OPERATING FUNDS IN SOCIALIST INDUSTRY AND THE FUNCTION OF THE BANK

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000600290194-5
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: September 29, 2011
• Sequence Number: 194
• Publication Date: March 6, 1950
• Content Type: REPORT

Sanitized Copy Approved for Release 2011/09/29: CIA-RDP80-00809A000600290194-5
CLASSIFICATION CONFIDENTIAL. C : ' 11
Li...,,..~~ 11 )r1
CENTRAL INTELLIGENCE AGENCY REPORT
INFORMATION FROM
FOREIGN DOCUMENTS OR RADIO BROADCASTS CD NO.
COUNTRY
SUBJECT
HOW
PUBLISHED
WHERE
PUBLISHED
DATE
PUBLISHED
LANGUAGE
Economic - Finance
Bimonthly periodical
Sofia
Jan/Feb 1949
.,.
01 -IN T.. N
_1 roll 1.
SOURCE Pari i Kredit, No 1, 1949.
DATE OF
INFORMATION 1949
DATE DIST.(, Mar 1950
NO. OF PAGES 3
SUPPLEMENT TO
REPORT NO.
THIS IS UNEVALUATED INFORMATION
OPERATING FUNDS IN SOCIALIST INDUSTRY
AND THE FUNCTION OF THE BANK
To assure an uninterrupted process of planned production in industrial plants,
certain funds known as "enterprise-owned funds" are placed at the disposal of so-
cialist enterprises.
The conception of enterprise-owned funds is, however, relative, as any funds
in socialist enterprises belong primarily to the state and are designed to rein-
force the economic control of production processes. Under this plan, every enter-
prise participates in a single process of distribution of socialist production.
The funds are extended under the following conditions: (a) Every enterprise
is provided with the minimum of operating funds necessary to fulfill and exceed
the production plan in accordance with the approved plan. (b) The funds are al-
lotted for an extended period to permit easier handling and encourage their ac-
cumulation. (c) Bank credits are used to finance seasonal production increases,
timely stockpiling of raw materials, fuels, auxiliary production materials, short-
term investments in unfin.,hed products, stockpiling of finished products against
heavy seasonal demand, and other temporary needs. (d) Enterprise-owned funds are
derived primarily from accumulations in enterprises themselves and, in their ab-
sence, from accumulations of other enterprises in the awe association /the term
"association" (obedineniye) refers to one of the smallest administrative unit of
enterprises under a ministry7or from the budget. (e) Borrowed or short-term
operating funds are dr-ived exclusively from bank credits, which are granted only
for complete utilization and payable unconditionally within a definite period.
(f) Different regulations exist for the use of enterprise-owned and operating
funds.
Funds acquired during the production process by exceeding plans of accumula-
tion or through accelerated turnover must be immediately returned by the bank to
the enterprise to supplement its own operating funds. This advantage helps 'io
encourage speedy execution of production plans. furthermore, the enterprise is
CLASSIFICATION CONF1OENTIAL
NAVY I NSRr DISTRIBUTION
AIR FBI 1 -1 I _._ - 1 --I
Sanitized Copy Approved for Release 2011/09/29: CIA-RDP80-00809A000600290194-5
 Sanitized Copy Approved for Release 2011/09/29: CIA-RDP80-00809A000600290194-5
encouraged to make every effort to improve production and reduce expenses to a min-
imum, to achieve the necessary economy for the accumulation of funds.
The amount of the funds ti be assigned is established each year bj the ap-
proved annual industrial Finance Plan and held within limits exactly correspon-i-
inF- to the real needs of enterprises, which are determined by their production
programs, turnover cost of materials, etc. The funds are covered by the savings
accumulated by the enterprise and from budgetary subsidies, with the main part of
the resources always to be derived from savings; only when the amounts accumulated
from savings prove to be inadequate to cover the requirements for a growth of pro-
duction may the industry have recourse to the budget.
Deterctnation of standards by days, that is, establishing the minimum reserves
of inventory values of unfinished products and the remainder of finished products,
is the central problem of financial planning.
The Poll -:ing ' o on example of hov the standards are fixed for various inven-
tory values in an industrial enterprise, as based on data from a 3-month production
account.
Ia such an account, say that raw material expense is 1,080,000 leva, fuel,
540,000 leva, and auxiliary materials, 270:000 leva. The total cost of production
for the 3-month period is 2,700,000 leva.
The standards set in the turnover plan are as follows: for raw materials, 30
days, for fuel; 45 days, for auxiliary materials, 60 days, for unfinished and semi-
finished products, 20 days, and for finished products, 8 days.
The 3-month (90-day) outlay for :aw materials is 1,080,000 leva. "e shall
fix one day's expense for raw materials at 12,000 leva (1,080,000-.' 90 ? 12,000).
If the standard of raw material reserves for 30 days' production it the min-
imum raw material reserve, 3'60,000 leva (12,000 x 30 = 360,000) will be required
for the enterprise to guarantee uninterrupted production.
The standards for fuel., which are 270,000 love in the given example, are com-
puted the same way (540,000 _ 90 x 45); and for auxiliary materials, 180,000 leva
(270,000r 90 x 60).
The standard for finished products is calculated with reference to the average
daily production, obtained from production accounts.
In the given example, the average daily production is 30,000 leva (2,700,000-
90 : 30,000).
The standard for finished products is fixed at 8 days, which corresponds to a
value of 240,000 leva (30,000 x 8).
The standards for unfinished products and semifinished products are computed
with reference to the ratification of the production plan and the established norm
in days.
With the standard for unfinished products and semifinished products at 20 days
and the average daily production costs at 30,000 leva (2,700,000 _ 90), the fixed
investments in unfinished products and semifinished products will be 600,000 levc.
Calculation of expenses for the coming period is based on the orresponding
average actual balances over the current year, with reference to production in-
creases for the following planning period.
All calculations based on the above method have been collated. They repre-
sent he sum total of enterprise-ocned operating funds necessary to an enterprise.
6l :.L :_. ... _: -jA
I_.
Sanitized Copy Approved for Release 2011/09/29: CIA-RDP80-00809A000600290194-5
 Sanitized Copy Approved for Release 2011/09/29: CIA-RDP80-00809A000600290194-5
Vl,'i~: ail l i
This financial system grants the bank a position where it can conduct a sys-
tematic and timely analysis of the financial and economic activity of industrial
enterpriues, based on the control of loans and, more particularly, of operating
ft-ids, which is a most important factor in the national economy.
Sanitized Copy Approved for Release 2011/09/29: CIA-RDP80-00809A000600290194-5