THE STATE TREASURY OF THE REPUBLIC OF CROATIA Ministry of Finance THE STATE TREASURY OF THE REPUBLIC OF CROATIA Chișinău, June 2016 Danka Mihaljević and Mladenka Karačić

THE STATE TREASURY OF THE REPUBLIC OF CROATIA—BACKGROUND Late in 1997 a contract with IBM was signed regarding the SAP application 2001–2003 reform of the accounting system; a new Budget Act: a new budget process dynamic, budget classifications (including program classification); internal financial control system 2007, Treasury Single Account of the State Treasury The State Treasury is an organisational unit of the Ministry of Finance, and it is comprised of the sectors for: budget preparation and local and regional self-government unit financing, execution of the state budget, public debt management, support to the State Treasury and National Fund operations. The State Treasury includes 47 sections (20 of which are ministries) on 105 locations (regional treasuries) The information system is part of the State Treasury. Ministries and agencies have their own separate accounting, but do not have separate giro accounts

TREASURY FUNCTIONS The State Treasury performs the tasks related to: Budget preparation (financial plans of the state budget users are part of the state budget) Budget execution (single account with the Croatian National Bank) State accounting—state budget general ledger—data for reporting on state budget execution (cash-based payment) and for the financial statement (modified accrual-based accounting principle) Cash and public debt management The Treasury does not provide services to entities outside the state budget system. Own and assigned revenues of state budget users (except for those which are exempt from payment into the budget according to the State Budget Execution Act) as well as those funds which the Republic of Croatia receives from EU institutions and bodies are paid to the single account. The Treasury provides for budget user training regarding work in the SAP system and in the case of changes made to the accounting and budget systems. The SAP system is also used for sending messages to regional treasuries.

STRATEGIC PLANNING Ministries and other government bodies at the section level of the organisation classification draft strategic plans for a three-year period which are published on websites Strategic plans for a three-year period include missions, visions, strategic objectives and ways in which to achieve objectives, as well as their connection to the organisational and program classification, and performance assessment measures General objective of the Ministry of Finance: macroeconomic and economic stability State Treasury objectives: Rationalisation with regard to public money management Ongoing drafting of a new strategy for the State Treasury development for the period 2017–2021

MAJOR REFORMS Public database of payments through the single account Accounting system reform Budget classifications include program budgeting and sources of funding Introduction of a three-year budget On 1 January 2007 a Treasury Single Account with the Croatian National Bank was established Since 2011, creation of a single State Treasury FMIS (integration) Within the framework of the single FMIS, web-applications for: Entry of budgetary plan explanations and budget execution explanations with performance indicators Assessment of the fiscal impact of regulations Entry of budget classifications (new activities and projects) Since 2011, establishment of a liability (commitments) announcement and control system Multi-annual liabilities (consent of the Minister of Finance and the Government) 2013, creation of a single foreign currency account with the Croatian National Bank and automation of foreign currency payments Public database of payments through the single account

FUTURE REFORMS AND CHALLENGES Further integration of FMISes of budget users with the State Treasury system (state hospitals) Strengthening the connection of strategic plans and the budget Implementation of applications for: Management in unforeseen circumstances Management in changed circumstances Expenditure standardisation based on an in-depth analysis of expenditures Development of a system of planning, execution and accounting registration of the European Union funds Increasing budget transparency