Budget Planning training

Report
Project funded by
The European Union
Government of the Republic of Serbia
European Integration Office
Budget
Planning
Aleksandra Branković
Andrija Pejović
All presentations are available on the PPF5 website: www.ppf5.rs
14 February 2014
Hierarchy of Strategic Documents
Enlargement Package
(EU Enlargement Strategy, EC Progress Report /SAA/ European Partnership)
IPA II Regulation / Rules of Application
Country /Multi-Country Strategy Paper
National Sector Programme or (IPA-specific)
Sector Planning Document -SPD)
Action Documents (ADs)
Annexed: SPDs
(Draft) Action Programme (AP)
Project funded by
The European Union
Financing Proposal
Annexed: ADs
Commission
Implementing Decision
Annexed: AP
Financing Agreement
Government of the Republic
of Serbia
European Integration Office
Sector Planning Document
SPD Template
Purpose
Section 1: Sector
Description
To systematically address the EC criteria for Sector Approach and
show that the sector in question is sufficiently mature to adopt a
Sector Approach. Also the steps being undertaken to increase
sector maturity.
1.4 Mid-term perspectives on national budget and development
assitance
Section 2: Sector
Programme
Rationale
To provide justification for the proposed programme to explain
the focus of IPA assistance within the whole scope of the sector
An overall picture of the problems to be solved with the support
of IPA funded sector support.
Section 3: Sector
Programme
Description
To describe in detail the proposed programme covering: overall
/specific objectives; impact indicators; results; measures &
operations; institutional arrangements for implementation.
Section 4:
Budget
To provide an indicative 3-year sector budget based on all
sources
Section 5:
Annexes
Log Frame
Project funded by
Institutional
The European Union
To provide inputs for the associated Action Documents
Government of the Republic
of Serbia
European Integration Office
Section 4 Sector Support Programme
Budget
SOURCES OF FUNDING
TOTAL
EXPENDIT
URE
SECTOR TITLE
I
B
(
1
)
IN
V
(1
)
EUR
(a)=(b)+(
e)
TOTAL
PUBLIC
EXPENDIT
URE
EUR
(b)=(c)+(
d)
IPA
CONTRIBUTIO
N
EUR
(c)
%
(2)
NATIONAL PUBLIC CONTRIBUTION
Total EUR
(d)=(x)+
(y)+(z)
% Cent
(
ral
2 EUR
)
(x)
Regional/
Local
EUR
(y)
IFIs
EUR
(z)
PRIVATE
CONTRIBU
TION
EUR
(e)
%
(
3
)
Priority 1
Measure
1.1.
Operation
1.1.1.
….
Priority 2
Measure
2.1
Operation
2.1.1.
….
TOTAL IB
TOTAL INV
TOTAL SSP
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Section 4 Sector Support Programme
Budget
• Similar to IPA I, budget template for Sector fiche
• Standard approach to preparation of budget
• Dismantle Measures and Operations to Contracts
• Preparing Section 4 and ‘Annex 3: Indicative
Implementation Schedule’ in parallel
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Exercise for today’s session
Competitiveness Sector Planning Document
(DRAFT!)
 Specific objective 3: The implementation of the
EU-harmonised policies to create a well functioning
market economy improved
Measure 3.1: Improving the policy,
regulatory and institutional framework and
implementation capacities of economic
operators
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Keep in mind the following:
• PRAG rules/types of contracts
• Co-financing requirements
• N+ rules
• Linkages with national budget planning process
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Indicative determination of contract
value
Three approaches
• Bottom up
• Top down
• Mixed
Sectoral and priority allocation predefined?
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
How to determine value
Service Contract
• The budget includes expert fees (which
includes the margin or profit for the
consulting
• company) which are calculated in relation to
type and number of experts (see table).
• Maximum duration of such project is two
years (sometimes three).
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
How to determine value
Expert fees
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
How to determine value
Other costs:
Incidental expenditure (between 2 & 5, sometimes 10% of
budget):
• Bank charges
• Per diems for experts working outside project base of
operations (e.g. Belgrade)
• Visibility events, translation etc.
• Verification (e.g. around 2% of budget for external auditor
fees)
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Types of Contract and Associated Documents
IPA
Action
Document
P
r
o
c
u
r
e
m
e
n
t
SERVICES
SUPPLIES
Technical
Specifications
WORKS
Bills of
Quantity
GRANTS
Project funded by
The European Union
Terms of
Reference
Guidelines for
Applicants
Government of the Republic
of Serbia
European Integration Office
Service contract-Budget planning-fee
based
First payment:
• for projects up to 12 months: 40%
• for projects between 12 and 24 months: 30%
• for 24 months projects or longer: 20%
Payments during project implementation:
• every 6 months in equal amounts.
Final payment: 10%
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Service contract-Budget planning-Global
price
• First payment : 60%
• Payments during project implementation: no payments
in most cases, but it depend on the project. If there
are payments: 10% every 6 months.
• Final payment: 40%.
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Service contract-Budget planning-Global
price
• First payment : 60%
• Payments during project implementation: no payments
in most cases, but it depend on the project. If there
are payments: 10% every 6 months.
• Final payment: 40%.
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Supply contract-Budget planning
• First payment : 60%
• Payments during project implementation: in
most of the cases there are no payments.
• Final payment: 40%
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Works contract-Budget planning
• First payment: 10%
• Payments during project implementation:
every month in equal amounts
• Final payment: 10%
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Twinning-Budget planning
• First payment: 20%
• Payments during project implementation:
instalment every three months
• Final payment: 5%
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Grant-Budget planning
First payment: 80%
Payments during project implementation: 0 if
project lasts for 1 year; if project lasts for more
than 1 year additional 10% can be added to
pre-financing later on during project
mplementation. It can be a single payment or
10% can be split up into 5+5% depending on
the project duration.
Final payment: 20% if project lasts for 1 year;
could be 10% if project lasts for
longer than 1 year
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Exercise• Table 1-Operation
Budget
• Table 2-SPD Section 4
• Table 3-Disbursement
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
EU co-financing framework
National co-financing framework
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Outline of IPA RAP
• IPA RAP not adopted yet
Financial management
a. Eligibility of expenditure; as regards
specificity of the policy areas, specific provision
may be foreseen in the Financing Agreements.
b. The co-financing concept in principle to be
maintained. Specific criteria to modulate the cofinancing rate set in the IPA Common Strategic
Framework. (to be developed)
Detailed level of the EU contribution laid down
in the respective Financing Agreements.
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Outline of IPA RAP
Aid intensity and rate of IPA assistance
1. The Commission decision adopting a cooperation programme
shall fix the co-financing rate and the maximum amount of
IPA assistance, based either on:
a) total eligible expenditure, including public and private
expenditure; or
b) public eligible expenditure.
2. The co-financing rate at the level of each [priority axis] shall
not be less than [20 %] and not higher than [85 %] of the
eligible expenditure of a cooperation programme.
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
OLD IPA IR Co-financing requirements
Institution building activities: require a degree of co-financing
by the final beneficiary and/or public funds. Exceptionally and in
dully justified cases, activities may be funded 100% by
Community funds
Administrative co-operation (twinning and TAIEX type of
activities) may be funded 100% by Community funds. If
twinning is involved, clearly state the expected co-financing
budget of the twinning contract. To note that contributions in
kind are not eligible.
Grants: the final beneficiaries may be required to contribute to
the operation’s eligible costs. In general, final beneficiaries must
contribute a minimum of 10 percent of the project, both for
investment and institution building projects.
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
National framework for co-financing
Budget System Law
Preparation of budgets and financial plans
Article 28
4) Overview of the expected funds from the financial assistance
of the European Union;
5) Estimation of the necessary financial resources to fund the
participation of the Republic of Serbia in implementing of the
financial assistance of the European Union;
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
National framework for co-financing
Budget System Law (Article 68a)
• Budget users are responsible for proper
planning in accordance with agreement
between RS and EU, in the proper
planning of the amount of expenditure
• Budget user who do not funds sufficient
funds for co-financing must redirect
funds form their other budget lines
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Budget system Law-Calendar
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Guidelines for preparation of the Budget
• Co-financing can be provided from public
funds (by definition EU public funds are funds
of budgets, own source revenues , loans
granted to the state) or grants from
international institutions.
• Time frame of planning and implementation of
activities that are co-financed by national
funds under projects financed by EU funds
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Time frame
It is necessary to respect the following rules :
• Activities that are co-financed under the project/sectoral
program defines in project proposals/sectoral programs which
make annual National program;
• The funds for co-financing of projects/sectoral program must
be planned in within the allowable budget limits for every
budget users;
• Bearing in mind that the implementation of the annual IPA
perennial and can not coincides with the national budget year ,
it is the projection plan funds to finance activities that are cofinanced;
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Time frame
• Activities that are considered as co-financing must begin with
the realization after the signature of the Financing Agreement.
Otherwise, the funds which are financed these activities will not
be recognized as part of the co-financing;
• National co-financing should be planned taking into account
the dynamics of implementation of project/program activities.
• When planning the dynamics of negotiation, ie . Payment of
those activities co-financed by public funds, or in predicting the
resources that are need for co-financing the activities of the
project /sectoral program should be take into account the order
of activities listed in the project or in the sectoral program;
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Time frame
• Contracts for the implementation of all project/sectoral
program must be concluded within two or three years from
the date of signature of the Financing agreements depending
on which service is provided specific financial Agreement
within two years after the conclusion of individual contractscontractual obligations to be performed, and the payment of
funds for their implementation is must be completed no later
than one year from the last day set for the execution
particular contract, unless otherwise specified in the
Financing Agreement;
• EC must be aware of implementation of part of the
project/program activities, are co-financed from national
resources;
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Exercise• Table 4-Instructions for
projects financed from
EU funds (IPA)
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
N+ Rules
OPTION 2
Combined annual Programme
(max. 3 years)
PROGRAMME ARCHITECTURE
OPTION 1
Annual Programme
OPTION 3
Multiannual Programme with split
commitments (max. 7 years)
Financing Decision (FD)
Financing Decision covering an
allocation for one year.
Financing Decision covering an
allocation for up to three years with
suspension clause.
Financing Decision covering an
allocation for an initial (maximum)
three years with suspension clause.
Amendment of Financing Decision to
add allocations for consecutive years'
budget allocation at least twice.
Possibly: Commission Decisions for
selection of certain infrastructure
projects (major projects) per year.
Action Programme
(Annex to FD)
Action Programme covering Actions
programmed for one year or Action
Programme covering Actions
programmed for more than one year
and broken down into annual
priorities (=selected Actions).
Action Programme covering Actions
programmed for three or more years
and broken down into priorities for a
maximum of three years.
For these priorities (selected
Actions), it must be clearly identified
whether they are financed from year
N, N+1 or N+2.
Action Programme covering Actions
programmed for up to seven years
without earmarking of Actions by
year.
Budgetary commitment
One budgetary commitment in year
N.
Annual budgetary commitments in N,
N+1 and N+2 (three).
The budgetary commitment is broken
down into seven instalments, one for
each year (through amendments to
original commitment).
Financing Agreement
Project funded by
The European Union
One Financing Agreement.
Financing Agreements to be
concluded for each year or two
amendments to original Financing
Agreement.
Financing Agreements to be signed
covering allocations as specified in
the Financing Decision (maximum
initial allocation of three years) with
suspension clause.
Amendments to Financing Agreement
Government of the Republic
to add allocations for consecutive
of Serbia
years' budget
allocation
at least
European
Integration
Office
N+ Rules
Relevant legal framework
Article 189(2) FR
Article 2 CIR
Article 189(2) FR
Article 6(3) CIR
Article 189(3) FR
Article 16 IPA RAP
Article 6(3) CIR
Possible methods of
implementation
Direct and Indirect
Direct and Indirect
Only Indirect
IMPLEMENTATION TIMELINE
Deadline for conclusion of
Financing Agreement
Deadline for conclusion of
procurement contracts and grant
agreements
Deadline for operational
implementation
Deadline for automatic
de-commitment
Project funded by
The European Union
N+1
d+3 from conclusion of Financing
Agreement
“d” the date of conclusion of the
Financing Agreement.
6 years from conclusion of Financing
Agreement
None
N+1 counted from the year of
creation of each yearly commitment
None
d+3 from conclusion of each
Financing Agreement
None
6 years from conclusion of each
Financing Agreement
None
None
Each yearly split commitment
must be spent within five years of its
validation (N+5).
The last split
commitment
Government
of the(2020)
Republic
must be spent within six years
of its
of Serbia
validation (N+6).
European Integration Office
Sector Budget
There needs to be a clear link between sector policy & budgeting.
Sector plans should be properly priced & prioritized within a
realistic estimate of the resources available from the national budget
& external donors.
IPA II Sector Support Programmes are planned to be multi-annual
& should be co-financed by predictable, multi-annual national
funding.
It is necessary to provide a brief description of the sector budget
on an annual, & if possible, on a medium-term perspective (3-5
years). Ideally there should be a Medium Term Expenditure
Framework (MTEF) for the sector.
However, development of MTEFs will be gradual, at first
assessments should focus on the existence of credible annual sector
budgets. At minimum, it is crucial to verify whether the sector
budget can be identified in the state budget.
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Path towards Fully-fledged Sector
Support
• Can the sector budget be easily identified in the state
budget?
• What is the nature and scope of the sector budget?
• Does the budget fairly reflect the sector policies and
objectives?
• What type of budget classification system is in use?
• What is the overall level of sector financing?
• Is the share the sector within total government
expenditures increasing?
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Path towards Fully-fledged Sector
Support-MTEF
• If a sector MTEF is in place, key
assessment questions include:
• Is it consistent with declared policies and the national
budget/overall MTEF of the country?
• Is it approved at a political level or is it largely a
technical document?
• If a sector MTEF is foreseen by the government how
can its elaboration be supported by means of the
Sector Support Programme?
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Path towards Fully-fledged Sector
Support-MTEF
• If a sector MTEF is in place, key
assessment questions include:
• Is it consistent with declared policies and the national
budget/overall MTEF of the country?
• Is it approved at a political level or is it largely a
technical document?
• If a sector MTEF is foreseen by the government how
can its elaboration be supported by means of the
Sector Support Programme?
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Path towards Fully-fledged Sector
Support-MTEF
• If a sector MTEF is in place, key assessment
questions include:
•
•
•
•
If an MTEF is already in preparation, has a coherent and broad sector
development plan with appropriate financing framework at sector and
national level been defined/decided at a political level and is it
considered feasible and is it consistent with national/overall MTEF?
If a Sector MTEF is not in place, are appropriate sector allocations
secured and properly stated in the general budget?
Is there an on-going process leading to the setting up of Sector
MTEF?
Based on the analysis, recommendations should be made to the
Government.
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Programatic budgeting
Differences between program and line budget:
Showing:
1. that the purpose of money is spent;
2. how such consumption is linked to strategic
objectives, and
3. what results should be achieved
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Advantages of programme budget
• Provides a single framework for prioritization
of expenditures;
• Improves policy coordination at the
government level, which is crucial for
achieving the national, social and economic
objectives;
• Provides financial context of strategic and
operational plans for budget users;
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Advantages of programme budget
• Allows the government and local authorities
to identify inefficient spending, as well as
areas that do not provide adequate results
and that require more resources;
• Contributes to the improvement of public
administration services through the
evaluation of the relationship of their price
and quality;
• Makes budget more transparent and
understandable for citizens
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Programme budget
• The introduction of program budgeting is of
major importance for the improvement of
public finance, as it enables continuous multiyear financing of priority policies, programs
and projects.
•
•
•
By the end of 2013 a comprehensive preparation of institutions has
been conducted for the introduction of program budgeting.
By the end of 2013, fourteen (14) Serbian intuitions have adopted
program based budget, including SEIO.
During 2014, the preparation of institutions for the introduction of
program budgeting will continue, as it is planned for the 2015
budget year according to the Budget System Law.
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Mid-Term Expenditure Frameworks
(MTEF)
• Mid-Term Expenditure Frameworks (MTEFs) are part of the
existing Fiscal Strategy. They are determined at the level of
budget users and cannot directly be transformed into sector
MTEFs.
• Recently adopted legislation requires the merging of strategic
planning of public policies with the budget process within the
government and the parliament. This will include mandatory
three-year budget planning and the introduction of
programme budgeting by 2015.
• It is planned that MTEFs for sectors will be developed
alongside programme budgeting. For this to be feasible it will
be necessary to ensure correspondence between the budget
programmes and the NAD sectors.
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Strategic Planning and Coordination of Public
Policies
• The guidelines for drafting the strategic documents
were provided in the form of recommendations, and the
uniform information system was introduced for the
collection of data required for the government work
program.
• Draft Methodology for Integrated Strategic Planning
was prepared, and this draft is to be adopted.
• Still, upgrading of strategic planning and coordination
of public policies within the Government should be
considered the priority task in the forthcoming public
administration reform process.
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Project funded by
The European Union
Government of the Republic of Serbia
European Integration Office
Thank you for your
attention
All presentations are available on the PPF5 website: www.ppf5.rs

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