1. TCOP GROUP 1 1

2. OUTLINE Countries present: Turkey, Bulgaria, Macedonia, Albania, Romania, Indonesia, France, (World Bank) Question 1: External conditions and constraints influencing treasury reforms. Linkage of treasury reforms to broader public finance and public sector reforms 2

3. General Discussion Drivers of reform different between transition and developing countries and these drivers have changed over time Content of reforms has changed over time (greenfield vs brownfield sites) Transition countries – higher level of reforms now Developing countries – basic structures put in by historical colonial host. Reform content aimed to plug the leaks with existing systems. Reforms takes time, political will, and money System reforms often reduce staff needs and challenging to manage this (political, economic and social impacts) Financial crisis can be impetus and opportunity for reforms Reforms require change management System reforms only require high level technical capacity for IT system implementation as users of the system don’t need specialist IT skills Capacity issues sometimes overstated as a constraint Ensure adequate and structured training and start at pilot sites and roll out.

4. Turkey Similar to Romania and France reform In response to severe financial crisis, PFM reforms were implemented. New treasury law 2005 accrual based accounting Treasury staff program – recruiting staff with language and IT skills 2007 TSA Problems – in institutions particularly regional level. 4

5. Bulgaria Working to improve PFM system and reinforce legal framework and put in place fiscal rules. Eg. Enforcing commitment control, extending coverage of TSA (to municipalities), closing extra-budgetary accounts. Legal framework will be new public finance law (early stage of development) 5

6. Macedonia Reform problems experienced in areas of closing commercial accounts to go into one TSA. decentralization process with municipalities management and human resources. Currently expanding functionality to include commitments and starting to improve accounting and system of reports. 6

7. Albania Treasury reforms needs to be linked to broader PFM reforms Law in 2008, 3 year transition for managers to understand change but proved ineffective Had to monitor whole process after this transition for 6 months and is still continuing (for financial managers) Recognized modified accrual by law – this is not well understood by budget department which causes problems with fiscal report Challenge – reports well designed and system works well but getting managers to understand 7

8. Romania Financial crisis caused many problems (access to liquidity to finance debt, downgrades from rating agencies, trends in public debt). Need to comply with certain IMF and EU targets – austerity measures (wage cuts etc). Put pressure on number of civil servants (1:7 replacement rate of staff) Three areas of action Policy (to increase fiscal discipline under IMF stand by agreement and EU agreement, Fiscal Responsibility Law, MTEF, Public Debt Management Strategy, New Law on Local Public Finance (established thresholds for muni borrowing), results orientated budgeting Financial (IMF/EU loans) plus medium term note program in place Organizational (Fiscal Council) 8

9. Indonesia Hit by Asian crisis – worst in region. Public Debt GDP ratio almost 100% Treasury Act, Finance Act, Audit Act 2003 treasury reforms began but practical activity started from 2009 with ORACLE (2013 full implementation) Massive change – business process improvement – challenge how to manage change (Change Management and Communication CMC) Accounting standards for central govt developed by MoF. But Local govt standards developed by Ministry of Internal Affairs, thus it takes more effort to consolidate. Human resource issue has been part of the problem to solve during the reform process 9

10. France Took long time to change system. Former system was linked to Constitution in 1958. Wanted three phases, political, technical and implementation Needed 10 years for complete implementation Сhallenges –; special IT needs for orgs that are in broader public sector, cost of govt – historically large civil service, to relocate staff have to speak to unions and plan training 10

11. THANK YOU www.pempal.org Group 1