1. Paulius Baniūnas Ministry of Finance of the Republic of Lithuania EU Structural Support Management Department Monitoring and Analysis Division SYSTEM OF FINANCIAL PLANNING AND MONITORING IN LITHUANIA: LESSONS FROM 2007–2013 PERIOD Budapest, 2012-10-04

2. Levels of financial planning system 1. FINANCIAL MASTER PLAN (CERTIFIED EXPENDITURE) 2. COMMITMENTS PLAN 3. MEASURES IMPLEMENTATION PLAN (PREPARATION FOR CALLS FOR PROPOSALS) 4. QUATERLY PLAN OF COMMITMENTS, PAYMENTS AND CERTIFIED EXPENDITURE 5. BUDGETARY APPROPRIATIONS PLANNING 6. 3 MONTHS PAYMENT PROGNOSIS 7. PROJECT PAYMENTS PLAN Strategic Tactical Operational

3. Purpose of Financial Master Plan Management of risk of automatic decommitment (N+2/N+3 rule) Management of flows of EU funds and co- financing over the 9 years period - budgetary appropriations planning

4. Main features of Financial Master Plan (1) Yearly Plan of certified eligible EU funds expenditure (2008-2015) Sets critical and optimal financial targets for the absorption of funds Separate targets for each OP, Fund, Priorities and Line Ministries (usually appropriations holders) Prepared by MA and consulted with IB’s, approved by the Government Updated 2 times over programming period

5. Main features of Financial Master Plan (2) OP Priority Line Ministry Total allocation Optimal level of certified eligible EU funds expenditure 200820092010…2015 Priority 1Line Ministry 11436693435128924501210…1436693 Priority 2Line Ministry 27542400535546655…754240 Line Ministry 3701830297816535…70183 …………………… Priority XLine Ministry X4074530564030240…407453

6. Principles of determining critical and optimal levels Critical level (Top-down approach): – sets higher targets than N+2/N+3 rule for safe EU Funds absorption – on the level of OP’s and Funds part of sums (30-40%) required under the N+2/N+3 rule are transferred to the previous years – on the level of Priorities corrections are made taking into account the specific characteristics of different Priorities – in case of underachievement corrective actions can be taken Optimal level (Bottom-up approach): – optimal level can be equal or higher then critical level – the optimal level is determined taking into consideration maximum realistic opportunities of each Priority to use EU Funds – less funds are foreseen to be used in 2014-2015 in order to free up administrative resources for the new period – stable amounts of EU funds expenditure and need for co-financing are planed over the programming period in order to avoid high jumps and falls in expenditure

7. Financial Master Plan (accumulated)

8. Financial Master Plan (yearly)

9. Updating of the Master plan Formal updates in case of reallocations of funds Substantial update including adjustments according to the speed of implementation in all OP’s, Priorities and Funds (2011): Based on evaluation done by outsourced experts Model, based on historical data, used to forecast use of funds up to 2015 Evaluation results – basis for MA position (objective forecast) Consultations with IB’s (Bottom-up approach) After update critical level very close to optimal level Implementation of optimal plan after update – 95 %, across Priorities 80- 105 %

10. Yearly commitment plan Yearly commitments (2008-2013) All financing sources On Priority level Adopted by Line ministries (after agreement with MA) Measure implementation plans Adoption of measures in programme complement, adoption of selection criteria, adoption of calls for proposals documents, adoption of projects lists, launching of calls for proposals (2008-2013) Dates and total sums of financing allocated Adopted by Line ministries Other long term financial plans

11. Quarterly plans Bottom-up approach Made on measure level Include three financial indicators: commitments, payments, certified expenditure All financing sources Made for 2 years period, updated quaterly Provided to Managing Authority by Line ministries The tool for medium term financial management: – Evaluation of deviation from long term plans – Evaluation of budgetary appropriations needs – Forecasts of payments to the EC – Quarterly monitoring of financial progress

12. Project Payment Claims Submission Plan Each final beneficiary provides Project Payments Plan for Implementing agency when signing a contract Includes estimated amounts of Payment claims to be submitted planned for the whole period of project implementation Updated regularly every quarter with each payment claim Is used by Implementing agencies to prepare payment forecasts on measure and priority level

13. Monitoring of plans implementation Systematically done every quarter with reports to the Government Reports include information on: state of implementation of financial indicators; overview of financial plans implementation; main problems of OP’s implementation, measures already taken and planned to be taken to solve them. proposals to the Government: - speed up of procedures (calls for proposals, signing contracts, etc.) - reallocate funds between measures and (or) priorities - other measures to speed up implementation

14. Use of IT system for financial monitoring Main features of the system: – All data on actual payments and contracting is gathered only from IT system – Most of the financial data is automatically imported from el. forms – Financial forecasts submission in el. forms – Up to date monitoring of targets achievement and lags in procedures

15. Use of IT system for financial monitoring Achievement of Master plan targets (N+2/N+3, critical, optimal)

16. Main advantages of the system Clear division of responsibilities for EU funds absorption between Intermediate bodies Formal basis for corrective actions including reallocations of EU funds Enough time for corrective actions in case of deviations The top-down and bottom-up approaches are used complementary All stages of implementation are covered Use of IT system – constantly updated monitoring data

17. Problems Trade off between speed of implementation and effective use of Funds – what is critical underachievement of critical Master plan target ? Questionable need for 2 Master plan targets – Optimal target isn't taken seriously Ownership of the Master plan targets Too many plans ? – Coherency of other plans and Master plan is not always ensured Plans are not always updated in time – become unrealistic The rules of application of corrective actions not formalized No system of sanctions for lagging behind on the level of beneficiaries

18. Challenges for 2014–2020 Links of financial planning with Performance Framework Integrated planning of intermediate targets for financial indicators and physical indicators Comprehensive planning of the use of Funds must be done before the start of the period Accuracy of forecasts Possible ways to lessen administrative burden

19. Thank you for your attention ! p.baniunas@finmin.lt www.esparama.lt p.baniunas@finmin.lt