Treasury of Georgia - Functions and Reforms

1. TREASURY OF GEORGIA – MISSION AND FUNCTIONS Nino Tchelishvili June, 2016 Chisinau, Moldova

2. BACKGROUND • Treasury Service - founded in 1995 as a structural department at the MOF • Subordinated Agency under the MOF - Since 2001 • 11 Regional Offices with more than 100 hundreds staff shut down since web-based Information System launched in 2010 • Single office operating since 2010; • Total staff -97; • Acting as a secretariat for: • IPSASB Georgia • Committee for debt and tax liability restructuring

3. Treasury - Organizational Chart

4. FUNCTIONS OF THE TREASURY • Main functions of the Treasury • Servicing Department –Commitment and Payment processing; • Deposit and Loans Management Department - registering new accounts, managing cash accounts, revenue collection, refund management, loan monitoring and management (Secondary function?); • Settlement Department – Managing Treasury Single Accounts (GEL, FX), banking settlement. • Reporting and Methodology Department - budget execution reporting, accounting methodology, consolidated financial statement • Cash forecasting and management – Preparing statistical and analytical reports, forecasting cash, drafting cash investing rules and procedures; • Administrative Department – Administrative services: Payroll, Utilities, Office maintenance...

5. External Partners - TREASURY • Central Bank (National Bank of Georgia - NBG) – Fiscal Agent for the Government. • Non-commercial banking arrangement – NBG does not charge Treasury transactions, therefore, treasury does not charge for any services financed through budget; TSA balances do not earn interest, Official exchange rate applied to conversion transactions; • Connected via RTGS (GEL), SWIFT (FX) • IT support – LEPL Financial Analytical Service of the MOF • Training partner – LEPL MOF Academy. • Donor Organizations (EU, GIZ, USAID) – supporting TA activities;

6. STRATEGIC PLANNING • PFM Strategy for 2013-2017–Medium Term PFM Policy; • Maintain Fiscal Disciple and Improve Fiscal Forecasting; • Improve Public Finance Planning; • Improve Public Finance Management, Accounting and Reporting; • Implement IPSAS • Cover Local Budgets in the Integrated PFMS • Enhance TSA Coverage of LEPLs • PFMS implementation • Cash planning and management; • PFM reforms implementation plan – annual; • IPSAS implementation plan – Entire project 2010-2020;

7. MAJOR REFORMS

8. TREASURY MANDATE IN BUDGET PAYMENTS • Treasury authorize and execute all payment transactions; • Treasury perform ex-ante control in terms of compliance to the rules (Procurement, Classification, Primary documents). Appropriateness is not assessed. No justification required. • Green Corridor is functioning for standardized payments, (Utilities, Healthcare Programs. etc.). • Commitment and Payment documents analyzed and most commonly used texts for payment purpose for certain economic code input into the system; • If predefined payment purpose selected by the user, the system processes and authorizes documents automatically; • No manual process involved in the back office Treasury;

9. B u d g e t E x e c u t i o n S t a g e 1 R e q u i s i t i o n S t a g e - L i k e l y t o D e c i s i o n t o i n v o l v e t e n d e r i n g p r o c e s s e s P r o c e s s f o r b a s e d o n t h e v a l u e o f g o o d s P u r c h a s e - P r e - a n d s e r v i c e s t o b e p u r c h a s e d c o m m i t m e n t c o m p r e h e n s i v e a c c o u n t i n g a n d c o n t r o l F u n d s C o n t r o l / B u d g e t S t a g e 2 C o m m i t m e n t - S e t s a s i d e Commitment document f u n d s s o t h a t m o n e y c a n n o t S t a g e 3 b e s p e n t f o r o t h e r p u r p o s e s G o o d s o r S e r v i c e s D e l i v e r e d A c c r u a l - A c c o u n t s L i a b i l i t y p a y a b l e - I n v o i c e S t a g e 4 R e c o g n i s e d - C o r r e c t l y m a t c h e d t o p u r c h a s e ( f i n a n c i a l R e n d e r e d I n v o i c e o r d e r / c o m m i t m e n t o b l i g a t i o n ) r e c e i v e d S t a g e 5 P a y m e n t m a d e o n d u e Y e s S t a g e 6 Payment Request Registered in the System d a t e r e c o g n i z e d b o t h o n P a y m e n t M a d e a n a c c r u a l a n d c a s h b a s i s S t a g e 7 N o B u d g e t A r r e a r s P a y m e n t s a r e o v e r d u e Payment Scheme Georgia Treasury

10. RISK MANAGEMENT • Treasury exposed to operational and financial risks, however, formal risk based assessment does not take place. • Technical risks are managed by the Financial Analytical Service of the MOF (business continuity plan developed.) • Assessing appropriateness/misuse of Budget Funds is direct responsibility of the internal and external audit.

11. Future Reforms and Challenges • Treasury is seeking to change its role, functions and focus. • Risk Management: • Treasury’s role in controlling payment diminishes as capacity in Line Ministries and Municipalities improve. • Treasury’s role in managing financial risks evolving. • Accounting and Reporting • FMIS is supposed to capture accrual/non monetary transactions. • Treasury may choose to prepare IPSAS based financial statement by its own based on the LM data.

12. Treasury ServiceMinistry of Finance of Georgia Thank you www.mof.ge www.treasury.gov.ge www.etrasury.ge