Use of Country Systems Armenia Use of State Treasury for Designated Accounts

Entering point CFAA and PEFA to identify weaknesses Consistent dialogue and assessment of on-going improvements in Treasury Principal agreement to advance Treasury and transfer all DAs/SAs Many years of sustained work by the Bank team and Government counterparts in building capacity in government systems (including IDF grants)

The transition process (1) 1.MOF confirmed in writing that 1.all the Bank recommendations are complied with, 2.the changes in Treasury procedures and software had been completed 3.the system is ready for piloting. 2.The Bank assessed those arrangements and provided recommendations addressed before piloting. 3.MOF drafted a Note describing the funds flow procedures, which was agreed with the Bank.

The transition process (2) 4. Two pilot projects DAs were transferred to the Treasury based on evidence of completion of the previous two steps. 5.Bank monitored the piloting and provided new recommendations to make the system ready for wider transfer. 6.A time-bound transition plan was developed for transfer of all the DAs/SAs.

Key Results Online Treasury Client system is now used for all Bank-financed projects (all payments processed within one day!) This system is now available for all other budget programs Substantial operating expense savings achieved for projects (bank fees/charges) Improved cash management and financial savings to the Government Enhanced government ownership

What is coming next? These require broader reforms and substantial capacity building Budgeting Accounting Financial Reporting Internal Auditing External Auditing Government financial management information system (GFMIS)