1. STATE TREASORY DEVELOPMENT STRATEGY Ministry of Finance Republic of Croatia

2. Ministarstvo financija MINISTRY OF FINANCE General Secretariat State Treasury Tax Administration Departments for Macroeconomics Analysis and Planning, Economy, Financial System, European Integration and International Financial Relations Department for Financial Management, Internal Audit and Supervision Customs Administration

3. Ministarstvo financija STATE TREASURY Department for State Budget Preparation and Financing of Local Self-governments and Regional Units Department for State Budget Execution Public Debt Management Department State Treasury Support Department Department for National Fund Administration

4. Ministarstvo financija Strategy for the Development and Modernization of the State Treasury Processes within State Treasury System, 2007 − 2011  for more efficient utilization of public resources and elimination of production of unnecessary expenses from the state budget funds, a continuous improvements of the State Treasury functions are being made  therefore, in 2007, the Government of the Republic of Croatia has adopted Strategy for the Development and Modernization of the State Treasury Processes within State Treasury System, 2007- 2011. the goal was to improve and enhance public finances management system the improvements were conducted at several levels: 1. at state level 2. at interdepartmental level (Ministerial level) 3. at programmatic/managerial level

5. Ministarstvo financija Strategy for the Development and Modernization of the State Treasury Processes within State Treasury System, 2007 − 2011 1. at state level the goal was to ensure overall fiscal discipline, which is foundation of the macroeconomic stability  Fiscal Responsibility Law was passed, and entered into force on January 1, 2011 introduction of Fiscal rules Rules for straightening of fiscal responsibilities  introduction of multi-year budgetary framework (t+2), in order to produce a longer view on budget, and better fiscal risks control

6. Ministarstvo financija Strategy for the Development and Modernization of the State Treasury Processes within State Treasury System, 2007 − 2011 2. at interdepartmental level (Ministerial level) the goal was to secure efficient interdepartmental funds allocation aligned with strategic priorities of the State  budget planning is using „top-bottom approach“  obligation on production of strategic plans and three-year Strategy of Government Programs was introduced in 2009  performance indicators were introduced as a basis for establishment of monitoring and reporting system  budgetary classifications were improved: organizational, programmatic, and sources of financing  reclassification of income

7. Ministarstvo financija Strategy for the Development and Modernization of the State Treasury Processes within State Treasury System, 2007 − 2011 3. at programmatic/managerial level the goal was to harmonize budgetary allocations and implementation efficiency  a greater flexibility in budget execution was introduced (budget is adopted at a lower level of detail) in order to stimulate orientation towards qualitative providing of public goods and services  the possibility to carry forward projects from one to another budget year was provided  the possibility to transfer generated, but unspent special purpose revenues from one to another budget year was enabled

8. Ministarstvo financija such reform steps in public finances management have requested amendments in the legal framework  thus, in mid 2008, a new Budget Law was adopted  Rulebook on Budgetary Classifications and new Chart of Accounts were enacted  financial reporting was amended Amendments in the Legal Framework

9. Ministarstvo financija IT System Improvements  Before mentioned reforms towards improvement and modernization of budgetary processes were not possible without the support of IT system  Strategy for the Development and Modernization of the State Treasury Processes within State Treasury System, 2007 − 2011, envisages State Treasury IT system integration with IT financial management systems of regional State Treasury Offices  anticipation and control of future spending – liquidity management instrument, and maintenance, i.e., reduction of public spending levels  introduction of system control and transparency in creation of budgetary obligations via IT system become imperative  direct insight into budget users’ business operations, without interfering in its business independence

10. Ministarstvo financija Ministry of Finance Projects and Future System Status Budget Users State Treasury Project Reference Model Budgetary Classification Project Budget User with aligned ISJF#1 Budget User with aligned ISJF#2 Budget User with aligned ISJF#n Draft Financial Plan Reservation E-Bill Ministry Gateway (available online (Internet) via secure protocol) Data Exchange System Master Data Budgetary Classificati ons Budgetary Classifications System E-Documents Master Data Management System (Suppliers codes, etc.) Existing Infrastructure SAP SEM-BW Warehouse

11. Ministarstvo financija Public Finances Management Strategy 2012 - 2016  Ministry of Finance began to develop Public Finances Management Strategy 2012-2016, with which it continues to work on improvement of State Treasury system processes, aimed at: Budget preparation  stipulation of evaluation methodology and public investments planning  improvement of strategic plans’ quality  performance indicators review  continued work on risk identification  improvement of link between strategic plans, operative programs and budget  optimization of budget funds usage, with emphasize on usage of Structural and Cohesion funds instead of special-purpose revenues

12. Ministarstvo financija Public Finances Management Strategy 2012 - 2016 Budget execution  setting up of a single foreign currency account in the Croatian National Bank  development of the system for monitoring of execution of received funding from Cohesion and Structural funds  improvement of managerial accountability Accounting and Reporting  extending information coverage in annual State Budget Execution Report  increased availability and intelligibility of the key budgetary documents content for the citizens (production of guidebooks/brochures)  definition of state property valuation methodology and related record keeping

13. Ministarstvo financija Public Finances Management Strategy 2012 – 2016 Accounting and Reporting (Cont.)  improvement of consolidation process at the level of central and general government  introduction of program evaluation Integrated IT system for public finance management  continued integrations of the State Treasury IT system with IT financial management systems of regional State Treasury Offices  setting up of publicly accessible search data base on payments made

14. Ministarstvo financija THANK YOU FOR YOUR ATTENTION