An Overview of Treasury Public Financial Management Systems

An Overview of Treasury / Public Financial Management Systems in ECA Cem Dener PEM-PAL Workshop for Treasury Officials Ljubljana, Slovenia 26 -27 June 2006

An Overview of Treasury/PFM Systems in ECA Presentation • The “Big Picture” • Public Financial Management Cycle • PFMS components and functionality • Technological architecture • ECA Treasury/PFMS Projects • Treasury/PFMS Development Indicators • PFMS and e-Gov initiatives • Conclusions 26 -27 June 2006 An Overview of Treasury/PFM Systems in ECA 1

The “Big Picture” Comprehensive Development Framework Long-term Holistic Vision Country Ownership Partnership Indicative National Plan – Country Strategy Development Results CDF Plans Gov Program (PRSP in LICs) PFMS Budget Investment Plans Assistance UNDAF Programs CAS Standby (PRGF in LICs) CSP Indicative Prog Implementation / Supervision / Evaluation 26 -27 June 2006 An Overview of Treasury/PFM Systems in ECA 2

Public Financial Management Cycle Policy Development and Review 0 Budget Preparation Budget Execution 1 8 7 Audit and Evaluation Mgmt of Budget Authorizations Budget Review & Fiscal Rep. Commitment of Funds FMIS Web Publishing 6 2 3 Procurement/ Purchasing Debt and Aid Management Payments and Receipts Mgmt 5 Cash Management 4 Asset / Inventory Mgmt Payroll Calcs HR Mgmt

Integrated PFMS Components Core Treasury System includes the following components: 2 u 4 u 5 u 7 u 3 u 4 u Budget Execution and Monitoring Accounting (general ledger, accounts payable and receivable) Cash Management Financial Reporting Commitment of Funds / Procurement / Purchasing Asset / Inventory Management u Operational support for Spending Units Other Public Financial Management System components: 1 u 6 u 4 u 8 u 7 u Macro Economic Forecasting Budget Preparation and Approval Debt and Aid Management HR Management /Payroll Calculations Support for Financial Control and Auditing Web publishing 7 u Financial Management Information System The combination of above components is referred to as integrated PFMS

PFMS Functionality · · · · · PFMS Module Macroeconomic Forecasting Budget Preparation Core Treasury System + General Ledger + Accounts Payable + Accounts Receivable + Purchasing / Commitment + Cash / Fund Management + Financial reports + Asset / Inventory Management Operational support for SUs Internal Debt management External Debt and Aid mgmt. Personnel database (HR mgmt) Payroll calculations Support for Auditing Management Information System Common Implementation Options Existing Models / LDSW / COTS Interface banking system (TSA) revenue collection procurement agency banking system (TSA) Interface for spending units (LDSW) LDSW / Interface with Debt Mgmt System LDSW / COTS Locally developed reports COTS [ COTS : Commercial Off-The-Shelf Software 26 -27 June 2006 with LDSW : Locally Developed Software ] An Overview of Treasury/PFM Systems in ECA 5

Information & Communication Technology · Modern integrated PFM systems are designed and implemented as web-based applications · Implementation of the PFMS includes the following ICT components: [0] Establishment of countrywide network connections (communications lines) as Government contribution [1] Development of web-based Application Software (ASW) as a combination of customized package + locally developed software [2] Installation of central servers (database & application servers) and data storage units (fiber disk arrays) at the main system center & business continuity center [3] Installation of standard field hardware (domain servers, user workstations and peripherals) in central and field offices [4] Installation of network equipment, system and user management and engineering support solutions · Completion of countrywide network (physical) connections [0] by the Government is a precondition for signing the contracts with suppliers. 26 -27 June 2006 An Overview of Treasury/PFM Systems in ECA 6

Technological Architecture A typical 3 -tier web-based implementation and [ ICT ] components B C C M 1 SC Database Server(s) [2] Central Servers 2 Application Servers [0] Wide Area Network [1] PFMS Application Software Internet Web Server PFMS DB Firewall Mo. F / Treasury District Offices [3] Field Hardware On-demand lines for towns Collection Point (city center) Local Server 3 Dedicated line Virtual Private Network Encryption Tunnelling District Offices PCs / Thin Clients MSC : Main System Center BCC : Business Continuity Center [4] Network Equipment District Offices Spending Units 7

Web-based PFMS Model Application Servers Database Server 1 2 3 Web Server Users System Center PFMS COTS Internal Access Budget Preparation COTS DB PFMS DB Core Treasury System • • • VPN General Ledger Purch. /Commit. Accts Pay/Rec Cash/Fund Mgmt Fin. Reports Mo. F, TDOs, Central Line Ministries and Gov Agencies Asset/Invent Mgmt External Access LDSW Opr sup for locals HR Mgmt/Pers DB Payroll Calcs. Internal Audit Web Portal Org/Workflow Mgm LDSW DB User Terminals Internet Local finance directorates, local public authorities, municipalities Interfaces Internal + External LDSW : Locally Developed Software COTS : Commercial Off-The-Shelf SW 8

ECA Treasury/PFMS Projects (WB funded) • Completed Hungary Türkiye* Kazakhstan Ukraine • Implementation [1994 -2004] Treasury [1995 -2002] PFMS [1999 -2002] Treasury [1994 -2003] Treasury [1997 -2004] [1999 -2009] Albania HR + Treasury [2000 -2006] Slovak Republic Treasury [2003 -2007] Azerbaijan Treasury [1999 -2007] Kyrgyz Republic HR + Treasury [2002 -2008] Russian Federation Treasury [1999 -2009] Moldova PFMS [2004 -2009] Georgia PFMS [2005 -2009] • Preparation Ukraine Tajikistan 26 -27 June 2006 [2006 -2010] PFMS [2005 -2010] PFMS [2006 -2010] An Overview of Treasury/PFM Systems in ECA 9

Treasury/PFMS Development Phases Effectiveness 7 Implementation 5 Maintenance and Support Budget support Technical support cap System admin & Maint System development & integration Full scale testing and rollout Training and change management Procurement 4 Large scale ICT systems Technical Assistance and Training PFMS Design 3 Definition of system functionality Detailed technical requirements Preparation Readiness PFM reform strategy Institutional capacity Countrywide network infrastructure Time 9 – 18 months Monitoring & Evaluation 6 Monitoring mechanisms Project mgmt capacity PEFA 2 Legal and institutional frameworks Budget coverage Treasury Single Account (TSA) 18 – 36 months 9 – 18 months 1 Resources

ECA Treasury/PFMS Development Indicators 26 -27 June 2006 An Overview of Treasury/PFM Systems in ECA 11

ECA Treasury/PFMS Development Status 26 -27 June 2006 An Overview of Treasury/PFM Systems in ECA 12

Effectiveness PFMS and e-Government initiatives U. S. A. 2005 - 2010 target ? Europe 4 Türkiye December 2005 Integration PFMS 3 Transaction 2 Interaction 1 Publish • • Organizational info Laws and regulations Info on services Publications, documents, stats 26 -27 June 2006 • Electronic forms (e-Form) • Electronic services (e-Service) • Interactive query • Electronic government (e-Gov) • Common use of public resources for all public services • Restructuring common interactive operation platforms • All business processes performed electronically (e-Agency) • Web based solutions and electronic voting (e-Election) • Electronic procurement (e-Procurement) • All services performed on-line Benefits of developing online services (e-Service) in e-Gov applications: • Proper and timely delivery of public services to citizens and businesses • Rapid reduction in public expenditures • Increased processing speed and information security • Imptoved transparency and reliability Investment An Overview of Treasury/PFM Systems in ECA 13

Conclusions · From Treasury to Integrated PFMS: Within the last decade, emphasis has been given to the development of integrated PFMS solutions after the initial Treasury development projects, based on the developments in Internet and secure web-based applications. · Capacity building: Implementation of integrated PFMS solutions requires capacity building, proper training and professional technical assistance. · PFMS vs e-Government: Integrated PFMS technical solutions should be designed and implemented as a part of e-Government strategy, if exist. · Commitment and support: High level commitment and proper budgetary support is essential for the successful completion of PFMS implementations. · Financial Management Information System: Integrated PFMS is not only a tool to increase operational efficiency, but also a key decision support tool for public financial managers. 26 -27 June 2006 An Overview of Treasury/PFM Systems in ECA 14

An Overview of Treasury / Public Financial Management Systems in ECA Thank You PEM-PAL Workshop for Treasury Officials Ljubljana, Slovenia 26 -27 June 2006