Sailendra yak TSA Presentation English
May 25, 2016 | Author: International Consortium on Governmental Financial Management | Category: N/A
Short Description
Treasury Single Accounts Sailendra Pattanayak, Senior Economist, Fiscal Affairs Department, The International Monetary ...
Description
Establishing a Treasury Single Account (TSA) – Concept, Issues and Challenges Sailendra Pattanayak Fiscal Affairs Department International Monetary Fund
Overview of presentation 1. 2. 3. 4.
5. 6.
May 2010
Typical banking arrangements TSA principles and benefits Different TSA structures TSA coverage and interface with transaction processing systems Banking Arrangement for Donor Flows Issues/Preconditions for establishing a TSA
Sailendra Pattanayak, IMF
Typical Payment System with Many Bank Accounts Spending Ministry
Bank Accounts
SU SU SU
Ministry of Finance
SU
Spending Ministry
SU SU SU
Spending Ministry
SU SU
May 2010
SU = Spending Units
Sailendra Pattanayak, IMF
Banking Arrangements under TSA Regime
Transit / zero-balance bank accounts of the treasury
Current / deposit bank account(s) of the treasury (TSA)
Debt administration
Subsidies
Daily settlement with TSA
Local governments
Suppliers
Wage earners Government Borrowings
May 2010
Tax payers
Sailendra Pattanayak, IMF
2. TSA Principles and Benefits
TSA Principles
A TSA is a unified structure of government bank accounts that gives a consolidated view of government cash resources
It could be just one account or a set of linked accounts (main and subsidiary)
All public monies are seen as fungible to prevent inefficient use of cash resources The consolidation of government cash resources through a TSA is comprehensive It covers all budgetary and extrabudgetary funds The TSA should be legally recognized, institutionally robust and stable The TSA can contain ledger sub-accounts for control and monitoring purposes, but these should not contain over-night balances
May 2010
Sailendra Pattanayak, IMF
TSA Principles – contd.
Options for accessing the TSA is mainly dependent upon institutional structures and payment settlement systems The cash balance in the TSA is maintained at a level sufficient to meet daily operational requirements of the government Treasury-related revenue and disbursement floats in the banking sector are kept at the minimum realizable level
May 2010
Significant revenue and disbursement floats in the banking sector benefit the banks at the expense of the government
Sailendra Pattanayak, IMF
TSA and Consolidated Fund Concept
All government revenues should accrue to a common pool (such as the Consolidated Fund) and no source of revenue be earmarked for specific expenditure
In general, there is no need for revenue-specific or expenditurespecific bank accounts
Revenue and expenditure transactions should be classified through a well-developed chart of accounts and not by maintaining distinctive bank accounts for them
The TSA should be maintained in domestic currency, as this parallels the currency in which most budget transactions are executed
May 2010
Sailendra Pattanayak, IMF
TSA Benefits
Ensures complete, real-time information on government cash resources Helps preparation of accurate and reliable cash flow forecasts Optimizes the cost of government operations
including minimizing the volume and cost of government borrowing and lowering liquidity reserve needs
Facilitates efficient payment mechanisms Improves operational and appropriation control during budget execution Enhances efficiency and timeliness of bank reconciliation Facilitates timely and more complete accounting statements/reports
E.g. preparation of full statements of sources and uses of cash
May 2010
Sailendra Pattanayak, IMF
3. TSA Structure and Operation
TSA Structure – Option 1 State Treasury Head Office
Recon c.
Central Bank Settleme nt
State Treasury Regional office State Treasury Local office May 2010
Payment order
Central Bank Regional branch
Limited Treasury communicatio n and information systems
Settleme nt
Budget unit Payment order
Sailendra Pattanayak, IMF
TSA Structure – Option 2 State Treasury Head Office
State Treasury Regional office State Treasury Local office May 2010
Recon c.
Central Bank
Settlemen t
(2a)
Advanced Treasury communicatio n and information systems
Budget unit Payment order
Sailendra Pattanayak, IMF
TSA Structure – Option 3 State Treasury Head Office
Reconc.
Commercial Bank Head Office
Central Bank Settlement
Very Reliable and Advanced Commercial Bank Sector
Commercial Bank Regional Branch Payment Order
Budget Unit May 2010
Sailendra Pattanayak, IMF
Requirements for an efficient TSA
Co-operation of the line ministries Development of an Interbank settlement/clearing system Real Time Gross Settlement System (RTGS) at the central bank for high value transactions Major commercial banks and treasury connected to the RTGS Development of a small payments clearing system
May 2010
Sailendra Pattanayak, IMF
Different Models for transactional banking under TSA
Use commercial bank branch networks to channel funds to/from regional treasury offices to the TSA at central bank (CB) Use regional branches of the CB where a reliable commercial branch network is not available Regional treasury offices act as banks (only recommended where the commercial banking sector is regarded as too unstable) Use commercial banks branch network to clear funds directly between TSA and taxpayers/suppliers
May 2010
Sailendra Pattanayak, IMF
TSA using Commercial Banking system network and RTOs TSA at CB
Bank A
Bank B
Branch 1
Branch 2
Branch 1
Branch 2
RTO and BIs
RTO and BIs
RTO and BIs
RTO and BIs
Taxpayer/supplier
May 2010
Taxpayer/supplier
Taxpayer/supplier
Sailendra Pattanayak, IMF
Use of regional CB offices TSA at CB
Regional CB office
Regional CB Office
Bank Branch 1
Bank Branch 2
Bank Branch 3
Bank Branch 4
RTO and BIs
RTO and BIs
RTO and BIs
RTO and BIs
Taxpayer/supplier
May 2010
Taxpayer/supplier
Taxpayer/supplier
Sailendra Pattanayak, IMF
TSA using Commercial Banking network (no RTOs) Treasury and BIs
TSA at CB
Bank A
Bank B
Branch 1
Branch 2
Branch 1
Branch 2
Taxpayer/supplier
Taxpayer/supplier
Taxpayer/supplier
Taxpayer/supplier
May 2010
Sailendra Pattanayak, IMF
Management of Receipts
Collection through commercial banks
Impose penalties on late remittances Framework agreements between Ministry of Finance (MoF)/Treasury and agency banks
Alternatively through treasury system
Standardized services and transparent fees Penalties for delays and under-performance Monitoring
Detailed information available to MoF and agencies
May 2010
Sailendra Pattanayak, IMF
Management of Payments
Agencies submit payment requests Covered from TSA after control and verification Clarify roles and responsibilities between ministries, agencies, banks, central bank and MoF Maximize use of direct bank transfers Use checks, credit and debit cards when efficient Minimize imprest accounts and cash payments Ensure that payments are made on due date Eliminate layered cash flows
May 2010
Sailendra Pattanayak, IMF
Management of Balances
Define separate pools of funds within TSA system, for instance: Liquidity Deposit Investment Differentiation based on liquidity needs, level of uncertainty, costs of alternative sources, etc Select instruments that match expected cash needs Integrated management of assets and liabilities Transparent and efficient pricing of assets, liabilities and services
May 2010
Sailendra Pattanayak, IMF
4. TSA Coverage and Interface with Transaction Processing Systems
TSA Coverage
Only central government
Central and sub-national governments
Should include extrabudgetary funds, if any Could include autonomous government entities Could be extended to social-security funds and other trust funds Either under a single TSA or separate TSAs
Public corporations are generally not included
May 2010
Sailendra Pattanayak, IMF
Bringing social security and other trust funds under TSA
Each Trust Fund could be distinctly identified and controlled through the Treasury Ledger and/or TSA sub-account The key issues are:
Whether Government has the legal right to use, even temporarily, the surplus cash available The risk of perverse incentive to use the cash reserves of these funds to finance budget deficits
May 2010
This risk is quite high in low-income countries, particularly those with underdeveloped PFM systems
Sailendra Pattanayak, IMF
One TSA for both central and sub-national governments
Could be done through the use of correspondent accounts The key issues are:
Has the advantage of consolidating the surpluses and deficits of all correspondent governments participating in the TSA system
May 2010
Minimizes the cost of general government borrowing
Requires well-developed Treasury Ledger System to monitor the balances of each correspondent Need to consider the risk of abuse by the central government to finance its deficits at the cost of subnational governments Need for safeguards to ensure timely availability of funds to each correspondent government
Sailendra Pattanayak, IMF
TSA interface with transaction processing and accounting systems
TSA with centralized payment and accounting controls
Payment requests are prepared by individual budget agencies and sent to a centralized Treasury for payment Treasury manages the float of outstanding invoices Might lead to inefficiencies and high transaction costs (particularly with manual processing)
TSA with deconcentrated payment and accounting controls
Individual budget agencies process and make payments directly to suppliers (and account for these transactions) MoF sets the cash disbursement limits (monthly or quarterly)
May 2010
Sailendra Pattanayak, IMF
5. Banking Arrangement for Donor Flows
Covering donor funds within TSA
What are donor concerns?
Assurance for use of donor aid on specific projects (or non-diversion of funds) Some ring-fencing to avoid liquidity problems (and ensure timely payments during project execution) Minimize exposure to exchange related fluctuations/losses in the value of donor aid (when currency exchange rate regime is volatile) Reliability of controls (in managing donors’ funds) and information produced by the national PFM systems
May 2010
Sailendra Pattanayak, IMF
Banking arrangement for donors’ funds – possible options
Converting donors’ funds into local currency on transfer to the TSA (best option) The use of the resource-source arrangement would still allow donor funds to be linked to specific projects This, being a single-currency TSA, has technical and transparency benefits
Opening separate foreign currency sub-accounts within the TSA There could be one account for each foreign currency, or one for each of the main donor currencies The government’s accounts would still be reported in local currency, with foreign currency converted at the relevant exchange rate
May 2010
Sailendra Pattanayak, IMF
Banking arrangement for donors’ funds – possible options Maintaining foreign currency accounts outside the TSA, but bringing the flows within the accounting regime
May 2010
Weakens the concept of the TSA, and requires additional administrative processes, but at least has the benefit of tracking transactions through the accounting system
Sailendra Pattanayak, IMF
6. Issues/Preconditions for Establishing a TSA
Some country-specific issues for design of a TSA
Associate a resource source (e.g. resource from a donor) with specific expenditure categories Could be done through sub-accounts of a TSA
Need for transit accounts e.g. for major revenue streams to monitor their collection and remittance or to facilitate revenue sharing
Technical feasibility of daily settlement between the zero-balance accounts of budget agencies and the TSA
May 2010
Sailendra Pattanayak, IMF
Some country-specific issues for design of a TSA – contd.
Appropriate interface between the TSA and transaction processing/accounting systems This issue should be carefully examined at the conceptual design stage in case of an IFMIS
Identification of non-bank transactions (after closure of agency-specific bank accounts)
Elimination of below-the-line transactions
Strategy for obtaining retail banking services from commercial banks, including use of e-payment/EFT options
May 2010
Sailendra Pattanayak, IMF
Preconditions for establishing a TSA
Political support is essential (such as for closure of agency a/cs)
Legal and regulatory requirements TSA should be legally recognized Authority to open bank accounts should vest with the MoF/Treasury
Technological requirements Reach of the banking network and reporting architecture Transaction clearing and inter-bank settlement systems
May 2010
Sailendra Pattanayak, IMF
Preconditions for establishing a TSA – contd.
Formalization of agreements between the Treasury, TSA Bank and Banks providing retail banking services Should cover services offered by the banking system, service charges/fees, penalties for nonperformance, reporting and reconciliation arrangements, etc.
Revisiting the chart of accounts for coverage of non-bank expenditure transactions
Capacity development of TSA users
May 2010
Sailendra Pattanayak, IMF
May 2010
Sailendra Pattanayak, IMF
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