MINISTRY OF FINANCE STATE TREASURY

2 Management, accounting and reporting of externally financed projects

3  International agreements  Decision by Parliament on ratification of international agreements  Public Debt Law, Law on Government Guarantees and Law on Government On-Lending  Budget System & Budget Process Law  State Budget Law; Decisions by Local Authorities approving annual local budgets (for a given year)  Regulation on institutional framework and mechanism for coordinating assistance by international donor organizations and donor countries to the Republic of Moldova (Government Decree)

4  Budget planning 100%  Execution: - through Treasury System 53.1% - through the Banking System 46.9%  Reporting 100%

5 Components of state and local budgets:  Core component  Special means  Special funds  Externally financed projects

6 Budget components State budgetLocal budgets AmountУдел ьный вес, % AmountShare, % MDL mln. USD mln.MDL mlnUSD mln Core component Special means Special funds Externally financed projects Total

7 Budget components State budgetLocal budgets AmountShare, % AmountShare, % MDL mlnUSD mln MDL mlnUSD mln Core component Special means Special funds Externally funded projects Total

8 State Budget Law for 2012 Article 21. – The Ministry of Finance is in the right to: а) - upon application of key budget ministries - change the approved state budget allocations: - For projects funded out proceeds of foreign grants and credit, - as well as to use the remaining balances of monetary resources sitting in project accounts at the beginning of a year -

9 Implementation of externally financed projects BudgetExternally Financed Projects Treasury System Treasury & Banking Systems Banking Systems State budget Local budgets бюджеты 88-- Total

10  Separate Bank and Treasury accounts for each donor in foreign & local currencies  Interest on balances - in bank accounts – that are recorded to local budgets  Expenditure for servicing bank account that are paid by state/ local budgets  Procurements made as per available contracts  Contracts registered with a local treasury  Prioritized servicing of projects

11 Treasury Providing treasury system services to externally financed projects Commercial bank Enterprises Project implementation units of externally financed projects

12 Budget classificationTreasury Chart of Accounts Revenues classification “Grants for externally financed projects” 4681 “Foreign grants, other state budget receipts and transfers for operations of externally financed projects” Functional classification “Loans from international financing organizations” 8582 “External loans to the state budget from international financing organization for operations of externally financed projects” Economic classification of expenditure “Capital transfers for externally financed projects” 2681 “State budget expenditure out of proceeds of foreign grants, foreign loans, etc. for operations of externally financed projects” Organizational classification 7XX – State Budget 9XX – Local Budgets

13 Code Full name Accronym 50Council of Europe Development BankСЕВ 51European Investment BankEIB 52German Bank KfWKfW 53European Bank for Reconstruction & DevelopmentEBRD 54World BankWB 55European CommissionEC 56Global Fund to fight AIDS/ TB / malariaGF 57International Fund for Agricultural DevelopmentIFAD ……… 99Другие доноры

14 Has 4 parts – 15 characters/ digits XXXX XXX XX XXXX XX Part I – 4 digits – code of balance account from the Chart of Accounts ; Part II – 5 digits – chapter/ paragraph of Budget Classification; Part III – 4 digits – code of a public institution, beneficiary, that has received proceeds of foreign grants; Part IV – 2 digits –budget classification code (functional, organizational); foreign donor’s code. Example: Where, 4681 – “Foreign grants, other receipts & transfers of state budget for operations of externally financed projects” – “Grants for externally financed projects” 3649 – “Consolidated unit for implementing the International Fund for Agricultural Development programs” “Activities & services in agriculture, forestry, fishery & water industry, not attributed to other groups ”, 750 “Project of providing financial services and developing agribusiness in rural areas”, 57 “ International Fund for Agricultural Development “

15 Has 4 parts – 15 characters/ digits XXXX XXX XX XXXX XX Part I – 4 digits –code of balance account from the Chart of Accounts; Part II – 5 digits – main group code/ functional classification group of budget expenditure ; Part III – 4 digits - code of public institution, beneficiary of resources of foreign credit ; Part IV – 2 digit – budget classification code (functional, organizational); foreign donor’s code; Example: Where, 8582 – “Foreign loans of state budget from international financing institutions for operations of externally financed projects” “Loans by foreign financing institutions” 3649 – “ Consolidated unit for implementing the International Fund for Agricultural Development programs” “Activities & services in agriculture, forestry, fishery & water industry, not ascribed to other groups ”, 750 “Project of providing financial services and developing agribusiness in rural areas”, 57 “ International Fund for Agricultural Development”

16 Has 4 parts – 15 characters/ digits XXXX XXX XX XXXX XX Part I – 4 digits – code of balance account from the Chart of Accounts; Part II – 5 digits – main group code/ functional classification group of budget expenditure ; Part III – 4 digits - code of public institution, beneficiary of resources of foreign credit ; Part IV – 2 digit – budget classification code (functional, organizational); foreign donor’s code. Пример : где, 2281 “State budget expenditure out of proceeds of foreign grants, foreign loans, etc. receipts for implementing operations of externally financed projects” – “Share of foreign grants” 3649 – “ Consolidated unit for implementing the International Fund for Agricultural Development programs” “Activities & services in agriculture, forestry, fishery & water industry, not ascribed to other groups ”, 750 “Project of providing financial services and developing agribusiness in rural areas”, 57 “ International Fund for Agricultural Development”

17 Budget Classification / Chart of Accounts Economic of Classification / Chart of Accounts Grants “Current grants” from foreign governments for externally financed projects” “Capital grants” from foreign governments for externally financed projects” ““Current grants” from international organizations for externally financed projects” ““Capital grants” from international organizations for externally financed projects” Loans “Foreign loans” Expendit ure Class 2 “Expenditure” Class 3 “Non-finance assts” Program classification “Activity” 7XXXX – State Budget / Local Budgets

18  Monthly  Quarterly & annual Ministry of Finance Line Ministries Project Implementation Units Ministry of Finance Line Ministries Project Implementation Units

19 Externally financed Projects serviced by Treasury system Externally financed Projects serviced by Banking system On a daily basis, statements from the serviced bank Reports are entered manually into information System of Ministry of finance

20  Projects are dispersed across the Treasury & banking systems  Reporting  Accounting  Technical capacity  Staff

21  Integrated management of externally financed projects serviced by Treasury system  Implementation of an Integrated Public Finance Management Information System (IPFMIS)  Uniform rules and methodology  Training

22 Thank You for Your attention! 22