The Republic of Moldova

MINISTRY OF FINANCE

STATE TREASURY

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Management , accounting and

reporting of externally financed

projects

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Regulatory framework International agreements Decision by Parliament on ratification of international

agreements Public Debt Law, Law on Government Guarantees and Law

on Government On-Lending Budget System & Budget Process Law State Budget Law; Decisions by Local Authorities approving

annual local budgets (for a given year) Regulation on institutional framework and mechanism for

coordinating assistance by international donor organizations and donor countries to the Republic of Moldova (Government Decree)

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Externally financed projects and the budget process

Budget planning 100%

Execution:

- through Treasury System 53.1%

- through the Banking System 46.9%

Reporting 100%

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Budget Planning Components of state and local budgets: Core component Special means Special funds Externally financed projects

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Share of externally funded projects in the budget (revenues) Budget components

State budget Local budgets

Amount Удельный вес, %

Amount Share, %MDL

mln.USD mln. MDL mln USD mln

Core component

14455.4 1189.4 87.3 7034.6 578.8 93.2

Special means 1093.5 90.0 6.6 302.0 24.8 4.0

Special funds 281.3 23.1 1.7 90.8 7.5 1.2

Externally financed projects

726.8 59.8 4.4 124.2 10.2 1.6

Total 16557.0 1362.3 100 7551.6 621.3 100

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The share of externally funded projects in the budget

(expenditure)

Budget components

State budget Local budgets

Amount Share , %

Amount Share, % MDL mln USD mln MDL mln USD mln

Core component

16863.2 1387.5 84.2 7435.0 611.7 92.2

Special means 1217.0 100.1 6.1 344.7 28.4 4.3

Special funds 291.2 24.0 1.5 98.8 8.1 1.2

Externally funded projects

1653.1 136.0 8.2 186.5 15.3 2.3

Total 20024.5 1647.6 100 8065.0 663.5 100

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State Budget Law for 2012 Article 21. – The Ministry of Finance is in the

right to: а) - upon application of key budget ministries -

change the approved state budget allocations:

- For projects funded out proceeds of foreign grants and credit,

- as well as to use the remaining balances of monetary resources sitting in project accounts at the beginning of a year -

Budget Planning

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Implementation of externally financed projects

Budget Externally

Financed Projects

Treasury System

Treasury & Banking Systems

Banking Systems

State budget

40 12 11 17

Local budgets бюджеты

8 8 - -

Total 48 20 11 17

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Rules of providing treasury system services to externally financed

projects Separate Bank and Treasury accounts for each

donor in foreign & local currencies Interest on balances - in bank accounts – that are

recorded to local budgets Expenditure for servicing bank account that are paid

by state/ local budgets Procurements made as per available contracts Contracts registered with a local treasury Prioritized servicing of projects

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Treasury

Providing treasury system services to

externally financed projects

Commercial bank

Enterprises Project implementation units

of externally financed projects

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Current Budget classification & Chart

of Accounts Budget classification Treasury Chart of Accounts

Revenues classification

412.02 “Grants for externally financed projects”

4681 “Foreign grants, other state budget receipts and transfers for operations of externally financed projects”

Functional classification

28.03 “Loans from international financing organizations”

8582 “External loans to the state budget from international financing organization for operations of externally financed projects”

Economic classification of expenditure

291.00 “Capital transfers for externally financed projects”

2681 “State budget expenditure out of proceeds of foreign grants , foreign loans, etc. for operations of externally financed projects”

Organizational classification

7XX – State Budget 9XX – Local Budgets

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Register of foreign donors Code Full name Accronym

50 Council of Europe Development Bank СЕВ

51 European Investment Bank EIB

52 German Bank KfW KfW

53 European Bank for Reconstruction & Development EBRD

54 World Bank WB

55 European Commission EC

56 Global Fund to fight AIDS/ TB / malaria GF

57 International Fund for Agricultural Development IFAD

… … …

99 Другие доноры

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Treasury account for the proceeds of foreign grants to be used for externally financed projects

Has 4 parts – 15 characters/ digits XXXX XXX XX XXXX XX  Part I – 4 digits – code of balance account from the Chart of Accounts ; Part II – 5 digits – chapter/ paragraph of Budget Classification; Part III – 4 digits – code of a public institution , beneficiary, that has

received proceeds of foreign grants; Part IV – 2 digits –budget classification code (functional, organizational);

foreign donor’s code.

Example: 4681 41202 3649 01Where, 4681 – “Foreign grants, other receipts & transfers of state budget for operations of

externally financed projects” 412.02 – “Grants for externally financed projects” 3649 – “Consolidated unit for implementing the International Fund for Agricultural

Development programs”01- 11.05 “Activities & services in agriculture, forestry, fishery & water industry, not

attributed to other groups ”, 750 “Project of providing financial services and developing agribusiness in rural areas”, 57 “International Fund for Agricultural Development “

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Treasury account for proceeds of foreign loans to be used for implementing of externally financed projects

Has 4 parts – 15 characters/ digits   XXXX XXX XX XXXX XX Part I – 4 digits –code of balance account from the Chart of Accounts; Part II – 5 digits – main group code/ functional classification group of budget

expenditure ; Part III – 4 digits - code of public institution, beneficiary of resources of

foreign credit ; Part IV – 2 digit – budget classification code (functional, organizational);

foreign donor’s code;

Example: 8582 02803 3649 01Where, 8582 – “Foreign loans of state budget from international financing institutions for

operations of externally financed projects” 28.03 - “Loans by foreign financing institutions” 3649 – “Consolidated unit for implementing the International Fund for Agricultural Development

programs” 01- 11.05 “Activities & services in agriculture, forestry, fishery & water industry, not ascribed to

other groups ”, 750 “Project of providing financial services and developing agribusiness in rural areas”, 57 “International Fund for Agricultural Development”

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Treasury expenditure account for proceeds of grants and foreign loans used for implementing of externally financed projects

Has 4 parts – 15 characters/ digits   XXXX XXX XX XXXX XX Part I – 4 digits – code of balance account from the Chart of Accounts; Part II – 5 digits – main group code/ functional classification group of budget

expenditure ; Part III – 4 digits - code of public institution, beneficiary of resources of

foreign credit ; Part IV – 2 digit – budget classification code (functional, organizational);

foreign donor’s code.

Пример : 2281 29102 3649 01где, 2281 “State budget expenditure out of proceeds of foreign grants, foreign loans, etc. receipts

for implementing operations of externally financed projects” 291.02 – “Share of foreign grants” 3649 – “Consolidated unit for implementing the International Fund for Agricultural

Development programs”01- 11.05 “Activities & services in agriculture, forestry, fishery & water industry, not ascribed to

other groups ”, 750 “Project of providing financial services and developing agribusiness in rural areas”, 57 “International Fund for Agricultural Development”

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New Budget Classification and new Chart of Accounts

Budget Classification / Chart of Accounts

Economic of Classification / Chart of Accounts

Grants 131120 “Current grants” from foreign governments for externally financed projects” 131220 “Capital grants” from foreign governments for externally financed projects”132120 ““Current grants” from international organizations for externally financed projects”132220 ““Capital grants” from international organizations for externally financed projects”

Loans 524000 “Foreign loans”

Expenditure

Class 2 “Expenditure” Class 3 “Non-finance assts”

Program classification “Activity”

7XXXX – State Budget / Local Budgets

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Reporting Monthly

Quarterly & annual

Ministry of Finance

Line Ministries Project Implementation Units

Ministry of Finance Line Ministries

Project Implementation Units

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Reporting

Externally financed Projects serviced by Treasury system

Externally financed Projects serviced by Banking system

On a daily basis, statements from the serviced bank

Reports are entered manually into informationSystem of Ministry of finance

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Challenges Projects are dispersed across the

Treasury & banking systems Reporting Accounting Technical capacity Staff

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Solutions Integrated management of externally

financed projects serviced by Treasury system

Implementation of an Integrated Public Finance Management Information System (IPFMIS)

Uniform rules and methodology Training

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Thank You for Your attention!

www.mf.gov.md

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