1. TREASURY OF GEORGIA – MISSION AND FUNCTIONS Nino Tchelishvili June, 2016 Chisinau, Moldova

2. BACKGROUND Treasury Service - founded in 1995 as a structural department at the MOF Subordinated Agency under the MOF - Since 2001 11 Regional Offices with more than 100 hundreds staff shut down since web-based Information System launched in 2010 Single office operating since 2010; Total staff -97; Acting as a secretariat for: –IPSASB Georgia –Committee for debt and tax liability restructuring

3. TREASURY - ORGANIZATIONAL CHART

4. FUNCTIONS OF THE TREASURY Main functions of the Treasury Servicing Department –Commitment and Payment processing; Deposit and Loans Management Department - registering new accounts, managing cash accounts, revenue collection, refund management, loan monitoring and management (Secondary function?); Settlement Department – Managing Treasury Single Accounts (GEL, FX), banking settlement. Reporting and Methodology Department - budget execution reporting, accounting methodology, consolidated financial statement Cash forecasting and management – Preparing statistical and analytical reports, forecasting cash, drafting cash investing rules and procedures; Administrative Department – Administrative services: Payroll, Utilities, Office maintenance...

5. EXTERNAL PARTNERS - TREASURY Central Bank (National Bank of Georgia - NBG) – Fiscal Agent for the Government. Non-commercial banking arrangement – NBG does not charge Treasury transactions, therefore, treasury does not charge for any services financed through budget; TSA balances do not earn interest, Official exchange rate applied to conversion transactions; Connected via RTGS (GEL), SWIFT (FX) IT support – LEPL Financial Analytical Service of the MOF Training partner – LEPL MOF Academy. Donor Organizations (EU, GIZ, USAID) – supporting TA activities;

6. STRATEGIC PLANNING PFM Strategy for 2013-2017–Medium Term PFM Policy; –Maintain Fiscal Disciple and Improve Fiscal Forecasting; –Improve Public Finance Planning; –Improve Public Finance Management, Accounting and Reporting; Implement IPSAS Cover Local Budgets in the Integrated PFMS Enhance TSA Coverage of LEPLs PFMS implementation Cash planning and management; PFM reforms implementation plan – annual; IPSAS implementation plan – Entire project 2010-2020;

7. MAJOR REFORMS Major Changes in Treasury Operations since InceptionMain drivers for the changes Establish commitment control system - since 2003Effective control of arrears Establishing Single Revenue account and Refund Fund – since 2004Improved Revenue accounting and refund Fully Functional Treasury Single Account – since 2006Effective management of Treasury Resources Implementation of central web-based payment system and abolish regional offices - 2010 Improved budget payment effectiveness and transparency Implementation of Integrated PFMS - 2012Improve budgetary controls and transparency Prepare consolidated financial statement for the central government - 2014Improved financial statement and accountability

8. TREASURY MANDATE IN BUDGET PAYMENTS Treasury authorize and execute all payment transactions; Treasury perform ex-ante control in terms of compliance to the rules (Procurement, Classification, Primary documents). Appropriateness is not assessed. No justification required. Green Corridor is functioning for standardized payments, (Utilities, Healthcare Programs. etc.). Commitment and Payment documents analyzed and most commonly used texts for payment purpose for certain economic code input into the system; If predefined payment purpose selected by the user, the system processes and authorizes documents automatically; No manual process involved in the back office Treasury;

9. PAYMENT SCHEME Georgia Treasury 9

10. RISK MANAGEMENT Treasury exposed to operational and financial risks, however, formal risk based assessment does not take place. Technical risks are managed by the Financial Analytical Service of the MOF (business continuity plan developed.) Assessing appropriateness/misuse of Budget Funds is direct responsibility of the internal and external audit.

11. FUTURE REFORMS AND CHALLENGES Treasury is seeking to change its role, functions and focus. Risk Management: Treasury’s role in controlling payment diminishes as capacity in Line Ministries and Municipalities improve. Treasury’s role in managing financial risks evolving. Accounting and Reporting FMIS is supposed to capture accrual/non monetary transactions. Treasury may choose to prepare IPSAS based financial statement by its own based on the LM data.

12. TREASURY SERVICE MINISTRY OF FINANCE OF GEORGIA Thank you www.mof.ge www.treasury.gov.ge www.etrasury.ge 12