To improve financial management of funds for social and economic development, Kazakhstan’s Ministry of Finance has been working closely with the World Bank to strengthen and modernize the country’s Treasury system.
Several important improvements have been made. For example, public organizations now have access to a more efficient way of processing payments, usually completed within one or two days, while information on transactions and balances is now readily available online. In addition, the system allows for direct savings on commercial banks’ service fees.
As a first step in transitioning public funds through the Treasury, the World Bank brokered a sequenced approach with the Treasury Committee of Kazakhstan’s Ministry of Finance. This approach included an initial assessment of the Treasury system, design of the funds flow procedure, pilot transfer of the three largest projects into the Treasury, and finally, an assessment of the piloting results before full use of the Treasury system.
The new Treasury-Client system now allows for paperless processing of payments – saving time for public organizations and improving internal controls over the flow of funds. To phase-out the practice of submitting paper requests, the system introduced electronic requests for the withdrawal of funds, which also reduced face-to-face interactions with Treasury officials, thereby mitigating the potential for dishonest behavior.
Transfers in various currencies within Kazakhstan and abroad now operate more efficiently. The National Bank exchange rate is applied for all payments, meaning that fees for currency conversions are not charged and funds in the national currency are not retained on transit accounts – thereby eliminating potential foreign exchange losses. In just a few months, direct savings on commercial banks’ service charges exceeded US$100,000.
Multi-level access for individuals currently ensures security of the Treasury-Client system, with further enhancement planned through the introduction of tokens for online access.
“The system became more user friendly and functional, response time and performance of the Treasury-Client system improved dramatically – handling payments via the Treasury is now much easier, with no need to leave your office desk,” says Aigerim Malik, Financial Management Specialist at the Roads Committee, Ministry of Investment and Development. “The funds saved will be used for other important activities under the two projects building a major international road corridor helping link Western Europe and Western China.”
Inspired by the impressive outcomes to date, Kazakhstan’s Treasury Committee has developed a detailed User Manual for the system, and carried out training for all current and potential implementing agencies.
“Improvement of the country’s financial management system will positively impact the implementation of all Bank-financed projects in the country. The positive reaction of the Treasury and its strong commitment throughout the whole process gives confidence in the use of the country’s system,” says Ato Brown, World Bank Country Manager for Kazakhstan.
Finally, all designated accounts of World Bank-financed projects have now been moved into the Treasury system.