Ministry of Finance of the Republic of Kazakhstan Treasury Committee

Topic: «Integration of External Financing in the Process of Budget, Accounting and Reporting Execution»

EXTERNAL FINANCING IN THE PROCESS OF BUDGET EXECUTION

LEGAL ENVIRONMENT:1. International loan agreements ratified by the Parliament of the Republic of Kazakhstan and

international financial institutions Guidelines.2.Budget Code of the Republic of Kazakhstan #95-IV of 4.12.2008 3.Government Decree on “The rules of Budget administration and cash services” #220 of

26.02.2009 4.Government Decree of the Republic of Kazakhstan “On Reporting on state external loans” #616

of April 21, 2000

The procedure of borrowing, usage, redemption and facility of government external loans is defined by the Government of the Republic of Kazakhstan.

Ministry of Finance Treasury Committee of the Republic of Kazakhstan:•Carries out financial procedures on debiting from state external loan accounts, relevant grants, co-

financing resources from the republican budget and monitors their application;•Performs payments from the republican budget, directed on repayment and service of republican

loan obligations.

Statistical data on external loans is published on the Republic of Kazakhstan Ministry of Finance web-site (www.minfin.kz).

As of February 1, 2012 in the Kazakhstan Republic

There are 21 investment projects financed at the expense of external governmental loans at a

stage of implementation, including:

16 projects – IBRD10 projects – ADB 5 projects – IDB 5 projects – JICA (Japan) 3 projects – EBRD 3 projects – KfW (Germany) 1 project – ADFD (UAE) 1 project – KFAED (Kuwait) 1 project – SFD (Saudi Arabia)

The Treasure Committee is serving 45 external governmental loans at the expense of

republican budget, including:

12 projects – IBRD 5 projects – ADB 2 projects – JICA (Japan) 1 project – IDB 1 project – EBRD

Note: The projects finance at the expense of relevant grants and guaranteed by the state loan are not included in the lists

Chartof External Loan Expenditures by Means

Of Direct Payment

Creditor(loan account)

Goods, work and servicessupplier

Treasury CommitteeBudget

ProgramAdministrator

Payment

3

4

7

2

6

1

Integratedinformation

systemof treasury

Summary report

Request for payment

The request for payment approvedby Administrator (for signing)

The signed request for payment

The report on receipt and expenditure

5 Written extract

Chartof Special Account Disbursement

BudgetProgram

Administrator

Special accountin Kazakhstan

commercial bank

Goods, work and servicessupplier

Treasury CommitteeIntegratedinformation

systemof treasury

Payment

Summary report

Expenditures reportWritten extract

Request for payment

1

2

3 4

5

Creditor

Detailedmonthly

report6

Chart of Redemption and Servicing Procedure for Government and State Guaranteed Debt of the Republic of Kazakhstan from the Republican Budget

JSC “Central securities depositary institution”

Creditor

Treasury Committee

Treasury department of Astana city

KazakhstanNational Bank

Correspondent bank of creditor

1Invoice for payment

of external loans

2Invoice for payment of internal loans

34

6

7Payments of Kazakhstan external loans and services in foreign currency

Request for converting foreign currency and tenge coverage of foreign currency procurement

Invoice for payment in tenge and request for converting foreign currency

Daily extracton expenditures

Department of stateloans of Kazakhstan

Ministry of Finance

Actual dataon payments

8

5Payments on redemption and service of internal debt of KazakhstanIntegrated

informationsystem

of treasury

Treasury Committee Department of Republican Budget Reporting

Head of Department

Head expert(6 units)

Expert(2 units)

Functions

Republican budget accounting

Reception and verification of budget reporting from republic budget

program administrators

Particularities of Accounting and Financial Reporting During Project Management Using External Financing

Legislative environment:• Budget Code of the Republic of Kazakhstan of December 4, 2008.• The rules of the budget accounting #495of November 16, 2009.

The procedure of the budget accounting of republican and local budgets execution is defined by the Republic of Kazakhstan Ministry of Finance and the accounting itself is done by Treasury Committee of the Republic of Kazakhstan Ministry of Finance.

The Treasury Committee of the Republic of Kazakhstan Ministry of Finance carries out the system of gathering, registration and generalization of information on requirements and obligations of the Republic of Kazakhstan in monetary terms regarding transactions using single treasury account, control cash accounts and public institutions accounts. The system is regulated by budget legislation of the Republic of Kazakhstan. The budget accounting is budget execution tracking implemented on cash basis, when transactions are reflected on bills with double recording according to the chart of accounts. Budget accounting is done in national currency of the Republic of Kazakhstan.

Budget Accounting Chart of Accounts

Accounts are grouped into seven groups of the main book and one off-balance accounts group in the following way:

• 1. Financial resources including Single treasury account• 2. Funds in the National bank of the Republic of Kazakhstan (deposits)• 3. Control cash accounts and other accounts in national currency• 4. Accounts in foreign currency• 5. Settlements• 6. Receipts• 9. Results• Off-balance accounts.

To reflect the funds flow on external loans the following accounts are used: 302 «Account on external loans», where the funds flow on external loans account is recorded. Receipt of funds is reflected by DB subaccount 302 and CR subaccount 610.Disbursement of funds is reflected by DB subaccount 510 and CR subaccount 302510 «Disbursement of external loans» account disbursement of external loans are recorded».610 «Placing funds of external loans» account receipts of external loans are recorded.

Budget accounting data is the basis for budget reporting on budget execution.

Reportingon External Loans in Budget Accounting

Reporting on external loans

Information on external loans disbursement in the framework of investment projects

# Institution, program and subprogram

code

Office code Name of institution

Donor Budget classification

code

Start of the year balance

Loan receipt Loan disbursement End of reporting

period balance

А 1 2 3 4 5 6 7 8 9

Total

Budget classification

code

Adjusted budget for the reporting financial year

Reporting year financing summary

plan

Disbursement The balance of unused funds

Total On spec. account On off-shore payments

For the reporting

period

From the start of the

year

For the reporting

period

From the start of the

year

For the reporting

period

From the start of the

year

1 2 3 4 5 6 7 8 9 10

Total

Accountingin Public Institutions

Legislative Environment:• Budget Code of the Republic of Kazakhstan of December 4, 2008.• Guidelines on accounting in public institutions #30 of 27.01.1998 and Rules of budget reporting by public

institutions and budget program administrators #89 of 27.02.2009. Accounts are grouped into seven groups of the main book and one off-balance accounts group:

• 1. Assets• 2. Inventory• 3. Assets of low unit cost• 4. Production costs and others• 5. Funds• 6. Internal payments• 7. Settlements• 8. Disbursement• 9. Financing• 10. Funds and earmarked funds• 11. Products sale• Off-balance accounts.

To reflect the funds flow on external loans the following accounts are used : - 099 «Plans for liabilities on projects funded by external loans and relevant grants» - 113 «Special account of budget investment project on external loans»- 151 «Liabilities settlement at the account of external loans»- 204 «Disbursement on projects funded by external loans» - 239 «Project funding by external loans»- 249 «External loans»

Reportingon External Loans in Public Institutions Accounting

Report on external loansFunctional group_____________________

Budget program administrator__________________

Name of public institution,

implementing investment project_________________

Budget program_______________________________

Subprogram_____________________________________

Periodicity: annual, quarterly__________________

Measurement unit: thousand tenge

Report on grants

Budget program administrator __________________

Periodicity: annual, quarterly __________________

Measurement unit: thousand tenge

Name Loan # Line code

Revenue or

specifics code

Amount

Total On spec. accou

nt

Off-shore payments

1 2 3 4 5 6 7

Balance for the start of the year

Received from the start of the year- total

Including (from donor) - ADB

-IBRD

-EBRD

-Earmarked transfers from republican budget

Spent since the start of the year – total

including (by specifics)

Special account balance at the end of the reporting period

including – foreign currency

- tenge special account

010

040

041

042

043

044

045

050

170

171

172

Х

Х

Х

Х

Х

Х

Name Line/spec. code

Relevant grants

1 2 3

Balance for the start of the year

- total

010

including cash balance 011

Current year receipt 020

Total 040

Expenditures – total 050

including by specifics

Balance at the end of reporting period 170

including cash balance 171

Verification of Accounting Data

Thank you for your attention!

Contacts:

a_dost @ minfin.kz

I_zhusipalieva@minfin.kz