Sybi Hida ALBANIA February, 2005 Albania’s Experiences with Budget Reform, and Preparations for Treasury Reform Sybi Hida ALBANIA February, 2005

Main steps (1) Organic Budget Law, OBL, 98 Law no. 8379, date July 27,1998 “Preparation and Execution of the State Budget in Republic of Albania” Provides the principles of rules for annual budget preparation, executing, presents concepts of debt , budget executing through treasury single account. In 2000 Public Investment Programme (PIP) → MTEF (MTBP) The first full MTEF/MTBP cycle in Albania was in 2001-03. Since then, this document is consolidated and deepened.

Main steps (2) In 2002 The budget 2002 was presented by programs. This was a further step in transforming budget formulation, from a statistic budget to policy oriented budget. In 2004 A Finance Management Manual (PFMM) is prepared. (1) Programme Policy Review (PPR) and (2) Programme Expenditure Planning (PEP). Thos new procedures has been piloted to four ministry (education, health, social and agriculture)

More steps In 2003- New Organic Budget Law (NOBL) A legal basis for a modern financial management system Based on international good practices Looking forward to European Integration An initial lay draft of the NOBL was prepared in July 2003 and updated in September 2003. A Task Force in MOF is working. Expected to pass through in the end of 2005. In 2004- Public Investment Procedures (PIM) Investment projects receive funding without a proper process of identification, appraisal and approval that links with Albania’s policy and planning frameworks. Institutional responsibilities for organising and managing public investment are fragmented and MoF is working to establish the PIM process for the purpose of MTBP 2006-2008

More steps In 2005 Ahead Capacity, capacity, capacity …… A Public Expenditure Management Calendar for 2005. This provides detailed information on activities, roles and responsibilities for all public expenditure management activities during the year Implement the Integrated Planning Strategy in 2005 proposed by Technical Secretariat. It will solve institutional and authority problems. Ahead Capacity, capacity, capacity ……

The job is not finished A Modern Treasury System is needed. Part 1. A Recovery Program Technical Assistance has started in July 2001, - July 2006, financed by WB. Part 1.Implementation of short term improvements – “ quick-wins” Part 2.Enhancement of Treasury IT system and network Part 3. Integration of Albaia’s Publc Finance System Part 1. Implementing the new budget classification and other short term improvements-”quick-wins”; Training the Treasury IT department staff and the Tirana Office end-users; Designing and implementing the kernel of Treasury IT network.

The job is not finished (2) Part 2. The first objective will be to sketch out the design of an integrated financial management system in the longer and to spell out the functional , organizational , IT architectural and technical standards that will be needed for its staged implementation The second objective will be to initiate the Albania’s Treasury development towards international finance and accounting and the best. Stage 2.1 Treasury modernization Stage 2.2: Technical infrastructure generalization Stage 2.3: Treasury package parameterization and implementation

The job is not finished (2) Part 3. To integrate the Albanian Public Finance system according to international best practices and to accrual accounting standards. 1st Priority: Record state receipts and expenditures according to the new budget classification , consolidate, in real time or at least daily, those records at the central level and provide a daily “Budgetary control panel” report. 2nd Priority: Provide a IT system to manage and disseminate to Treasury district branches and line ministries changes and transfers in Budget allocations. 3d Priority: Facilitate somewhat the information used for authorization of payments and execution of the transactions, bank reconciliation at regional level and Treasury accounts status reports to the central level. Provide a daily “ Treasury control panel” report on the status of all state owned accounts.

Thanks to GOD that Job is not finished yet.