TECHNICAL NOTE ON GENERAL BUDGET SUPPORT (GBS) FOR IMPLEMENTATION OF MKUKUTA. Technical Arrangements. 1. Management of the GBS facility

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1 THE UNITED REPUBLIC OF TANZANIA TECHNICAL NOTE ON GENERAL BUDGET SUPPORT (GBS) FOR IMPLEMENTATION OF MKUKUTA June 2007 Technical Arrangements The purpose of this technical note is to outline the technical details of the operation of the GBS facility for channelling the disbursements of the development partners to the United Republic of Tanzania (the Government). This technical note complements the Partnership Framework Memorandum (PFM) in outlining the principles of the GBS facility. The two documents form the common base for the bilateral agreements that shall be signed between an individual development partner and the Government. 1. Management of the GBS facility 1.01 All development partner contributions to the GBS facility and any potential interest derived there from shall be used to provide budget support to the Government The facility shall be managed by the Ministry of Finance and Economic Affairs (MoFEA), External Finance Department and the Accountant General s Department with the Permanent Secretary as the Accounting Officer The accounting arrangements shall be determined by the Accountant General (AcGen) in accordance with the current public financial management legislation Further to clause 24 of the PFM, MoFEA will establish and maintain foreign exchange accounts with the Bank of Tanzania. The AcGen shall in consultation with the GBS partners determine which bank accounts the GBS facility shall operate. 1

2 2. Receipts to the accounts 2.01 In accordance with some GBS Partners bilateral agreements, MoFEA (External Finance Department) is required to send a formal request for the transfer of the agreed sum to the Government of Tanzania via remittance to the GBS account with the Bank of Tanzania 1 (BoT). This request is cover copied to the BoT and the AcGen Each GBS partner forwards the agreed sum to MoFEA by remitting the funds to the GBS account held at the Bank of Tanzania either through a national or an international correspondent bank. Where the GBS partner has a bank account with a commercial bank within Tanzania the remittance can be made directly to the GBS account with the BoT. MoFEA provides a list of preferred correspondent banks for the development partners using currencies other than USD Each GBS partner notifies the AcGen that the transfer of the funds has been undertaken The funds are credited by the BoT to the GBS account 2.05 Daily, as and when funds are credited to the GBS account, the BoT informs the AcGen (Development Revenue Section) of amounts received and any reference data In consultation with External Finance Department, the AcGen (Development Revenue Section) identifies the relevant GBS partner s transfer and confirms the amount, in whatever original currency, of the disbursement. Once the receipt is definitely identified an acknowledgement of receipt of funds is sent to the appropriate GBS partner and copied to the GBS partners Secretariat with an exchequer receipt to the value of the equivalent TShs. The rate for the exchange rate conversion is the [buying rate of the inter-bank foreign currency market on the date when the Bank of Tanzania receives funds]. The exchange rate is calculated on the day that the funds are credited to the GBS bank account The amount of the exchequer receipt in TShs is posted by the AcGen to the IFMS showing the transfer of funds from the GBS account to the development revenue account 13: Weekly the BoT sends copies of the bank statements for the GBS accounts to the AcGen. The process described in 2.06 to 2.08 inclusive should not take longer than two working days. The acknowledgements will be sent by letter, fax, and no later than two weeks from the date of receipt. 1 Previously there were two alternative accounts. PRBS No. 1 account was a USD denominated account held by the Bank of Tanzania with the Federal Reserve Bank in New York. The PRBS No. 2 account is a USD denominated account held with the Bank of Tanzania directly. At present only the USD denominated account held with the BoT directly is in use. The reference in the document to the GBS account will refer to this account. 2

3 2.09 The AcGen (Development Revenue Section) reviews the bank statements and records on an Excel database the various funds received. Amounts credited to the GBS account include interest earned on the account 2. This is entered as a receipt on the database. 3. Transfers from the accounts 3.01 The AcGen shall instruct the BoT to automatically transfer all funds deposited into the GBS account at the BoT to the development revenue account 13.99, and thereafter to the Exchequer development account 17:28 on the same day as they are received. This would eliminate exchange rate gains or losses The AcGen verifies that the transfers have in fact been actioned by the BoT and follows up where necessary. Daily, as transactions take place, the AcGen receives credit notifications from the BoT of the transfers to the Exchequer development account These notifications are posted by the AcGen to the IFMS showing the transfer of funds from the GBS account to the development revenue account 13:99, and thereafter to the Exchequer development account 17: In cases where the transfer has not been done by the BoT within 10 working days from the date of the credit to the bank account the AcGen notifies the relevant GBS partner and the GBS partners Secretariat in writing that such is the case. Reasons for the delay are given together with any details of corrective action being taken The reminder for transfer will then be sent to the BoT for action Since the facility and accounts are part of the Consolidated Fund no balances can be carried forward at the year end and transfers are made to bring the facility balances to zero. 2 The GBS account held with BoT directly is currently non-interest bearing. 3

4 4. Production of financial statements 4.01 From the database for the GBS and the IFMS the AcGen produces financial statements for the GBS facility. The statements are for the whole facility with the position of GBS accounts shown in detail (the format of these statements is shown in Annex (i)). These accounts are produced on a monthly, quarterly and annual basis by the AcGen These statements are sent to the External Finance Department - MoFEA, the IMF and the GBS partners Secretariat before the 10 th of the subsequent month. They are accompanied by BoT bank statements and AcGen produced bank reconciliation statement copies At the end of the financial year the AcGen prepares an annual GBS facility statement three months (30 th September) after the end of each financial year. The statement is submitted to the CAG for audit In addition, the AcGen prepares, from the GBS bank accounts, a schedule detailing the source of the funds that have been credited to the development revenue account. This schedule is included in the Development revenue account statements. 5. Auditing arrangements 5.01 The annual audit of the GBS facility will be the responsibility of the CAG, and carried out by the National Audit Office (NAO). The annual audit shall be completed within three months of the submission of the accounts for audit by the AcGen, ref above. The Government will share annual audited reports with GBS partners at the latest by the first week of the third quarter (of the subsequent year) after the ending of the financial year being audited. At the discretion of the CAG, he may contract assistance from a professionally recognised audit company Consistent with good practice the Internal Auditor of the AcGEN (MoF) is not required to carry out any work as an integral part of the GBS facility processes. However due to the significant nature of the sums involved the MoFEA Internal Audit undertakes at least two internal audit reviews of the operation of the GBS facility during each financial year. Internal audit reports will be promptly shared by MoFEA with the GBS partners through the GBS partner s Secretariat. The GBS partners shall reasonably expect at least two internal audit reports in any one fiscal year, one covering the 1st quarter, and another to be selected by GBS partners The annual schedule of the GBS transactions mentioned in 4.04 is included in the Development Revenue statements which are subject to audit by the CAG The internal and external audit reports will be discussed as part of the annual review, referred to in the Partnership Framework Memorandum, ref. clause 29 of the PFM. 4

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6 Annex (i) The Formats of the GBS Facility Financial Statements Contents 1) The Monthly Statements a. The Facility Summary b. The Receipts and Transfers Statement c. The Bank Reconciliation Statements d. The BoT Bank Statements. 2) The Quarterly Statements a. The Facility Summary b. The Receipts and Transfers Statement c. The Bank Reconciliation Statements 3) The Annual Statements a. The Facility Summary b. The Receipts and Transfers Statement c. The Bank Reconciliation Statements 6 May 2007

7 Summary Statement for the Month of... 20YY. TShs USD Balance brought forward 1 st MMM YYYY Receipts from Development Partners Interest Received Exchange Gains less Transfers to Development Revenue Exchange Losses Balance carried forward at month end 31 st MMM YYYY The General Budget Support Facility Receipts & Transfers Statement for the Month of... 20YY. Facility Facility USD TShs Balance brought forward 1 st MMM YYYY Receipts DD/MM/YY Development Partner X DD/MM/YY Development Partner Y DD/MM/YY Development Partner Z DD/MM/YY Interest DD/MM/YY Exchange gain Total Receipts less Transfers toexchequer Development Revenue Account (Oswald pls. confirm) DD/MM/YY Development Partner L DD/MM/YY Development Partner M DD/MM/YY Development Partner N May

8 DD/MM/YY Interest DD/MM/YY Exchange loss Total Transfers Balance carried forward at month end 31 st MMM YYYY 8 May 2007

9 Bank Reconciliation Statement(s) as at the month end - DD MMM 20YY. GBS Account USD USD Balance as per Facility Account on DD MMM YYYY add Credits on bank statement not in account Detail... Detail... Detail... less Debits on bank statement not in account Detail... Detail... Detail... Balance as per Bank Account on DD MMM YYYY [Copies of the bank statements are attached at this point] May

10 Summary Statement for the quarter ended DD MMM 20YY. USD USD TShs TShs Balance brought forward 1 st MMM YYYY Receipts from Development Partners Month 1 Month 2 Month 3 Interest Received Month 1 Month 2 Month 3 Exchange gains Month 1 Month 2 Month 3 less Transfers to Development Revenue Month 3 Exchange losses Month 1 Month 2 Month 3 Month 1 Month 2 Balance carried forward at quarter end 31 st MMM YYYY 10 May 2007

11 Receipts & Transfers Statement for the quarter ended 31 st MMM 20YY. Facility Facility USD TShs Balance brought forward 1 st MMM YYYY Receipts DD/MM/YY Development Partner X DD/MM/YY Development Partner Y DD/MM/YY Development Partner Z DD/MM/YY Interest DD/MM/YY Exchange gain Total Receipts less Transfers to Development Revenue DD/MM/YY Development Partner L DD/MM/YY Development Partner M DD/MM/YY Development Partner N DD/MM/YY Interest DD/MM/YY Exchange loss Total Transfers Balance carried forward at quarter end 31 st MMM YYYY May

12 Receipts & Transfers Statement for the quarter ended DD MMM 20YY. Balance brought forward 1 st MMM YYYY Receipts DD/MM/YY Development Partner X DD/MM/YY Development Partner Y DD/MM/YY Development Partner Z DD/MM/YY Interest Total Receipts less Transfers to Development Revenue DD/MM/YY Development Partner L DD/MM/YY Development Partner M DD/MM/YY Development Partner N DD/MM/YY Interest Facility USD Total Transfers Balance carried forward at quarter end 31 st MMM YYYY May

13 Bank Reconciliation Statement(s) as at the quarter end - DD MMM 20YY 3. GBS ccount USD USD Balance as per Facility Account on DD MMM YYYY add Credits on bank statement not in account Detail... Detail... less Detail... Debits on bank statement not in account Detail... Detail... Detail... Balance as per Bank Account on DD MMM YYYY 3 This statement contains exactly the same figures and information as the monthly statement of the same date. May

14 Summary Statement for the year ended DD MMM 20YY. USD USD TShs TShs Balance brought forward 1 st MMM YYYY Receipts from Development Partners Quarter 1 Quarter 2 Quarter 3 Quarter 4 Interest Received Quarter 1 Quarter 2 Quarter 3 Quarter 4 Exchange Gains Quarter 1 Quarter 2 Quarter 3 Quarter 4 less Transfers to Development Revenue Quarter 1 Quarter 2 Quarter 3 Quarter 4 Exchange Losses Quarter 1 Quarter 2 Quarter 3 Quarter 4 Balance carried forward at year end 31 st MMM YYYY May

15 Receipts & Transfers Statement for the year ended 31 st MMM 20YY. Facility Facility USD TShs Balance brought forward 1 st MMM YYYY Receipts DD/MM/YY Development Partner X DD/MM/YY Development Partner Y DD/MM/YY Development Partner Z DD/MM/YY Interest DD/MM/YY Exchange gain Total Receipts less Transfers to Development Revenue DD/MM/YY Development Partner L DD/MM/YY Development Partner M DD/MM/YY Development Partner N DD/MM/YY Interest DD/MM/YY Exchange loss Total Transfers Balance carried forward at year end 31 st MMM YYYY 0 0 May

16 Bank Reconciliation Statement(s) as at the year ended - DD MMM 20YY 4. GBS Account USD USD Balance as per Facility Account on DD MMM YYYY add Credits on bank statement not in account Detail... Detail... Detail... less Debits on bank statement not in account Detail... Detail... Detail... Balance as per Bank Account on DD MMM YYYY 4 This statement contains exactly the same figures and information as the monthly statement of the same date.