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CASH MANAGEMENT STUDY TOUR

Join the study tour in Vilnius to explore innovative cash management practices presented by Nikola Vukicevic, Deputy Minister for Budget of Montenegro. Learn about principles such as unity, specification, transparency, and sound financial management, and gain insights into strategic planning methodologies, budget institutions, and IT systems for budget execution. Discover how Montenegro is implementing budget reforms and explore the next steps for improving financial management practices. Enhance your knowledge on budgetary reform, IT systems, budget forecasting, and public finance management principles. Don't miss this opportunity to elevate your financial expertise!

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CASH MANAGEMENT STUDY TOUR

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  1. CASH MANAGEMENT STUDY TOUR VILNIUS LITHUANIA 15-16 FEBRUARY PRESENTED BY: NIKOLA VUKICEVIC DEPUTY MINISTER FOR BUDGET REPUBLIC OF MONTENEGRO

  2. ORGANIZATIONS INVOLVED • MINISTRY OF FINANCE – REPUBLIC OF MONTENEGRO • STATE TREASURY DEPARTMENT MINISTRY OF FINANCE – LITHUANIA • US DEPARTMENT OF THE TREASURY OFFICE OF TECHNICAL ASSISTANCE

  3. REFORM OF PUBLIC FINANCE IN LITHUANIA – INTRODUCTION • LEGAL FRAMEWORK • Organic Budget Law • Strategic Planning Methodology • Government Resolution on Budgeting, Calendar, etc.

  4. PRINCIPLES OF REFORM • UNITY • SPECIFICATION • TRANSPARENCY • SOUND FINANCIAL MANAGEMENT

  5. UNITY • CONSOLIDATION OF NON BUDGETARY FUNDS • Five included, four still EBF • TAXES AND OTHER INCOMES ARE REDISTRIBUDET THROUGH CONSOLIDATED NATIONAL BUDGET, SOCIAL AND HEALTH INSURANCE FUND

  6. TRANSPARENCY • ADDITIONAL INFORMATION TO THE PARLIAMENT, LEADING ANNUAL DRAFT BUDGET: • Programmes to be executed • Investment projects to be implemented • Performance information • Information available on the internet

  7. SPECIFICATION • ISSUE - APPROPRIATION MUST HAVE A GIVEN PURPOSE AND BE LINKED TO SPECIFIC OBJECTIVE • SOLUTION - IMPLEMENTED BY STRATEGIC ACTIVITY PLANNING SYSTEM

  8. SOUND FINANCIAL MANAGEMENT • IMPLEMENTATION – THROUGH CREATION OF STRATEGIC PLANNING SYSTEM • Governmental Level • Institutional Level – Spending units • Based on Budget Routine Process

  9. BUDGET INSTITUTIONS STRATEGIC ACTIVITY PLAN • GOVERNMENT DEFINES STRATEGIC GOALS AND PROGRAMS FOR LINE MINISTRIES • LINE MINISTRIES DEFINE SPECIFIC TASKS AND INDICATORS

  10. STRATEGIC PLANNING 1 • First step in annual budget cycle – budget priority setting for mid-term period • Sector strategies for investment based on budget priorities • Fiscal plan expenditure targets based on budget priorities • Linking ministerial strategic action plan to priorities • Linking inter ministerial programs to priorities • Linking measures inside ministerial programs to priorities

  11. STRATEGIC PLANNING 2 • Principal framework for the hierarchy of strategies of different duration (15, 7 and 3 years) • Harmonisation of investment planning and strategic activity plans (budget programmes) • Harmonisation of EU planning instruments with investment planning and budget

  12. IT SYSTEM FOR BUDGET EXECUTION • IT SYSTEM FOR AUTOMATED FORECASTING OF BUDGET EXPENDITURE • More accurate forecasts of budget expenditure • Forecasts of expenditures for borrowing and investment planning • More accurate data – less balance kept in accounts for unexpected expenditures • Lower interest expenses

  13. MONTENEGRO - HIGHLIGHTS • ORGANIC BUDGET LAW - 2001 • TREASURY IMPLEMENTED – 2002 • SAP SYSTEM FOR BUDGET EXECUTION – IMPLEMENTED IN 2003 • PROGRAM BUDGETING STARTED IN 2004 – ONGOING PROCESS • HOME MADE SOFTWARE FOR BUDGET PLANNING – 2005 • CAPITAL BUDGET IMPLEMENTED - 2007

  14. APPLICABILITY TO MONTENEGRO • UNITY • Inclusion of all EB Funds in TSA from 2008 • SPECIFICATION • Program Budgeting improvement – spending units takes more responsibility for formulation of performance indicators • Redefinition of Program Structure

  15. APPLICABILITY TO MONTENEGRO – cont • TRANSPARENCY • Budget Rationale better presented by functional classification • SOUND FINANCIAL MANAGEMENT • Government Responsibility in definition of Sector Strategies

  16. APPLICABILITY TO MONTENEGRO – cont • FORECASTING PROCESS • Assigning responsibilities to spending units in process of budget execution

  17. MONTENEGRO NEXT STEPS • EB funds in TSA – 2008 • Improvement of implementation of Program budgeting based on experience of Lithuanian case and other countries • Medium Term Budgeting Framework – explore possibilities for multiyear budgets • Ceilings for spending units for three year period

  18. MONTENEGRO NEXT STEPS – cont • Unification of all spending units through SAP system • Unification of all spending units through Budget Planner system and connection with SAP • Improving municipality reports on public expenditures • Improving Public enterprises reports on assets and liabilities

  19. KNOWLEDGE GAINED • Role of well-established principles in budgetary reform • Quality of IT system in cash management process • Innovative methods for budget execution forecasts • Advantages of combination of both top down and bottom up principles in public finance management

  20. THANK YOU

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