1. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU BUDGETING EU FUNDS IN LITHUANIA Rimantas Veckys Lithuanian Ministry of Finance Seminar on Budget and EU Funds Skopje, 14-15 May 2007

2. PRESENTATION OUTLINE BUDGET REFORMS IN THE RUN-UP TO EU ASSISTANCE PROGRAMMING OF EU FUNDS MANAGEMENT AND CONTROL OF EU FUNDS

3. THE CORNERSTONES OF THE REFORM PRINCIPLES :  UNITY;  SPECIFICATION;  TRANSPARENCY;  SOUND FINANCIAL MANAGEMENT

4. UNITY CONSOLIDATION OF NON BUDGETARY FUNDS TAXES AND OTHER INCOME ARE REDISTRIBUTED THROUGH THE CONSOLIDATED NATIONAL BUDGET, SOCIAL AND HEALTH INSURANCE FUNDS

5. 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

6. SPECIFICATION ISSUE-APPROPRIATION MUST HAVE A GIVEN PURPOSE AND BE ASSIGNED TO SPECIFIC OBJECTIVE SOLUTION-IMPLEMENTED BY STRATEGIC ACTIVITY PLANNING SYSTEM

8. 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

10. 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

11. EU REGIONAL POLICY: PRINCIPLES PROGRAMMING CONCENTRATION PARTNERSHIP ADDITIONALITY

12. 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)

13. 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

14. STRUCTURAL FUNDS AND COHESION FUND – FINANCING AREAS èERDF- INDUSTRIAL SECTOR, INFRASTRUCTURE, TECHNICAL ASSISTANCE, COUNTRY REGIONS; èESF- ACTIVE MEASURES OF EMPLOYMENT POLICY, SOCIAL INTEGRATION, EDUCATION AND PROFESSIONAL TRAINING; èEAGGF- RURAL DEVELOPMENT ( TRAINING, MARKET DEVELOPMENT, RECONSTRUCTION OF FARMS ) èFIFG – MEASURES OF FISHERY RECONSTRUCTION èCOHESION FUND – BIG PROJECTS OF TRANSPORT AND ENVIRONMENT (50% : 50% ) SPD

15. 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.

16. 20002015200420062008201020022012 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 SOCIETY Public Administration Peoples Competencies Science/Education Kulture

17. 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.

18. 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

19. THE MANAGEMENT AUTHORITY SETTING GENERAL ADMINISTRATION PAYMENT SUPERVISION PROCEDURES RULES FOR THE IMPLEMENTATION OF THE SPD

20. 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

21. 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

22. 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

23. 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 SERVICE OF IMPLEMENTING AGENCIES MINISTRY INTERNAL AUDITORS PROJECT

24. 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

25. 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