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Budget execution in Hungary

Budget execution in Hungary. Zsolt Tavaszi, Tamás Pál Török. Budapest 6 Ju ne 201 9 PEMPAL TCOP Meeting. Budget Act. 1. § of the Budget Act. Budget appropriations. Budget Appropriations. Detailed budgets – 1.789 in 2019. Annual report in the central subsystem.

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Budget execution in Hungary

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  1. Budgetexecutionin Hungary Zsolt Tavaszi, Tamás Pál Török Budapest 6June 2019 PEMPAL TCOP Meeting

  2. BudgetAct 1. § of theBudgetAct

  3. Budgetappropriations

  4. BudgetAppropriations

  5. Detailedbudgets – 1.789 in 2019

  6. Annualreportinthecentralsubsystem

  7. Annualreportinthecentralsubsystem

  8. Annualreportinthecentralsubsystem The Treasury is responsibleforcollectingdataondetailedbudgets, annualreports, annualinterimreports… (KGR-K11)

  9. The role of the Treasury in the control of public expenditures

  10. Modification of appropriations • Mid-year estimates modifications • Range of Scope:Parliament, Government, minister responsible for state budget • Chapter governing body • Budgetary body/chapter (in its discretion)

  11. Modification of appropriations • Appropriations of incomesmay be increasediftheyareoverfulfilled, and haveto be decreasedifthefulfillmentfiguresarelowerthanplanned • Minister of financecanincreasetheappropriationsofcentralbudgetaryinstitutions and chaptermanagedappropriationsifitsresidualscoverit. (Centrally managedappropriationsdonothaveresiduals, itsremainingappropriationsaredeletedatthe end of theyear.) • Centralbudgetaryinstitutionscanincreaseitsappropriations of incomes and expendituresincasetheyreceivenewmissionstoaccomplishduringthefiscalyear • Someappropriations of expendituresmay be exceededwithoutmodification • EU fundsrelatedexpenditures • Certainsubsidies • Expendituresrelatedtolaw-suits, compensations, collaterals, guaranties • Expendituresrelatedtoinvestments • Expendituresrelatedtoforeignexchangerates, debt service, prime interest rate

  12. Release of funds • YTD/Year-to-date allotment • Operating budget of governmental bodies. • Performance proportioned allotment • Accumulation budget of governmental bodies, chapter-managed estimates. • Modification of schedule • Institutions with temporary liquidity problems, chapter-managed estimates. • with different time-frame replacement • with non-different time-frame replacement • Appropriationsincreases without amendment • Exceeded appropriations

  13. TSA – Accountsmanagedbythe Treasury Treasury Single Account

  14. Payments • Submission of transfer orders • Paper-based • Electronic • Prior notification of big lump sum payments • Transfers in excess of HUF 1,000 million to be announced at least 3 days in advance • Double cover test • Liquidity coverage test • Appropriation line item test • Identification of performance • Single Column headings established under the order number (ERA) and government ID are used to identify the transfer lines. • Net financing

  15. Banking arrangements Treasury Single Account (TSA) at Central Bank of Hungary • provision of funds for operations (performance or monthly basis): gross expenditure – own income = net expenditure (budgetary contribution) • liquidity management • via TSA (central government) • municipalities can hold bank accounts at commercial banks • rolling cash-flow plan (T+2 months) • data exchange to prepare overnight operations • new Accounts Management System (from 2020) • other related fields

  16. Cash forecasting • Daily forecasts for three months • Sources: • a large amount announcements • Bottom-up information: institutional reports, commitments, financing plans • Top-down information: planning on basis of last years and main information • Liquidity Board (Delegates of MoF and HST)

  17. Cash forecasting • Others: • ContinuousinformationexchangewithCentral Bank, MoF, TaxAuthority and otherlargeentities • Problems: • Largefluctuation of cash balancewithin a month • Lot of disbursementsatthebeginningofmonth (wages, familyallowance, pension, disbursementof VAT, etc. • Incomes: inthesecondhalf of month • Difficulttoplansometypes of incomes (e.g.: paymentsfrom European Commission

  18. IFMIS project The main objective of the project is the improvement of information processesin public finances, the rationalization of public data and information flow, the development of a data warehouse and the development of decision support functions supporting modern budget implementation tasks and the increase of transparency. This project is part of a large, strategic-level program plan, other elements of which are the development of a Treasury Data Warehouse, the creation of a central master data management system and the development of a new account management - banking system.

  19. Present system

  20. Components of the IFMIS 3 Components: Budget Module: Budget Management, Commitment Management, Payments and Revenue Management, Liquidity Management, Budget Monitoring. Integrated Accounting Application: Accounting application for centrally managed appropriations. Institutional accounting system: newaccounting systemforspendingunits.

  21. Main systemsincooperation • Budgetary Planning: • Ministry of Finance (Not part of theIFMIS) • Budget implementation: • Account management system • Data Warehouse • MDM • Payroll and HR (KIRA) • Public purchase • Reporting • KGR-K11 will not be replaced

  22. Systems’ transformation Pensions Wages Familysubsidies IFMIS K11 Bank accounts management system TSA Spendingunits

  23. Plannedtechnologicalbackground • Central Module and Integrated Accounting Application: SAP Platform • Data Warehouse: SAP HANA • Supply Systems, EER Project: SAP Platform • Institutional accounting system: not SAP • New Account Management System: Not SAP

  24. Scheduling of the IFMIS project • Preparatory phase from 2016 • Public purchasing processes: 2018-2019Q1 • Detailed Design: Starts in 2019Q2 • First phase of implementation: Functional design of the central module without integration points, establishment of institutional frontends, development of MDM integration. Deadline: 31 December 2019 • Phase 2: Integration with the new Account Management System, Integration with the Integrated Accounting Application and Institutional Accounting System. Deadline: 30 June 2020 • Testing, migration, go-live: 01January 2021

  25. Thank you for your attention!

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