Public Sector Financial Reform in the Republic of Macedonia

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Public Sector Financial Reform in the Republic of
Macedonia

• Republic of Macedonia
• Ministry of Finance

Miami - April, 2004
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Objective

• To provide participants with an overview of the
  past present and future public sector financial
  management reform occurring in Macedonia

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Treasury basic functions
Budget execution
Reports and Analysis
Cash management
Liquidity forecasting
Budget accounting
Debt management
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ORGANIZATIONAL ASPECT
Provide technical assistance
Clearly define roles and responsibilities
Prepare Strategic plan
Change the organisational structure of the
institutions
Hire adequate staff
Train the treasury staff
Train the budget users and spending units
Provide incentives for long working days
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Changes in 2001 and 2002

• Changes in the structure of accounts of Budget
  users
• More flexibility for budget users with
  expenditures control on 3-digit level of budgeted
  expenditures
• Elimination of the idle balances within budget
  users accounts
• Opening of the TREASURY SINGLE ACCOUNT
• Opening of Treasury Offices in 16 different
  cities, for accepting and processing of payment
  requests and providing reports on accounts of the
  budget users

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Accounts 840
banks
Acc. 845 - Customs
Budget
Budget users accounts
STRUCTURE OF TSA
Special accounts
Depository acc. of the courts
Transitory accounts of LSG and Funds
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REVENUE COLLECTION
Revenue processing is performed by
Central Bank (RTGS)
Clearing house (clearing inter-bank system)
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Institutions connected to RTGS
Ministry of Finance Treasury
Clearing House
Banks
ZPP
Central Bank
National Payment Card
Central Depository for Securities
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Ministry of FinanceTreasury IT Subsystem
Wireless Ethernet
1. 2. . . . . . 16
Central Bank
MoF Treasury
TO Skopje
Public Revenue Office
Frame Relay
ISDN
Treasury Offices
Clearing House
Stopanska Banka
Customs
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Revenue collection
Clearinghouse accepts payment orders by tax
payers (small amounts) and in SWIFT format
transfers money on the TA at CB according to the
revenue code
Deponents of Bank A
Deponents of Bank B
Post
Firm A
Firm E
Firm B
Firm F
Firm C
Firm G
Clearing house
Firm H
Firm D
?
Bank A
Bank B
CB RTGS
?
?
?
Banks accept payment orders from the tax payers
for paying taxes and in SWIFT format transfer
funds on the TA in the CB according to the
revenue code
CB electronically submits data for inflows and
outflows on the TA and analytical data by type of
revenues
Treasury account
Deponent of CB
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EXECUTION OF EXPENDITURES
MF - Treasury
Treasury Offices input payment requests into the
system and they are electronically submitted to
the Treasury
Budget users submit their payment requests in
Treasury Offices
?
16 Treasury Offices throughout the territory of RM
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Execution of expenditures
Firm A
Firm E
Firm B
Firm F
Treasury electronically submits payment order to
the Central Bank. At the same time the
transactions are recorded in TGL
Firm C
Firm G
Firm D
Firm H
CB RTGS
Banks approve the accounts of the ultimate users
and inform them
Bank A
Bank B
?
?
?
CB transfers funds to the banks of ultimate users
by amounts and users
CB informs Treasury for the inflows, outflows and
balance of the TA
Treasury account
?
?
Deponent of CB
Budget users submit payment requests to the
Treasury. Treasury controls and authorize payments
Treasury
T1
T2
Budget user 1
Budget user 2
Budget user 3
Budget user 4
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BUDGET USERS - CASH
Treasury Office
Budget users
payment request
cash
Treasury
approved request
commercial bank
CB - RTGS
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Changes in 2003 and beginning of 2004

• Introduction of Commitment accounting
• Improvement of cash management improved cash
  planning and arrears management
• Treasury securities

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Commitments procedure
Commitments are reported with the submission
of O1 form report and a copy of the MOF
approval to the Treasury Office
Reporting of the Commitment at the Treasury
office according to the contract within 10 days
If form not completed
Recording of the Commitment to the Single
Commitment data base at the MOF
Commitment shall not be recorded
Assigning of a commitment number
If commitment canceled at any stage of the process
Budget user submits a O1 form - cancellation
Informing the budget users about the number of
reported commitments through a statement issued
at the Treasury Offices
If change occurs
Budget user submits O1 form change
Submission of a payment request according to the
payment time schedule
If not submitted on time
Payment request rejected
If funds available
If funds not available
Execution of the payment according to the payment
plan from the O1 form
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Cash planning
Budget adopted
Annual financial plan by quarters
Quarterly plans for settlement of liabilities
Quarterly financial plans by months (5 days at
latest before the beginning of the quarter)
Commitment accounting
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TREASURY BILLS

• Implementation 20th January 2004 (first issue)
• Short-term state securities, nominal value of
  10.000 MKD and 3 months maturity period
• National Bank of RM Agent of the State
  regarding the issue of the State Bills
• Can be purchased by all domestic and foreign
  legal entities and physical persons
• Interest rate defined on market principles

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TREASURY BILLS

• Objectives
• more efficient budget liquidity management
• initiation of more dynamic development of the
  financial markets in RM
• improvement of the structure of the debt of the
  State
• stimulation of savings
• implementing new financial instruments on the
  market.

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Extra-Budgetary Funds 2004

• Consolidating of the Extra Budgetary Fund
  accounts within the frames of the TSA
• Designing a Strategy for the process of
  transferring the accounts
• Timeframe for transfer Sep-Dec. 2004

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NEW PROJECT IN 2004
Improvements of Treasury financial software
package

• Improvement of budget accounting system
• Improving of the Debt management function
• More efficient use of public financial resources

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Budget - Key Developments to Date (1)

• Fiscal Strategy
• Budget Timetable/circular
• Fiscal Ceilings
• New Policy set aside in 2003

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Budget - Key Developments to Date (2)

• Shift from detailed inputs to budget
  appropriations by economic category
• Reduction in the number of budget users
• Budget Preparation system

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Budget Current Developments

• Budget Committee
• Capital Budget
• Program Classification
• Budget Presentation
• Budget Classification

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(No Transcript)
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Budget future developments

• Continued development of budget presentation
• Development of Budget Formulation system
  including on-line access for Budget Users

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Discussion
Questions Comments Proposals
Mende.Micevski_at_finance.gov.mk Toni.Dimovski_at_financ
e.gov.mk