TREASURY SECTION

Introduction

Treasury Section has been allocated 7 staff positions for the general management and the performance of the treasury section responsibilities. The main responsibility being managing, monitoring and reporting the treasury loan funds to the relevant authorities. It also develops and maintains policies and procedures according to the Finance bill.

Other Responsibilities include:

  • develop and maintain Policies & procedures for approval of the loans
  • Assist loan programs through Bank of Maldives to promote and develop fisheries and agriculture sector.
  • Provide loans to government and public companies for capital investments and cash flow management of the public companies.
  • Provide electrification loans to atolls through a revolving fund created for the purpose of providing financial assistance to atoll electrification program.
  • Collecting repayments from public loans.
  • Service and administer the public loans
  • Monthly reconciliation of treasury funds with MMA.
  • Keeps the records of the decreed debtors.

PUBLIC ACCOUNTING SYSTEM (PAS)

Background

Government is embarking on implementing a Public Accounting System (PAS) across the whole of government. The PAS is viewed as being the vital tool for achieving a program of financial management reforms, aimed at:

  • Supporting effective macroeconomic policy and fiscal operations,
  • Improving public sector efficiency,
  • Enhancing government accountability and transparency and
  • Improving expenditure control and monitoring,

The Government is supported in this venture by its development partners (notably, the World Bank and European Commission), who have jointly agreed to allocate to PAS US$5.5m of the EC funds granted to assist in relief and rehabilitation in the aftermath of the December 2004 Tsunami. The Ministry of Finance & Treasury serves as the implementing agency for the PAS project.

The reform strategies

The key driver for PAS is the Law on Public Finances 2006, which introduced a number of legislative changes that impact upon financial management. These include:

  • The requirement for a Single Treasury Account.
  • The introduction of a commitment management system to ensure that actuals plus commitments do not exceed budgets.
  • The need to introduce mechanisms to control and manage contracts and commitments that span more than one fiscal year.
  • The long term objective to adopt full accrual accounting,
  • The requirement to produce specific, comprehensive financial statements,
  • Establishment of a fixed asset register.

MoFT has set additional policy objectives, including:

  • Moving to a medium term perspective (of three forward years) for formulating Government’s recurrent and capital budgets
  • Including performance measures and target outputs as part of its budget preparation and monitoring mechanisms
  • Basing the budget preparation on a macro-economic framework linked to defined Government goals and planned outcomes.

The Project

Compliance with the Law and achieving policy objectives is partly dependent on acquiring, installing and sustaining modern financial management software and associated hardware. The centralised PAS will be administered and run by MoFT. It will be used to support the government in all aspects of budget preparation, execution and management of government financial resources. The system will cover all spending units financed from the government’s budget, and will process and manage all expenditure and payroll transactions pertaining to these units.

To maximise the benefits from investment in the new system and to ensure that improvements are sustained into the future, the PAS acquisition will be accompanied by extensive user training programmes and change management activities.

PAS Scope

The PAS software will cover the entire financial management cycle. Functionality is to include:

  • Budget preparation
  • Budget maintenance/management
  • Budget execution and treasury, including
  • General ledger
  • Procurement, including:
  • Accounting for payments and receipts
  • Payroll and pensions
  • Human resource management
  • Stores and Inventory management
  • Fixed Asset management

PAS Procurement

Selection of the PAS supplier is following the World Bank’s International Competitive Bidding Procedures. A two-stage bidding process is being applied, whereby the first stage assesses bidders’ technical compliance to requirements, and the second stage evaluates both technical and price bids to determine the preferred bidder.

The process commenced with the publication of a General Procurement Notice in November 2006. It is planned that the bidding document will be released to interested parties in early April 2007 and that a contract will be executed in December 2007.

PAS Implementation Plan

The successful bidder is scheduled to mobilise in January 2008 and “live” operations in the pilot sites will follow by mid 2008, in time for preparing the 2009 budget. Accounting and receipting operations in the Ministry of Finance & Treasury will commence using the PAS in the second half of that year. During the following 12 months, it is planned that the system will be progressively extended to all national agencies on Male’. Thereafter, it will be rolled out to the Atolls.