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2015/FMP/WKSP1/019 Session: 5

Modernization of Treasury System (Certain Aspects)

Submitted by: Russia

Workshop on Fiscal Management Through Transparency and Reforms

Bagac, Philippines9-10 June 2015

Modernization of Treasury

System(certain aspects)

June 2015

TREASURY OF RUSSIA

Oxana PavlyukovaDeputy Head

Federal Budget Execution Directorate

Key Outcomes of Treasury Development

FTAS project

1998 - 2002(before start)

• No single treasury account

• Budget accounts served by

commercial banks

• No obligation controls system

• Weak budget classification, no tools to

explore and track expenditures

• Revenues and expenditures

accounted independently

• Information systems developed in-

house, fragmented and overlapped

• Large account balances are not used

Nowadays

• Federal Treasury became a principal

public financial authority

• Implemented Single Treasury Account

• Unified Treasury Automation System

implemented

• 23 248 budgets being serviced in FT

• Around 48 900 accounts opened in the

Central Bank

• More than 220 000 customers

• More than 900 000 certificates for

electronic signature issued by FT (free,

only for 2014)

• More than 50 000 000 payment

transactions monthly (for 2014)

• 48.5 bln rubles of budget revenue from

interest on balance at STA (only for 2014)

Слайд 2

Complex Approach to Development FTAS

FTAS

Law and regulatory acts

development,

methodology

development, learning

Information security

policy implementation

(splitting perimeters,

networking,

learning)

Software development,

customization,

implementation, learning

IT modernization

(infrastructure, networks,

systems management,

learning)

Слайд 3

Redesigned

business

processes

Infrastructure

Information

security

New application

software

Core account

Balance accounts of the Federal Treasury Departments

STA architecture and cash flows

Budget funds Off-budget

funds

Слайд 4

Functioning of the Single Treasury Account

Single Treasury Account

RTO 1 RTO 2 RTO 3 RTO 86……..

Sovereign funds

86 Regional offices of the Federal Treasury

Daily replenishment of

regional accounts (t+1)

Consolidation of balances

on the regional accounts

(cash-concentration)

Transfers

Слайд 5

Treasury system development trend – each budget ruble is accounted in the Federal

Treasury accounts

Article 5 of the Federal Law on Federal Budget for 2015 and planned period for 2016 and

2017

(subsidies, investments, contribution to the statutory

account)

Article 5 of the Federal Law on Federal Budget for 2015 and planned period for 2016 and

2017

(advance payments under state contracts)

Consolidation of off-budget funds on the STA

Subsidies to legal entities (except

for subsidies to federal budget and

autonomous institutions, subsidies

to federal state unitary enterprises

for capital investments), budget

investments to legal entities that are

not federal state unitary enterprises,

contributions to statutory capital of

legal entities, included into the list

approved by the Government of the

Russian Federation

Amount of advance payments

envisioned by the recipients the

federal budget funds upon

conclusion of state contracts

(agreements) on delivery of goods,

services and works (except state

contracts (agreements) concluded

in accordance with the state

defense order) within their budget

commitments limits, under state

contracts (agreements) the amount

of which exceeds 1 000 000

thousand rubles

Pension Fund of the

Russian Federation;

Social Security Fund of the

Russian Federation;

Federal Statutory Health

Insurance Fund

Слайд 6

STA Cash Management

*Preconditions for high-quality forecasts :

Use of all sources of information – statistics is not enough!;

Maximum possible automation of data collection to save time for analysis;

Regular updates of forecasts by customers – use of web portal solutions;

Facilitated forms of forecasts for the customers

Слайд 7

-Placement of temporarily

available funds in STA;

-Attraction of funds in STA (future perspective)

Cash Forecasts*STA Operation

STA cash management instruments

Deposits5 - 245 days

In Russian currency-

April 2008;In foreign currency–

November 2014

Budget loans

Up to 30 days

To the RF entities -

February 2014

REPOJanuary 2015

Budget loans

up to 30 days

To municipalities – April

2015

Слайд 8

DEPO operations

Currency swaps

Overnight

Loans

Placements to bank deposit accounts

RF Budget CodeLegal framework

• RF Government Resolution

• RT Order

• General Agreement between the Russian Treasury and lending institutions

• Agreement between the Russian Treasury and stock exchanges (Moscow Stock Exchange MMVB-RTS and S.-Petersburg Stock) on information services

open or closedTypes of auctions

• open: two stages

• preliminary: private call for bids

• competition: increasing rates

• closed: private call for bids and signing of deposit agreements

Support from the Bank of Russia and close cooperation with the Russian MoF

‘privileged’ partnership

• Bank of Russia extends recommendations concerning : amounts of placements, minimal rates and terms of placement

• Information exchange with the Bank of Russia and Russian MoF : ‘coordination of strategies’

Слайд 9

Procedure for Placement of Cash

in Bank Deposit Accounts

Слайд 10

Reference:

0

10

20

30

40

50

60

2008 2009 2010 2011 2012 2013 2014 01/06/2015

Evolution of Incomes from Cash Placed in Deposit Accounts (bln Rubles)

2015 2016 2017

entitlement to a loan stipulated in the law (decision) on the respective RF entity (municipality)

ceiling is equal to 1/12 of the total budget revenues approved by the law (decision) on the budget of the respective RF entity (municipality) for the current FY

percentage is determined in the Law on the Federal Budget (at 0.1% of the annual)

maximum period of loan is 30 days (the deadline for reimbursement is 25 November of the current year)

IndicatorAmount

(mln.Rubles)

2014-2015

Size of loans:

To RF entities

To municipalities

892 243.3887 929.2

4 314.1

Size of revenues:

From RF entities

From municipalities

293.83293.7

0.130

in 2014-2015, loans were

offered to:

51 RF entities;

17 municipalities

Budget Loans to RF Entities and Municipalities

Слайд 11

As of 01.06.2015

Borrower

(represented by a relevant authority)

FTTE

Borrower’s (RF entity, municipality)

account

Signing of loan

agreement and

transfer of

funds

Order

Outline of Budget Lending Process

Reporting

Alimentation of

accounts

Слайд 12

Treasury

of

Russia

Compliance assessment:mandates of officialscompliance with the ceilings (1/12 revenues)not more than 30 days

reimbursement not later than 25 November% rate as per the Budget Lawrestrictions

Credit agreement is an Addendum

to the Budget Loan Agreement

Trading Facility(Stock Exchange, extra-Stock

Exchange)

Treasury

Of

Russia

Lending

institutions

MoF

Russia

Central Bank of

the Russian

Federation

Re

po

rtin

g

Lending institutions Treasury of Russia

1. Order to sell (limit)

2. Total orders

3. Cut-off level

4. Order to buy

5. Execution of transactions 5. Execution of

transactions

REPO Procurement / Trading Procedure

transactions transactions

Слайд 13

Note (as of 01.06.2015), mln. Rubles:

Size of placement Revenue size

236 951.00 171.30

Operation of the Single Treasury Account in

New Environment (future perspective)

Слайд 14

Single Treasury AccountConsolidation of balances (book entries) without

“physical” aggregation

…...Bank account

№30101 (FTD 1)

Treasury account

Treasury account

Bank account

30101 (FTD 86)

Treasury account

Treasury account

Bank account №30101 (FTD 2)

Treasury account

Treasury account

Sovereign funds

transfers

Information systems of the Federal Treasury

KPI system

FTASPortal of SP

(www.zakupki.gov.ru)

E-Budget

SIS SMP

Portal SMI

(www.bus.gov.ru)

FT - proprietor FT - operator

SAMS

(www.gas-u.ru)

(www.budget.gov.ru)

15Слайд 15

Functional structure of E-Budget

Reference and

master data

Budget planning Accounti

ng and reporting

Revenue manage

ment

Expenditure

management

Procurement

management

NFA manage

ment

Cash manage

ment

HR manage

ment

Financial asset and

debt managem

ent

Performance

management

Financial controls

16Слайд 16

CASH PLANNING

Single account

Limits

Monetary funds

AS FINANCIAL STATUS

Liabilities

Assets

Cash handling

INTERCONNECTION WITH OUTPUTS

Quality of

services

Quantity of

services

AS financial

status

Budget appointments controls

AS financial status

Measure outcomes

E-Budget targets

Слайд 17

Thank you for your

attention!

Слайд 18