Free Republic Of Liberland MINISTRY OF FINANCE

Transcription

1 Free Republic Of Liberland MINISTRY OF FINANCE Summary Annual Report

2 THE FREE REPUBLIC OF LIBERLAND MINISTRY OF FINANCE Summary Annual Report January 2017

3 TABLE OF CONTENTS FOREWORD BY THE FINANCE MINISTER 3 FINANCIALS - SUMMARY 4 FINANCIALS - INCOME 5 FINANCIALS - EXPENSES 7 FINANCIALS - LIBERLAND MERITS 10 MINISTRY OF FINANCE ORGANISATION 12 OBJECTIVES AND TOPICS RELATED TO MINISTRY OF FINANCE 14 Sandy beaches in Liberland FREE REPUBLIC OF LIBERLAND In Prague February 2017 Image on cover: 3NTA 2

4 FOREWORD BY THE FINANCE MINISTER JAN PURKRÁBEK Finance Minister Dear Reader, It has been 18 months since Liberland was born and 12 months since all five ministry departments have been constituted. I was appointed December 14th, 2016, after 5 months of daily engagement in the Liberland project. Since the beginning, we have been very consistent and clear about the ultimate objectives of what Liberland should be; and what it definitely should not be in the future. We are building a libertarian, friendly and strong economic sovereign state, which will always be one step ahead of traditional countries. We deeply believe that state authorities should never pretend to have a better ability in doing things than the people, entrepreneurs, and companies from the private sector. Due to Liberland s vision and continuous progress, it has managed to attract many extremely interesting, smart and respected people from around the world and from various financial industries. We have assembled a huge network of knowledgeable and professional people with backgrounds from the financial services sector. These include the digital economy, global investments, the libertarian economy as well as futuristic digital states. Inspired by a book written by Hans Adam II, Liberland is demonstrating what a state in the third millennium will look like. During the last one and a half years, Liberland has transformed its image that was presented by the media as a Czech joke to one of most interesting projects for the 21st century. An online magazine Seeker Daily has thoroughly analyzed the topic How powerful is Liberland? It concluded with respect to its unique homogeneity, that Liberland is the single most ideologically powerful nation on Earth since the Ancient Roman Empire. Liberland contributions and donations have exceeded 225k USD equivalent for the past period, where almost half has been provided in Bitcoins. This gives Liberland another top global position worth of following by other states. The financing has been supported by quite a unique concept of Liberland Merits. This motivates supporters and investors to participate in building this European HongKong (what Liberland has sometimes been likened to). The publishing of this annual report, by the Ministry of Finance, enables us to share the state of the treasury as well as the flow of funds for the past year. As we progress with establishing a secure and rigid framework of legislation for international commerce to do business in Liberland, as well as expanding into International Banking, we can expect the free market to begin showing its power. Long Live Liberland Jan Purkrábek, January

5 FINANCIALS SUMMARY The total Income for Liberland has reached the amount USD equivalent in the period from April 13th, 2015 to December 31st, USD equivalent (89.4 % of the total Income) has been used for covering direct expenses related to the key mission of the Liberland provisional government - to develop Liberland and set up the essential environment and infrastructure for the future growth. The financial cash flow result for the above period is a surplus of USD equivalent (10.6 % of the total Income), which has been saved for the upcoming year cash overview (USD eq.) 23,882.9 USD Total Income 225,126.5 USD Total Expenses 201,243.6 USD There have been no public debts issued during the period, as stated in the Liberland Constitution. The results have been consolidated for both Liberland State and Liberland Limited Ltd., a state-owned service provider and legal entity. 4

6 FINANCIALS INCOME The total Income of USD equivalent was mainly represented by two streams. First one is represented by at least relatively smaller nominal incoming payments, often on a repetitive basis. Those counterparties call their contribution as donation or even voluntary tax. The second part is represented by relatively high nominal values considering strategic investments or high one-off donations from individual supporters or investors (see further). Below is an overview of the total Income. The largest category with almost 40% is BTC mixing both small and large incoming payments. Materna with 26.8% share represents payments received through the payment gateway which includes hundreds of received payments. Reformy (FIO Bank) current account is currently being phased out. This bank account had been used mainly to facilitate other payment services that were utilized during BTC income 87,040 39% Other income 3,613 1% Donations - payment gateway (Materna) 60,278 27% Strategic and Larger Investments 31,269 14% Income from donations (Reformy) 42,927 19% Materna represents a large number (746) of small payment amounts received with an average value of 81 USD equivalent each. 5

7 FINANCIALS INCOME The numbers of incoming donations through the main payment gateway were significantly higher in three months of the year - February, August, and December (see chart below) and basically reflects Liberland media coverage. INCOME BY PURPOSE In the current structure, all donators are rewarded (credited) with Liberland Merits with the nominal value 1:1 USD equivalent of his/her donation. This regime applies even if the creditor has declared a strict purpose of the payment. This attitude flattens differences between payments as a voluntary tax and payment for the citizenship, as an example. In the upcoming periods, we assume to differentiate among categories such as direct citizenship, voluntary tax from corporations, voluntary tax from individuals, pure donation/speculative Merit exchange, business incorporation fee, other state services income etc. 6

8 FINANCIALS INCOME INCOME PER CURRENCIES The main currency for incoming payments (38.7%) has been Bitcoins! This result is probably another world #1 example for Liberland, with an almost equal share of digital and normal (fiat) currencies in the state treasury. The Bitcoin effect is not only a demonstration of how progressive Liberland is, but also how most Liberland supporters prefer a non-centralised and non-inflationary currency. A move away from traditionally monopolized currencies. It is also a very transparent tool since all the transactions are fully trackable and publicly available via the Bitcoin blockchain. All other currencies are evenly distributed, which indicates a fairly regular distribution of Liberland supporters across the world. other 42, % EUR 30, % USD 64, % BTC 87, % Detailed sheet shows the split between currencies We are proud that one of the top global Bitcoin investors Mr. Roger Ver belongs among the top Liberland contributors. It not only helps Liberland to grow and to fulfill the mission, but also throws a positive light on Liberland from a global investors perspective. 7

9 FINANCIALS EXPENSES The total expenses for the relevant period have reached the equivalent of USD. The main use being traveling & diplomacy, together with conferences &events representing 37% of the total. More than 26% of the expenses was spent for assets purchases mainly related to the settlement in the territory, including other related settlement expenses on the place. The external services (mainly IT cost and lawyers) represent 20.4%. The rest is represented by administration expenses and other uncategorized expenses. Travelling & Diplomacy 53,896 27% Assets 41,837 21% Conferences & Events 19,325 10% Settlement 10,828 5% Fees 187 0% IT 8,852 4% Services 32,238 16% Others 9,057 5% Office & Administration 25,024 12% 8

10 FINANCIALS EXPENSES EXPENSES PER CURRENCY Almost a half of the total expenses were paid in Bitcoins, approximately 23% expenses were in USD and 22% in CZK. EUR was least used for outgoing payments (8% share). CZK 43,306 22% BTC 95,542 47% EUR 15,718 8% USD 46,677 23% 9

11 FINANCIALS LIBERLAND MERITS The Liberland Merit is a unique evaluation token system, rewarding any contribution coming into Liberland. After registration, anyone can contribute either by donation, by labor or any other acceptable way. The total amount of Liberland Merits issued has reached LLM as of 31st of December All donations or third-party related expenses have been rewarded by 1:1 to USD equivalent. The contribution through labor or activity has been used more frequently, in the average ratio 4:1, as per the chart below. Labor & effort evaluation LLM 683, % Financial contribution equivalent LLM 168, % The Liberland Merits concept has been justified by real-world experience. Liberland Merits as a future digital currency is already getting its value, even without any free-market convertibility. The transformation to a real digital currency is planned to start during 2017, including a public offering (IPO/ICO). 10

12 FINANCIALS LIBERLAND MERITS There was a public poll held in April 2016, voting with almost 50% for LLM as the official currency abbreviation for Liberland Merits, as per global standards. Another poll is planned to be held for finding best currency Unicode symbol. 11

13 MINISTRY OF FINANCE STRATEGIC GOALS AND ORGANIZATION Liberland Ministry of Finance has been incorporated by the Liberland Constitution. The strategy for Liberland finance has always been standing on following four key robust pillars: Voluntary taxation No government debts Minimal government expenditures, no fiscal policy Free competition of currencies, no monopoly legal tender Liberland Ministry of Finance structure The responsibilities of Ministry of Finance have been divided into three main sections, followed by three departments. Department of Strategic Planning defines Liberland finance principles and follows the key libertarian principles of free economy, free trade, and minimal government interferences. Setting up this framework also means an attractive environment for business and for Liberland investors. From a long-term perspective, apart from development activities, some sustainable perpetuity income streams must be stabilized for covering minimal state expenses. It will consist of income from citizenship, from the growing economy (voluntary taxes), from the land rent and other income streams. Department of Monetary and Macroeconomic Issues is responsible for all general monetary topics. The defining task is to utilize Blockchain technology to establish the first state-sponsored crypto-currency, the Liberland Merit. As the leader in this regard, Liberland will support the use (but not require) of a non-inflationary crypto-currency with no physical banknotes or coins and no government ambition to influence markets through proactive monetary policy making. Mr. Hollis Hedrich Head of the Department of Monetary and Macroeconomic issues 12

14 MINISTRY OF FINANCE STRATEGIC GOALS AND ORGANIZATION Department of financial operations will take the responsibility for cash management, accounting, controlling, budgeting, reporting, and auditing. Most of the operating agenda can be done automatically and transparently online with minimal human input required. LIBERLAND ECONOMIC ADVISORY COUNCIL Apart from the three ministry departments, the Liberland Economic Advisory Council has been created. This committee represents an independent advisory body of ultimately 5-15 international professionals, whose expertise, opinions or abilities are valuable for the Liberland development. Its purpose is to aggregate and oppose ideas and potential steps of Liberland considering both classical Libertarian and modern fintech and rapidly evolving financial landscape. The committee currently has 4 members as at December 31st, 2016; other respected professionals will be recruited in Mr. Alexander Borodich Mr. Vladimir Pikora Mr. Dominik Stroukal Mr. Martin Panek LIBERLAND KEY EXTERNAL VENDORS In the financial resort, we rely on several external providers, to outsource highly professional services or products. Among the most important are: Online payment gateway Bitcoin banking Fiat / crypto debit cards 13

15 OVERVIEW OF ALL TOPICS RELATED TO MINISTRY OF FINANCE Liberland is a sovereign state, but still suffering from a limited capability to act on its own behalf. Opening a bank account (with IBAN) at an existing bank is not desirable due to strategic security reasons, but using solely BTC accounts is not sufficient for third official parties and authorities. After incorporation of companies, Liberland Ministries and Embassies can obtain a unique ID and a legal status (1-2Q 2017). The Bank of Liberland will be opening current accounts for international currency payments allowing global commercial banks to operate from and/or in Liberland. Legal status for financial operations Liberland is using a multi-currency (EUR,USD, and BTC) bank account held with BitSuisse. For the incoming payments through the payment gateway, Liberland has been successfully using Materna services. An official Bitcoin address (wallet) is also under operation. BTC Debit cards for transparent expenditures with automatic currency conversion (2017). Flow all incoming payments through BTC account (1Q 2017) Cash management Liberland donation BTC account and FIO bank account are transparent and available in real time online. Process all transactions through blockchain public ledger, to show the cash flow transparently online in real time (2017). An automatic real-time IAS accounting on blockchain and IFRS reporting on a quarterly basis to the media with as a press release (2017). Certified auditor report provided on an annual basis. Transparency accounting and auditing Liberland annual budgeting represents a very simplified procedure at this moment. All ministries will raise their required financial standards for projecting and reporting based on their objectives and capabilities. Forecasts for annual and multi-year periods will be standard. Budgeting Business incorporation in Liberland is one of the key services for the economic development. The legal system is choosing the best from most progressive global destinations. The first international companies will be incorporated in Liberland during 1Q This also represents a potentially significant income for Liberland going forward. Business incorporation There is no possibility to open a bank account in Liberland at present Having business register and incorporate in 2017 is the first necessary step. Banking licenses will be issued so end users (individuals and corporates) will be able to open international bank accounts in Liberland. We'll be grateful to invite all players in international banking as well as progressive fiat-crypto banking services to Liberland. Commercial banking in Liberland 14

16 OVERVIEW OF ALL TOPICS RELATED TO MINISTRY OF FINANCE Most of the normal privileges of Central Banks is prohibited by Liberland Constitution Some of the minimal necessary roles will be provided directly by the Ministry of Finance and partly delegated to a separate entity (2017) Bank of Liberland (Treasury authority) Liberland Merits is a token system (see above) which has proved to be a motivating model for energy coming into Liberland. Among the main purpose of collecting LLM is obtaining citizenship, buying shares in Liberland Land Fund and participate financially on the future development of the territory, purchase other State services if any required etc. Liberland Merits Act to be put in place in 2017 transforming LLM to a publicly tradable cryptocurrency allowing for a freely floating exchange rate. Institute an Initial offering (ICO). Liberland Merits (LLM) No official statistics are held by Liberland government. GNP produced by current Liberland citizens is estimated at millions USD. After including Liberland applicants the overall national annual production rises to billions of USD. GNP will be significantly influenced by increasing citizenship applications approved, as well as by commercial entities incorporated in GDP will become relevant once the territory (at least ships) get permanent residents. Also, a significant impact on the whole region is expected (some additional 0.5% of Croatian and Serbian GDP is projected as a result of Liberland) GDP/GNP and macroeconomic relations 3 reasons for using Bitcoin in Liberland: (i) extremely practical instrument for managing international money transfers (ii) it is a public ledger (iii) free and independent currency. We encourage all participants to prefer non-inflationary Bitcoins vs. traditional fiat money. On the other hand, neither Bitcoin nor any other currency will attain the status of monopolistic legal tender in Liberland. Bitcoins Liberland is the only entity having the territory of 7km2 registered in the cadastral maps and also the only entity claiming this territory according to international law. Strengthen the legal status of territory through land law. Through 100+ years lease contracts allow to build up Liberland infrastructure to free market. As a result, a sustainable income to Liberland budget to cover related expenses will be provided. The surplus/profits will be paid off to shareholders of the land fund and/or buffered into a sovereign fund Liberland Land Fund Liberland has built up a very strong and complex network of representative offices in 80 countries on 5 continents. The primary mission of the representative offices is to develop Liberland ideas and support local steps for recognition Once Liberland business entities will arise, the representative offices could benefit from the network, contacts and knowledge of their local markets. Play the role of "Chambers of Commerce" by attracting business from/to local country and Liberland. 15 Embassies and chambers of commerce

17 Ministry of Finance Free Republic of Liberland finance.liberland.org

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