General Overview of the Budget System in Slovenia

1. General Overview of the Budget System in Slovenia The Republic of Slovenia Ministry of Finance PEMPAL: STUDY TRIP ON BUDGET PLANNING AND MANAGEMENT OF THE EU FUNDS IN SLOVENIA Mojca Voljč Ljubljana, November 2014

2. Introduction of Ministry of Finance and Budget Directorate • Budget system in Slovenia • Legislation • Budget Classifications • Budget Structure • Organization and Responsibilities • Budget Preparation Procedures in Slovenia • Role of the Parliament • Main points about Budget Execution • Information system Agenda

3. 1. Introduction of Ministry of Finance and Budget Directorate

4. 1. Introduction of Ministry of Finance and Budget Directorate BUDGET DIRECTORATE • preparation and coordination of budget and public finance policy, public finance legislation and other documents concerning public spending • interpreting budget solutions and advising budget users about budget preparation and execution • preparation of budget manual (budget and annual report) • final preparation of budget documents (for Government and Parliament) • indirect control of budget preparation and execution (i.e. through budget user managers) • preparation of different analysis of budget measures and budget execution

5. 1. Introduction of Ministry of Finance and Budget Directorate DEPARTMENT FOR BUDGET SYSTEM DEVELOPMENT • preparation of system solutions in the area of budgeting and public finance, • preparation of complex analyzes in connection with the preparation and implementation of the budget and the preparation of proposals for action, • platform design and preparation of manuals for budget users, • participation in the preparation of budget projections, • participation in the preparation of budget documents, • support the Government and the National Assembly for consideration and decision on the budget, • maintenance, development and administration system APPrA (System / application for information support in budget preparation procedures and data analyses related to the budget), • custody of databases.

6. Introduction of Ministry of Finance and Budget Directorate • Budget system in Slovenia • Legislation • Budget Classifications • Budget Structure • Organization and Responsibilities • Budget Preparation Procedures in Slovenia • Role of the Parliament • Main points about Budget Execution • Information system Agenda

7. LEGISLATION 2.1. Budget system in Slovenia – Legislation • Public Finance Act • Decree on Strategic Development Documentsand on the Bases and Procedures for Preparation of a Proposed National Budget • Rules of Procedure of theParliament • Implementation Actof the Republic of Slovenia Budget for 2014 and 2015 • Rules on the procedures of implementing the budget of the Republic of Slovenia

8. 01. October Preparation of budget proposal Adoption of the Budget Decree on Strategic Development Documentsand on the Bases and Procedures forPreparation of a Proposed National Budget Rules of Procedure of theParliament Public Finance Act 2.1. Budget system in Slovenia – Legislation Budget preparation 01. January 31. December

9. Public Finance Act regulate: • Composition of the budget and financial plans • Two budgets for next two years • Documentations that Government should submit to the Parliament • The date for submission to the Parliament • Instruction for preparing the Budget • The structure of the proposed financial plans explanation • Adjustment of proposals • Adoption of the Budget and restrictions in adopting the Budget 2.1. Budget system in Slovenia – Legislation

10. Decree regulates: • The preparation of the strategic development documents of the state • The formulation and determination of national development priorities • The preparation of the budget memorandum and determination of fiscal rule (the frame of public finance expenditures) • The procedures and documents for the preparation of a proposed national budget, proposed amendments to the national budget, a proposed revised national budget and other documents connected with these acts 2.1. Budget system in Slovenia – Legislation

11. Decree determine budget preparation procedures as follows: • The preparation and composition of the budget memorandum • First budget session of the Government (before 15. of May) • Harmonization of budget expenditures in government working groups • Second budget session of the Government (before end of June) • Instructions for the preparation of the budget • Submission of proposed financial plans (before 15. of August) • Submission of the budget memorandum and the proposed budget by the MoF to the Government (before 20. of September) 2.1. Budget system in Slovenia – Legislation

12. 2.2. Budget system in Slovenia – Classifications • INSTITUTIONAL CLASSIFICATION WHO spend public money • ECONOMIC CLASSIFICATION HOW we spend public money FOR WHICH economic purposes • PROGRAM CLASSIFICATION WHAT FOR we spend public money ON WHICH program areas • FUNCTIONAL CLASSIFICATION - COFOG WHAT FOR we spend public money FOR WHICH function • SOURCE OF FUNDS CLASSIFICATION FROM WHICH FUNDS

13. INSTITUTIONAL CLASSIFICATION 2.2. Budget system in Slovenia – Classifications GENERAL GOVERNMENT Line Ministries - 35 - Direct budget users CENTRAL GOVERNMENT State funds Direct budget users • 169 – • Nongovernmental • Governmental • Justice (Courts, Prosecutions,..) Other units of the state level (indirect users) LOCAL GOVERNMENT SOCIAL SECURITY FUNDS

14. INSTITUTIONAL CLASSIFICATION 2.2. Budget system in Slovenia – Classifications

15. ECONOMIC CLASSIFICATION 2.2. Budget system in Slovenia – Classifications 70 Tax revenues 71 Non - tax revenues 72 Capital revenues 73 Grants 74 Transferred revenues 78 Receipts from the EU budget 75 Repayments of loans and sales of equities 50 Borrowing 40 Current expenditure 41 Current transfers 42 Capital expenditure 43 Capital transfers 45 Payments to the EU budget 44 Lending and acquisition of equity 55 Amortization of debt ACCOUNTS OF REVENUES AND EXPENDITURES THE FINANCIAL ASSETS AND LIABILITIES ACCOUNT FINANCING ACCOUNT

16. 2.2. Budget system in Slovenia – Classifications • SOURCE OF FUNDS CLASSIFICATION • Budget expenditure (tip 1) • Sale and exchange of real assets (tip 5) • Own activity (tip 6) • Compensations from assets assurance (tip 7) • Contributions and taxes (earmarked) (tip 9) • Donations (tip 30) • Pre-accession funds – Slovenian participation (tip 20) • Donations – Slovenian participation (tip 31) • EU 07-13 – Structural funds– Slovenian participation (tip 71) • EU 07-13 – Cohesion fund– Slovenian participation (tip 73) • EU 07-13 – Rural development– Slovenian participation (tip 75) • EU 07-13 – Other measures in agriculture and fisheries sector – Slovenian participation (tip 83) • EU 07-13 – Environmental measures– Slovenian participation (tip 85) • EU 07-13 – Internal policies– Slovenian participation (tip 81) • EU 07-13 – European fisheries fund– Slovenian participation (tip 87) • EU 07-13 – Territorial co-operation– Slovenian participation (tip 89) • Pre-accession funds (tip 3) • EU 07-13 – Structural funds(tip 70) • EU 07-13 – Cohesion fund(tip 72) • EU 07-13 – Rural development(tip 74) • EU 07-13 – Other measures in agriculture and fisheries sector (tip 82) • …….. General revenues Earmarked SI participation EU funds

17. FUNCTIONAL CLASSIFICATION 2.2. Budget system in Slovenia – Classifications Three levels of classification: • Divisions - 10 • Groups - 69 • Classis - 111

18. PROGRAM CLASSIFICATION 2.2. Budget system in Slovenia – Classifications • FOR WHICH programs we spend public money • The base for result oriented budgeting • Three levels: • Policy – 24 • Program – 112 • Subprogram – 300

19. Program classification 140202 –Entrepreneurial and innovative environment and the promotion Institutional classification 2130 –Ministry of economic development and technology Budget item Economic classification Functional classification- COFOG 0474 –Multi-purpose development projects Source of funds classification 70 – EU 07-13 Structural funds Source of funds classification 1 – Budget expenditure 432000 – Capital transfers to Local Government 402000 – Office materials and services 402005 – Translation and interpreting expenses 2.2. Budget system in Slovenia – Classifications 2045 – Stimulation of public invest -ments - EU - Structural funds 2224 – Preparation, evaluation and development of programs

20. REVENUES AND EXPENDITURES EXPENDITURES ECONOMIC CLASSIFICATION • SURPLAS/ DEFICIT • INSTITUTIONAL • PROGRAM CLASSIFICATIONS BUDGET STRUCTURE 2.3. Budget system in Slovenia – Budget structure 1. GENERAL PART 2. SPECIAL PART 3. DEVELOPMENT PROGRAMS PLAN EXPENDITURES – PROJECTS / ACTIVITIES • PROGRAM CLASSIFICATIONS

21. GENERAL PART 2.3. Budget system in Slovenia – Budget structure shall comprise: A: the joint accounts of revenues and expenditures, B: the financial assets and liabilities account and C: the financing account ECONOMIC CLASSIFICATION

22. SPECIAL PART 2.3. Budget system in Slovenia – Budget structure of the budget shall comprise financial plans of the direct spending units INSTITUTIONAL CLASSIFICATION PROGRAM CLASSIFICATION

23. DEVELOPMENT PROGRAMS PLAN 2.3. Budget system in Slovenia – Budget structure shall disclose projects for investments, EU funds and state aid and activities of direct spending units in the subsequent four years, which shall be broken down by: • Individual program of direct spending units • Year in which the outgoings for the programs will burden the budget • Source of financing for full completion of programs. PROGRAM CLASSIFICATION PROJECTS ACTIVITIES

24. PARLIAMENT CABINET OF MINISTER Transfers from the state budget Health Fund Pension Fund Local communities Transfers from the state budget INDIRECT BUDGET USERS≈ 3000 … Secondary School … Primary School ORGANIZATION AND RESPONSIBILITIES 2.4. Budget system in Slovenia – Organization and responsibilities Ministry of Finance Budget department … Ministry of Justice Ministry of Defence Ministry of Education LINE MINISTRIES DIRECT BUDGET USERS Office for Youth Inspectorate for Education Core Ministry …

25. Introduction of Ministry of Finance and Budget Directorate • Budget system in Slovenia • Legislation • Budget Classifications • Budget Structure • Organization and Responsibilities • Budget Preparation Procedures in Slovenia • Role of the Parliament • Main points about Budget Execution • Information system Agenda

26. J F M A M J J A S O Preparation of macro-economic framework Revenues and expenditures projections Expenditures by programs Cabinet approves strategy and ceilings Budget circular Line ministries submit budget requests Budget requests reviewed by MoF - negotiations Draft budget prepared by MoF Budget submitted to legislature Legislature scrutinises and approves budget Timetable for budget implementation 3. Budget Preparation Procedures in Slovenia

27. First phase Second phase • determination of priorities • revenue and expenditure estimations • nominal expenditure frame • deficit / surplus as a goal • each line minister – finance minister • preparation of financial plans according priorities and instructions Harmonisation of budget expenditures Harmonisation of proposals - Final negotiations Expenditures by policies, programs, subprograms and line ministries MoF prepare budget proposal + other documentations Budget adopted by the Government Government budget session Ceilings Budget send to the Parliament 3.Budget Preparation Procedures in Slovenia

28. INPUT DATA RULES RESULT • Base data • Macro-economic indicators • Index • Absolute value Revenues / expenditures for the observed period Mathematical functions BD*MEI1*(Ind1+Ind2) +/- AV 3. Budget Preparation Procedures in Slovenia First Phase – Information system APPrA – module Scenarios • Wizard for defining rules • General and specific rules • At least 1 rule per data point per year • Result on detailed level

29. 3. Budget Preparation Procedures in Slovenia First phase Second phase • determination of priorities • revenue and expenditure estimations • nominal expenditure frame • deficit / surplus as a goal • each line minister – finance minister • preparation of financial plans according priorities and instructions Harmonisation of budget expenditures - First negotiations Harmonisation of proposals - Final negotiations Expenditures by exp. areas, main programs and line ministries MoF prepare budget proposal + other documentations Budget adopted by the Government Government budget session Ceilings Budget send to the Parliament

30. 3. Budget Preparation Procedures in Slovenia Second Phase • Instructions for the preparation of the budget shall contain • the resolutions of the first and second budget sessions of the Government • the basic economic starting points and assumptions for the preparation of budget proposals • the distribution of rights to expenditure determined by the Government • instructions for preparation of explanations of financial plans • deadlines • other technical and substantive instructions for the preparation of the proposed budget • Submission of proposed financial plans by 15 Avgust of the current year or by a day determined by the Government

31. BUDGET USERS LINE MINISTRIES MoF SAPPrA 3. Budget Preparation Procedures in Slovenia Second Phase – Information system • WEB application • Data base on MoF • Controls of data on entering • Different Role: MoF, BU, LM • Central administration and upgrade of application

32. 3. Budget Preparation Procedures in Slovenia Government shall submit to the Parliament: • Budget memorandum • Proposed central government budget with explanation • Proposed planned sales of the central government’s financial and physical assets for budgetary purposes • Proposed financial plans for the subsequent year with regard to the Health Insurance Institute and Retirement and Disability Pension Insurance Institute, both in the area of compulsory insurance, public funds and agencies founded by the central government, together with explanations • Proposed laws required to implement the proposed central government budget • Proposed Job Allocation Schedules and Proposed Plan of Capital Purchases

33. Introduction of Ministry of Finance and Budget Directorate • Budget system in Slovenia • Legislation • Budget Classifications • Budget Structure • Organization and Responsibilities • Budget Preparation Procedures in Slovenia • Role of the Parliament • Main points about Budget Execution • Information system Agenda

34. Rules of Procedure of the Parliament determine the adoption of the budget: • The session at which the budget memorandum and the draft state budget will be presented (in 10 days after submission) • Amendments are proposed to the individual subprogram of defined budget user in the special part of the draft state budget • Amendments to the draft state budget may be tabled by deputies, deputy groups, the working bodies concerned, and the working body responsible (no later than 10 days following the presentation) • All proposers of amendments must take into consideration the rule on the balance between budget revenues and expenditures. • An amendment tabled should not burden the budget reserves or general budgetary commitments, nor should it entail the burden of additional borrowing 4. Role of the Parliament

35. Rules of Procedure of the Parliament determine the adoption of the budget: • The Government takes a position on all tabled amendments • On the basis of the latest analyses of economic trends and the implementation of the state budget for the current year, government prepares a supplemented draft state budget and submits it to the Parliament (within 30 days following the presentation) • Amendments to the supplemented draft state budget may be tabled by the working body responsible, a deputy group, or at least one quarter of the deputies • Committee on Finance and Monetary Policy - working body responsible 4. Role of the Parliament

36. Rules of Procedure of the Parliament determine the adoption of the budget: • The session of the Parliament at which the discussion on the supplemented draft state budget will be held is convened within 15 days following the submission of the supplemented draft state budget • the representative of the Government may first explain the supplemented draft state budget • the reporter of the working body responsible may present a report • the representatives of the deputy groups may present their positions on such • At the session of the Parliament they debated and voted on individual parts of the supplemented draft state budget 4. Role of the Parliament

37. Rules of Procedure of the Parliament determine the adoption of the budget: • The Parliament decides on the amendments to the supplemented draft state budget at the end of the debate on the individual part of the special part of the supplemented draft state budget to which the amendment was tabled • When the voting on parts of the supplemented draft state budget is completed, the chairperson establishes whether the draft state budget is balanced in terms of revenue and expenditure, and individual parts • If the draft state budget is balanced, the Parliament votes on it in its entirety 4. Role of the Parliament

38. Rules of Procedure of the Parliament determine the adoption of the budget: • The budget implementation act • must be harmonised with the adopted state budget • if not, the Government must propose a harmonising amendment to the draft budget implementation act • the discussion and adoption of the draft budget implementation actby the urgent procedure 4. Role of the Parliament

39. Introduction of Ministry of Finance and Budget Directorate • Budget system in Slovenia • Legislation • Budget Classifications • Budget Structure • Organization and Responsibilities • Budget Preparation Procedures in Slovenia • Role of the Parliament • Main points about Budget Execution • Information system Agenda

40. BUDGET EXECUTION • Budget executed on budget line: budget item and 4-digit economic classification • Reallocation of Appropriations are allowed in according to Public Finance Act and annual Act on the implementation of the budget • Carry over's are not allowed • Restricted Entering into Commitments Burdening the Budgets for Subsequent Years 5. Main points about Budget Execution

41. Introduction of Ministry of Finance and Budget Directorate • Budget system in Slovenia • Legislation • Budget Classifications • Budget Structure • Organization and Responsibilities • Budget Preparation Procedures in Slovenia • Role of the Parliament • Main points about Budget Execution • Information system Agenda

42. Adopted budget Execution and accounting data • Automatic procedures • Every night System MFERAC 6. Information system • Execution • Accounting System APPrA Budget preparation process • Scenarios – First phase • Budget preparation – Second phase • Reporting system

43. 6. Information system APPrA System / application for information support in budget preparation procedures and data analyses related to the budget • Scenarios • Reporting system – internal (budget department) • Budget preparation – web collection of data • Reporting system – web • Final accounts – web collection of data • Applications for local communities • Application administration

44. 6. Information system

45. Thank you! Mojca.voljc@mf-rs.si