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BUDGETING EU FUNDS IN BUDGETING EU FUNDS IN LITHUANIALITHUANIA

Rimantas VeckysLithuanian Ministry of Finance

Seminar on Budget and EU FundsSkopje, 14-15 May 2007

PRESENTATION OUTLINE

• BUDGET REFORMS IN THE RUN-UP TO EU ASSISTANCE

• PROGRAMMING OF EU FUNDS

• MANAGEMENT AND CONTROL OF EU FUNDS

THE CORNERSTONES OF THE REFORM

• PRINCIPLES :

UNITY; SPECIFICATION; TRANSPARENCY; SOUND FINANCIAL MANAGEMENT

UNITY

• CONSOLIDATION OF NON BUDGETARY FUNDS

• TAXES AND OTHER INCOME ARE REDISTRIBUTED THROUGH THE CONSOLIDATED NATIONAL BUDGET, SOCIAL AND HEALTH INSURANCE FUNDS

TRANSPARENCY

• ADDITIONAL INFORMATION TO THE PARLIAMENT, ALONG WITH THE ANNUAL BUDGET:

PROGRAMMES TO BE EXECUTED; INVESTMENT PROJECTS TO BE IMPLEMENTED; PERFORMANCE INFORMATION; INFORMATION AVAILABLE ON THE INTERNET

SPECIFICATION

• ISSUE-APPROPRIATION MUST HAVE A GIVEN PURPOSE AND BE ASSIGNED TO SPECIFIC OBJECTIVE

• SOLUTION-IMPLEMENTED BY STRATEGIC ACTIVITY PLANNING SYSTEM

FORM 1 A

FORM 1B

MissionSTRATEGIC GOALS

PROGRAMME 1GOALS , OBJECTIVES,

MEASURES, PERFORMANCE

CRITERIA

PROGRAMME 2GOALS, OBJECTIVES,MEASURES,PERFORMANCE CRITERIA

PROGRAMME 3

BUDGETARY INSTITUTION’S STRATEGIC ACTIVITY PLANPRINCIPLE SCHEME

BUDGET OF INSTITUTION’S STRATEGIC ACTIVITY PLAN

BUDGET OF PROGRAMME 1BUDGET OFPROGRAMME 2

BUDGET OFPROGRAMME3

GOALS, OBJECTIVES,MEASURES,PERFORMANCE CRITERIA

SOUND FINANCIAL MANAGEMENT

• IMPLEMENTATION - THROUGH DEVELOPMENT OF INTEGRATED PLANNING MODEL:

GOVERNMENTAL LEVEL: CORRELATION BETWEEN STATE STRATEGIC GOALS

AND INSTITUTIONAL INITIATIVES

INSTITUTIONAL LEVEL: BASED ON BUDGET ROUTINE PROCESS

Integrated Planning Model

Strategic Activity Plan

Pro

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me

No

1

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No

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Strategic Activity Plan

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No

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No

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Strategic Activity Plan

Pro

gram

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No

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No

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Strategic Activity Plan

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gram

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No

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gram

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No

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Strategic Activity Plan

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No

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Strategic Activity Plan

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No

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No

…

Long-Term Goals (vision)

(more than 6 years)

Mid-Term Goals

(3 to 6 years)

Short-Term Goals

(1 to 3 years)

Strategic Framework Documents:

• Government Programme• Regional development plans• Convergence programme• EU & NATO Documents• SPD, SDP

Fiscal Strategy and Ministry Ceilings

Fiscal Strategy and Ministry Ceilings

Government Strategic Priorities

Government Strategic Priorities

Secto

ralS

trategy

Secto

ralS

trategy

Secto

ralS

trategy

Long-Term National

Development Strategy

Geopolitical situationLong-term prioritiesLong-term vision for sectors

EU REGIONAL POLICY

• REGIONAL POLICY DESIGNED TO REDUCE REGIONAL DISPARITIES

• THE AMOUNT IN THE EU BUDGET – 36 % OF EU BUDGET TOTAL EXPENDITURES

• AT PRESENT FINANCED BY FOUR STRUCTURAL FUNDS AND COHESION FUND

EU REGIONAL POLICY:PRINCIPLES

• PROGRAMMING • CONCENTRATION• PARTNERSHIP• ADDITIONALITY

CONCEPTION OF REGIONAL POLICY-LITHUANIAN CASE

• FROM EU REGIONAL POLICY PERSPECTIVE – LITHUANIA IT’S ONE REGION CORRESPONDING TO OBJECTIVE 1

• FROM NATIONAL REGIONAL POLICY PERSPECTIVE –SUBJECT OF INTERNAL POLICY FOR COUNTRY REGIONS IMPLEMENTATION OF WHICH REALISES THROUGH SINGLE PROGRAMMING DOCUMENT (SPD)

STRATEGY OF EU STRUCTURAL ASSISTANCE

SINGLE PROGRAMMING DOCUMENT ( SPD) – STRATEGIC DOCUMENT FOR INVESTMENT PLANNING FOR EU STRUCTURAL ASSISTANCE, BASED ON ANALYSIS OF CURRENT SITUATION AND ESTABLISHES DEVELOPMENT OBJECTIVES FOR PROGRAMMING PERIOD, IMPLEMENTATION STRATEGY, INVESTMENT PRIORITIES AND PRELIMINARY FINANCIAL PLAN

STRUCTURAL FUNDS AND COHESION FUND –FINANCING AREAS

ERDF- INDUSTRIAL SECTOR, INFRASTRUCTURE, TECHNICAL ASSISTANCE, COUNTRY REGIONS;

ESF- ACTIVE MEASURES OF EMPLOYMENT POLICY, SOCIAL INTEGRATION, EDUCATION AND PROFESSIONAL TRAINING;

EAGGF- RURAL DEVELOPMENT ( TRAINING, MARKET DEVELOPMENT, RECONSTRUCTION OF FARMS )

FIFG – MEASURES OF FISHERY RECONSTRUCTION

COHESION FUND – BIG PROJECTS OF TRANSPORT AND ENVIRONMENT (50% : 50% )

SPD

SPD INVESTMENT PRIORITIES

Improvement of Accessibility and Service Quality of Transport Infrastructure Ensuring of Energy Supply Stability,Accessibility and Increased Efficiency; Improvement of Environmental Quality and Prevention of Environmental Damage; Restructuring and Upgrading of Healthcare Institutions; Development of Infrastructure of Labour Market, Education, Vocational Training,Research and Study Institutions .

Investments in Agricultural Holdings; Support for Young Farmers; Improving the Processing and Marketing of Agricultural Products;Promoting the Adaptation and Development of Rural Areas; Forestry.

Direct Support to Business;  Improvement of Business Environment; Development of Information Technologies Services and Infrastructure; Public Tourism Infrastructure and Services

DEVELOPMENT OF SOCIAL AND ECONOMIC

INFRASTRUCTURE

HUMAN RESOURCE DEVELOPMENT

DEVELOPMENT OF THE PRODUCTIVE

SECTOR

RURAL AND FISHERIES

DEVELOPMENT

Development of Employability; Development of Labour Force Competencies and Ability to Adapt to Changes; Social Integration and the Prevention of Social Exclusion; Development of Conditions for Lifelong Learning; Improvement of Human Resources Quality in Scientific Research and Inovations.

2000 20152004 2006 2008 20102002 2012

SECURE COMMUNITY

Environment Health Care Social Care Defence Law and Order National Securuty Foreign Policy

COMPETITIVE ECONOMY

Industry/Business Energetics Transport/Tranzit Knowledge economics/E-Businesss Rural and Agricultural Development Tourism Regional Development Finance Policy

KNOWLEDGE SOCIETYPublic Administration Peoples Competencies Science/Education

Kulture

PRECONDITIONS FOR MANAGEMENT AND CONTROL OF EU FUNDS

• STRUCTURE – Establishment of Clear and Efficient Structure of Managing and Paying Authorities and Monitoring Bodies

• HUMAN RESOURCES – Adequate Quantity of Trained and Skilled Administrators, System of Continued Training, Possibility to Obtain Services Among Privat Sector, Effective Implementation of Technical EU Assistance

• SYSTEM – Elements of Budget Flexibility to Manage and Administrate Multi-Year Spending, Effective Cash Flow Planning , System of Financial Control for Specific Spending, Audit System, Data Management

• MEASURES – Computerised Information System, Adaptation of Legislation Basics, Manuals, Methodological Documents from Comission.

BASIC INSTITUTIONAL SCHEME(STRUCTURAL ASSISTANCE)

• THE MANAGING AUTHORITY – MINISTRY OF FINANCE

• INTERMEDIATE BODIES – LINE MINISTRIES, RESPONSIBLE FOR THE RELEVANT SPD ECONOMIC SECTOR

• IMPLEMENTING BODIES – AGENCIES, AUTHORIZED TO CARRY OUT MONITORING FUNCTIONS OF SEPARATE PROJECTS

THE MANAGEMENT AUTHORITY

• SETTING GENERAL ADMINISTRATION• PAYMENT• SUPERVISION PROCEDURES• RULES FOR THE IMPLEMENTATION OF

THE SPD

INTERMEDIATE BODIES

• SETTING REQUIREMENTS FOR THE CALLS FOR PROPOSALS

• PROJECT SELECTION

• PLANNING AND FORECASTING OF FUNDS

• THE CERTIFICATION OF ELIGIBLE COSTS OF THE MEASURE FOR SUBMISSION TO PAYING AUTHORITY

• REPORTING ON THE IMPLEMENTATION

IMPLEMENTING AGENCIES

• THE COLLECTION AND EVALUATION OF THE PROJECTS/APPLICATIONS

• SIGNING THE CONTRACTS AND SUPERVISING PROJECT IMPLEMENTATION

• CHECKING THE ELIGIBILITY OF DECLARED EXPENDITURES

• SIGNING CONTRACTS WITH GOODS SUPPLIERS AND SERVICE PROVIDERS

• SUPERVISING THE EXECUTION OF THE CONTRACTS

CONTROL OF EU INSTITUTIONS

- EXAMINATION BY AUDITORS FROM COMISSION DG’s

-EXAMINATION BY EUROPEAN COURT OF AUDITORS

- EXAMINATION BY OLAF

CONTROL OF NATIONAL INSTITUTIONS

IMPLEMENTING AGENCY- CHECK OF PROJECT APPLICATION;

- CHECK OF PROJECT EXPENDITURES ( CHECK ON THE SPOT);

MINISTRY INTERNAL AUDIT- EXAMINATION OF SYSTEM EFFICIENCY AND SAMPLE CHECKS(CHECKS MIN. 5 % OF EXP.DECL.)

EXTERNAL AUDIT- EXAMINATION OF 5 % CONTROL REPORTS, EXECUTION OF PLANNED AUDITS, PREP. OF WINDING-UP DECLARATION

CONTROL ELEMENTS AND INSTITUTIONS

CONTROL SYSTEM

EXTERNAL AUDIT

EU AUDITORS

IN CASE OF UNSUCCESFULL IMPLEMENTATION OF THE PROJECT NATIONAL BUDGET SHALL TAKE RESPONSIBILITY. IN CASE OF RULES INADEQUACY, EU ASSISTANCE CAN BE DECREASED.

CONTROL SERVICEOF IMPLEMENTING

AGENCIES

MINISTRY INTERNAL AUDITORS

PR

OJE

CT

SRUCTURE IMPROVEMENT OF THE MINISTRY OF FINANCE

• NEW EU ASSISTANCE MANAGEMENT DIVISIONS EU ASSISTANCE MANAGEMENT DEPARTMENT NATIONAL FUND DEPARTMENT FINANCE CONTROL METHODOLOGY DEPARTMENT

• EU BUDGET DIVISION– PAYMENTS IN TO EU BUDGET– COORDINATION OF ACTIVITIES DURING PREPARATION

OF NEW FINANCIAL PERSPECTIVE– COORDINATION OF THE PREPARATION OF COUNTRY

POSITION FOR DRAFT EU BUDGET

LESSONS LEARNED FROM EXPERIENCE OF BUDGETING EU FUNDS

•ACCURACY OF REDISTRIBUTION OF EU FUNDS AMONG SECTORS – RATIONAL BALANCE BETWEEN DEMAND AND ADMINISTRATION CAPACITY

•PROJECT QUALITY AND EFFECTIVENESS OF ADMINISTRATION SYSTEM

•ADMINISTRATION CAPACITY OF INSTITUTIONS TO MANAGE EU FUNDS – EFFECTIVENESS OF PROCEDURES