This presentation was made by Eftichia Gratsia & Nektaria Papatzanaki, Greece, at the 40th OECD Senior Budget Officials (SBO) meeting held in Tallinn, Estonia, on 5-6 June 2019
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Budgeting in Greece - Eftichia Gratsia & Nektaria Papatzanaki, Greece
1. GREECE
RECENT DEVELOPMENTS IN PUBLIC
FINANCIAL MANAGEMENT
Hellenic Republic
Ministry of Finance
General Accounting Office (GAO)
2. The Economic Adjustment
Programs
Early 2010 : lost access to international capital markets
May 2010 : First Economic Adjustment Program (loans)
with EU and IMF
March 2012 : Second Economic Adjustment Program
(loans) with EU and IMF
August 2015 : Financial Assistance Facility Agreement
with the EU
Broad objectives
Fiscal consolidation
Structural reforms
2
3. After the Adjustment
Programs…
Hellenic Republic - Ministry of Finance - General Accounting Office
3
Since August 2018:
EU Enhanced Surveillance Mechanism
Integration into the European Semester
timetable for economic policy coordination
Broad objectives
Continue implementing structural reforms
Meet fiscal targets, sustainable public debt
4. Public Financial Management
reforms
Hellenic Republic - Ministry of Finance - General Accounting Office
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Weaknesses
Fragmentation of functions
Centralization of budget procedures
Overlaps in controls
Lack of multiannual planning and fiscal risks identification
Low accountability
Treatment
Adoption of Budget Law (OBL)
Rationalization of the functions of the General Accounting
Office
PFM reforms in the following areas
5. Public Financial Management Reforms
5
Areas of reforms
Budgeting – medium term planning
Cash management
Payments processes
Fiscal reporting
Accounting
Institutional reforms
MTFS
Budget
Budget
Execution -
Payments
Fiscal
Reporting
Financial
reports
6. General Government in Greece
State + 1,696 entities
6
Social
Security
Funds
(26 entities)
Central Government
(State +552 entities)
Local
Government
(1,118
entities)
LGs Legal
Entities
(780)
Regions
(13)
Municipaliti
es (325)
Employment
Fund
(OAED)
Health Fund
(EOPYY)
Pension
Funds (24)
Legal entities (452)
State (27)
(Central
administration)
Presidency
Parliament
Decentralized
Administrations
(7)
Ministries (18)
Hospitals (100)
7. Multiannual Planning
From annual to multiannual fiscal planning:
MTFS - Medium Term Fiscal Strategy
Expand the horizon to 4 years (budget year + 3 years
ahead)
Targets for fiscal balance set for General Government
(GG)
Targets and expenditure ceilings incorporated into the
annual Budget
Fiscal projections for all sub-sectors
No policy change scenario and scenario incorporating
policy changes
First MTFS in 2011: for the period 2012 – 2015
7
8. Top-down Budgeting
Τop-down budgeting
From analytical budget
lines to major
categories of
expenditure (max 10)
Fiscal discipline built
in the process of
budget drafting and
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General
Government Fiscal
Targets
State
Sub-
sectors
Reven
ue
targets
Balanc
e
Targets
Expenditur
e ceilings
Breakdow
n within
ceilings
Breakdow
n within
targets
9. Commitment registries
Detailed registries of obligations in all GG entities
No obligation assumed in excess of appropriations
Accurate monitoring of outstanding commitments,
accounts payable and arrears
Data on payables and arrears collected in the General
Accounting Office (GAO) on a monthly and quarterly
basis
9
10. Budget Execution
Budget execution monitoring
Monthly monitoring & quarterly comparison against
targets
Sanctions if divergence from targets exceeds 10%
Local Governments’ Observatory
Constitutional restriction to the extent of MoF
intervention in LGs
Sanctions & corrective actions
10
11. Fiscal reporting
11
State Budget Bulletin
Publication twice a month (data on modified cash basis)
General Government Monthly Bulletin
On a monthly basis (data on cash basis)
Other Bulletins and reports (public debt)
12. Cash management
Hellenic Republic - Ministry of Finance - General Accounting Office
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Consolidation of State fragmented accounts into a
Single Treasury Account
Transfer of other GG entities accounts into the
Single Treasury Account
Repo operations
Objectives
More efficient liquidity management
Reduced financing needs of the State
Improved cash flow projections
13. General Directorates of Financial
Services
“Budget Bureau” in each spending Ministry:
General Directorates of Financial Services (GDFS)
13
Mo
F
LM1
Financial
services
X
Entity1
LM1
Financial
Services
Y
Entity2
Entity3Entity4
LM2
Financial
Services
X
LM…
Entity… MoF
GDFSs in
Ministries
Financial
Services in GG
entities
LM: Line
Ministry
14. Payment processes
14
Until 2014:
2014:
2017:
2019: Abolition of ex-ante HCA audits for the rest of GG
Line
Ministry
MoF/GAO
ex-ante audit
(legality &
regularity)
HCA
ex-ante
audit
(>15.000)
MoF/GAO
payment
voucher
Local tax
offices
Payment
Line
Ministry
MoF/GAO
ex-ante audit
(legality &
regularity)
HCA
ex-ante
audit
(>30.000)
MoF/GAO
Electronic
payment via
Bank of
Greece
Line Ministry entire
process
15. Accounting
2010: Double-entry accounting of modified cash
basis
Facilitation of reporting
Improved annual financial statements of the State
Statement of Financial Position (Balance Sheet)
Income Statement (Profit and Loss Statement)
Cash Flow Statement
Statement of Changes in Equity
15
16. New chart of accounts
Ongoing reforms: New GG Chart of accounts
New accounting rules & budget
classifications
Single chart of accounts for all GG subsectors (PD
54/2018)
Unified accounting rules for all GG subsectors
Different types of classifications
2019 new economic and administrative classification
applied for the Central Administration
16
17. Spending Reviews
Spending reviews
KEPE – GAO 1st spending review February – July
2012
SR in 6 ministries summer 2014
2016/2017 SR over the GG, with 3 pilots in 2016
2018 establishment of a new Directorate in GAO
(SRs organization and monitoring among its
responsibilities) – 3 pilots more targeted
2019 : 4 ministries under SR
17
18. Performance Budgeting
Hellenic Republic - Ministry of Finance - General Accounting Office
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Performance budgeting
2018 establishment of a new Directorate in GAO
2019: pilot project - 6 ministries
present 2020 budget under the new
architecture
2022: present the whole 2023 budget in new
structure, in parallel with existing
format
2024: execute performance budgeting (program
appropriations)
19. Institutional reforms (1)
19
2010: Parliamentary Budget Office
Information to Parliament via an independent
institution
Strengthen institutional controls on government’s fiscal
policy
Monitoring of the budget
21. Summing up – what has been
accomplished
Binding fiscal rules
Medium Term fiscal planning
Strict top-down budgeting
Monitoring of MoF on the whole GG
Simplification in payments procedures
Improved, transparent fiscal reporting
More efficient cash management
Comprehensive financial statements
Institutional reforms
21
22. Summing up – what remains to be
done
Accounting for all GG entities
single Chart of Accounts and unified accounting
rules
transition to accrual accounting
Cash management
Cash flow forecasting for large GG entities
Regular monitoring of entities’ cash reserves
Performance budgeting
Assessment of efficiency
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23. Next steps
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Continue the reforms
Meet fiscal and economic goals
Focus on the “quality” of public spending
24. THANK YOU FOR
YOUR KIND
ATTENTION
Hellenic Republic - Ministry of Finance - General Accounting Office 24