Task of Financial System’s Rebuilding and Economic Role of the State

Prof. Revaz Kakulia, Ekaterine Babunashvili

At the end of XX century and the beginning of XXI century the state adheres to an active position in the macro system when institutional and structural reforms are being carried out under the initiative and support of the state.

If we take a simple approach to the selection of reform methods they come to two variants. The first variant envisages implementation of a number of radical measures in the shortest terms; it was called “shock therapy”. The second one is based on particular reforms and their gradual intensification – it was called “policy of gradualism”.
The reforms in Georgia are being carried out according to the first radical variant, that are aimed at substitution of centralized planning for basic elements of market economy, that is: quick liberalization of prices and trade, implementation of stabilization program, etc.
Under these conditions, the problem of mobilization of material and monetary resources and their distribution to the sectors of the national economy for promoting its structural rebuilding becomes very important. Solving of these problems requires creation of the effective financial system.
The main objective of the financial system in Georgia is creation of the mechanism of formation and use of financial resources that would contribute to effective distribution and redistribution of the national income for the purpose of creation market economy structures, strengthening of the state, smoothing of the level of economic and social development of different regions.
All this allowed us to begin the implementation of the radical reform of the tax and budget system, especially the fiscal sector, and the reform of the social sphere.
Under market economy conditions, the perfection of financial and budgetary system becomes a prior and difficult task that management of any branch of our life confronts.