DEVELOPMENT STRATEGY OF THE TREASURY OF RUSSIA

1. TREASURY OF RUSSIA DEVELOPMENT STRATEGY OF THE TREASURY OF RUSSIA Meeting of the Treasury Community of Practice (TCoP) PEMPAL Head of the Federal Treasury of Russia R.E. Artyukhin JUNE 2012

2. MAIN AREAS OF DEVELOPMENT OF THE TREASURY SYSTEM (EXPERIENCE OF THE RUSSIAN FEDERATION) Goals: Enhancement of efficiency of operations of the state machinery Financialtransparency Information technologies Public nature FMIS Consolidation of the budget and budgetary process Managing liquidity and temporary free fund balances Treasury single account Single bank account Enhancement of transparency of financial activities of the state Budgeting aimed at outcomes Accrual based accounting Cash based accounting Managerial accounting Safety of budgetary funds Efficient financial control and monitoring Independence of administrators Accuracy and timeliness Budgetary restrictions Targeted use 2

3. STRATEGIC OBJECTIVES OF THE FEDERAL TREASURY FOR THE PERIOD OF 2012 – 2015 3

4. MAIN STRATEGIC OBJECTIVES OF THE FEDERAL TREASURY • development and improvement of mechanisms for managing liquidity of the treasury single account; • development of public (state) information systems; • creation and development of the system “Electronic Budget”; • Reforming the system of budgetary payments. 4

5. Текущее состояние Prospects of development Daily placement of funds into bank deposits Weekly placement of funds into bank deposits Loans to budgets of constituents of the Russian Federation and local budgets Sale and repurchase agreement MANAGING LIQUIDITY OF THE TREASURY SINGLE ACCOUNT IN THE RUSSIAN FEDERATION Account of the Federal Treasury Division Daily support TSA Managing balances Managing funds Daily accumulation of balance in the TSA Account of the Federal Treasury Division

6. INFORMATION SYSTEMS OF THE FEDERAL TREASURY Federal Treasury - owner Federal Treasury - operator Web portal of the state municipal administration (GMU) (www.bus.gov.ru) Web portal of OOS (www.zakupki.gov.ru) Automated system of the Federal Treasury Electronic budget (www.budget.gov.ru) System KPI (key performance indicators) (www.gas-u.ru) GASU GIS GMP 6

7. EFFECT FROM USE OF IT IN THE TREASURY • All Russia official web site • www.zakupki.gov.ru • 200, 000 customers, procurements for the amount of 6 trillion rubles. • GMU web portal • www.bus.gov.ru • 170 thousand institutions registered • Optimization of processes • Reduction of the number of manual operations related to the following: • Maintenance of accounting – 86% • On finishing budgetary data – 95% • Reduction of revenue accounts from 4400 down to 83. • Specialization of activities • Centralization of accounting on the level of the region • Decrease in the number of state clients from 2200 down to 776 • Optimization of costs • Reduction of costs in case of electronic document turnover: • On paper – 30% • Transport expenses of clients – 100% • Distance does not matter • Increased speed of information exchanges: • Inside the region - by 30 times • With the central administration - by 10 times • Optimization of the organizational and personnel structure • For 2000-2012 specialists were laid off in the following departments: • Department of revenues from 10530 persons to 2106 persons • Department of accounting from 6266 persons to 2530 persons. • Working efficiency • Working efficiency improved by 2 times • (from 145 operations a day per person up to 342 operations during one year after introduction of the new application software) 7

8. FUNCTIONAL STRUCTURE OF THE “ELECTRONIC BUDGET” SYSTEM Budgetary planning Accounting and reporting Financial control Analysis of efficiency Managing revenues Registers Classifiers Blank forms Managing debt and financial assets Managing expenses Human resource management Managing procurements Managing cash Managing non-financial assets 8

9. RESULTS OF CREATION OF THE “ELECTRONIC BUDGET” SYSTEM Improvement of the quality of information • Simplifying operations- Information is entered one time (input errors reduce significantly)- Information is registered and tracked in real time- Serious safety when exchanging documents 9 Harmonizing and automation of procedures - Automation of certain types of control- Harmonization of forms of data exchanges- Simplifying the range of source documents- Reducing the time for processing and exercising payments Advantages in terms of time when exchanging information between organizations • Automatic generation of managerial and accounting documents- Improvement of work with documents (sorting, search …)- Reducing time for preparation of reports- Joint access to stored source documents Financial advantages - Reduction of use of paper- Reduction of the number of accounting employees- Reduction of expenses on printing, archiving, storing … Creation of a single service center on the basis of the Federal Treasury - Maintenance of accounting- Accrual of wages to employees - Carrying out procurements 9

10. BENEFITS OF ORGANIZING PAYMENT FOR STATE SERVICES IN ELECTRONIC FORM (GIS GMP) Social relevance — enhancement of awareness of payers and simplification of payment procedures: • Receiving full and timely information on accrued payments, reimbursements and debts in the payer’s “Personal Room” from any place of the country and world • Possibility of making on-line payments • Informing the payer and the revenue administrator on-line about payments made and about repayment of debts Increasing collection rate of revenues — ensuring completeness and timeliness of delivery of corresponding revenues to budgets of the budgetary system of the Russian Federation: • Reduction of costs on administering receipts • Increasing awareness of receipt administrators about the situation with debts for each payer • Reduction of the volume of unidentified receipts of budgets of all levels • Reduction of time periods between accrual of payments and receipt of funds to corresponding budgets A possibility to present documents that confirm provision of services (execution of works, delivery of goods) in an electronic format 10

11. REFORMING THE SYSTEM OF BUDGETARY PAYMENTS. FUNCTIONAL STRUCTURE OF THE CORRESPONDENT ACCOUNT ASSET Balance FT LIABILITY Balance FT Accounts in the General Ledger of the Treasury of Russia P2G G2P 40101 40101 40105 40105 TSA 40101 40101 40101 Credit organizations 40501 Bank of Russia Correspondent account 30101 Of the Treasury with the Bank of Russia 40101 40101 40201 B2G G2B 40601 40101 40101 40204 40701 G2G 11 11

12. QUANTITATIVE RESULTS OF REFORMING THE SYSTEM OF BUDGETARY PAYMENTS BY YEAR 2018 Reduction of the number of accounts in the Central Bank of the Russian Federation from 62 thousand down to 1 single correspondent account. Minimizing balances in accounts from 1.7 trillion rubles down to the amount calculated taking into consideration the average daily demand for liquidity for the correspondent account Reduction of cash currency circulation – the share of funds transferred to bank cards of employees in the total volume of payments to employees would increase on payments of the federal budget from 75% to 90% (forecast), on constituents of the Russian Federation - from 50% to 75% (forecast); Reduction of the time needed to carry out operations on payments of clients carried out in electronic form – from 3 business days down to 1 business day Reduction of maximum time delay with crediting payments to budgets from T+3 to T+1 12 12

13. TREASURY OF RUSSIA Thank you for attention! “Each kopeck in the single account” 13