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Italian Ministry of Economy and Finance – GAD Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006 Mr Fabrizio Mocavini Mr Gianni Ghedini

Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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Page 1: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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Italian ODA financial management system

Regional conference of V4 countries Bratislava, May 17 – 18, 2006

Mr Fabrizio MocaviniMr Gianni Ghedini

Page 2: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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HISTORY

According to LAW 49/1987 it was possible to account for and report for ODA funds through “Special Funds” that were operated outside of the State Budget. Such fund was composed by Commodity Aid, Program Aid, and other facitilties in favor of selected parties (with low per capita income). This enabled Italian ODA a very high flexibility in its operation.

Law 559/1993 stoped allowing the use of “Special Funds”. That decision was made to improve efficiency in the management of overall financial resources available to Central Government. By the end of 1994 all resources had to be managed throught the State Budget. This enabled more transparency but also more rigidity of the financial operation.

Page 3: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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Italian State Budget is structured as follows:

- Ministry of Economy and Finance- Ministry of Defense- Ministry of Agriculture- etc…………………………- Ministry of Foreign Affairs is structured as follows:

- DG European Integration- DG Economic Affairs- DG Political Affairs- Inspectorate- etc…………………….- DG Development Cooperation (ODA)

Page 4: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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 1 - cash basis

2 - accrual basis = juridical obligation = committments

The State Budget is structured in Basic Budgeting Units (about 1.000).The BBU is a macroaggregate of expenditures (and revenues) linked by their common nature.

A BBU contains one or more chapters of the budget. In the previous system the chapters were the items voted for the Parliament (about 7.000) and they were disomogenous (some of them detailed some other generic) for their contents.

Each of them is voted by Parliament and they become part of the budget law for the year.

The appropriations of the BBU are quantified in terms of:

The Structure of the Italian State Budget

Page 5: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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Budget Planning (during the year n-1)

The MoFA makes the financial planning for all the ODA, european integration and other activities to be carried on during the year.

The total amount of funds requested by the MoFA is going to be disbursed subject to the overall constraints imposed upon the State Budget by the Maastricht’s parameters. Often the spending Ministries requests are reduce due to the above mentioned constraints.

Adjustments (during the year n)

During the year, according to the flow of the needs and revenues, the budget appropriations may be amended.

Page 6: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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Budget execution process

At January 1° the MoEF makes available at the MoFA all funds pertaining to the relevant budget chapters.

The financial resources (of each single chapter) are allocated in the Treasury Single Account (TSA of MoEF)

Each time MoFA/DGDC requires an appropriation of funds to affect a payments to a third party, a payment order (by electronic mandate) must be submited to MoEF/GAD. (electronic signature)

The MoEF/GAD, throught its branche placed within the MoFA, control all the expenditure relevant documentation and after it proceeds with the execution of the payment order by validating the payment order (electronic mandate).

The money are transfered from TSA to the bank account of the beneficiary located either in Italy or abroad.

At the end of the year the Supreme Audit Courts audits the payments processes and the relevant reports

Page 7: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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SAVINGS & ARREARS

SAVINGS - According to the Italian accounting law all the appropriation not allocated and spent at the end of the year become savings

It is not possible to spent during the succeding year Savings of the previous year. (delete)

ARREARS – all the commitments not yet paid at the end of the year become arrears.

The arrears can be paid during the following two years (current expenditures).

After two years the arrears are posted out of the budget and are recorder as liabilities (debts) in the equity of the Italian State.

Page 8: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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MoFA Budget – ODA Section

Basic Budgeting Unit n. 9 “ODA” – List of most relevant chapters

Chapter 2180 – Voluntary and finalized contributions towards International Organizations, International Financial Institutions, International Funds involved in ODA.

Chapter 2183 - Grants in favor of emercency interventions and humanitarian aid. Chapter  2160 - Funds to cover operating expences of Italian ODA offices abroad. This offices are located in 21 countries and they are independent from the Italian Embassy from the operating point of view.

Page 9: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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Accountability

According to the law 29/93 that regulates the relationship between political and administrative functions, the Head of Department (civil servant) is responsible for the specific objectives it has been assigned to him by the Minister. The Minister put at his disposal all the available resources (financial, human and instrumental) needed for the achievement of the objective.

The Minister is responsible towards Parlament for the achievement of the overall strategic objective. The Minister of Economy and Finance, responsible for the execution of the State Budget, puts at his disposal all the financial resources needed for the achievement of the strategic objectives.

Page 10: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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Official Development Aid in Italy Main Actors :

Min. of Foreign Affairs – DGCS (L.49/87)Min. Econ. & Fin., Dpt. TesoroPres. Cons. Min. - Protezione CivileRegional Governments (19)Provincial Governments (104)Municipal Governments (8,101)

Page 11: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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Central Government selected Actors

A) Min. of Foreign Affairs – DGCS

Funds Made Available (TAB. C) in ( € 000,000)

Year 2003 2004 2005 2006

Amount 618 616 588 400

B) Min. Econ. & Fin., Dpt. Tesoro

C) Pres. Cons. Min. - Protezione Civile

Page 12: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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DDisbursement of Funds (Procedure) of Min. of Foreign Affairs – DGDC

A) Entities allowed to apply for funding:

International organizations, Foreign public sector entities of eligible countries, Domestic NGO’s, Foreign NGO’s

B) Term to deposit an application:

If bid outstanding, within the term of the a.m. tender or, in other cases throughout the whole year

C) Screening and ranking process

Page 13: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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DScreening and ranking process

A) Within a tender process

1. Formal screening of the application documentation

2. Successful applications are screened for substancein order to create a ranking for final selection

B) Outside a tender process

1. Evaluation of “theoretical goodness” of the project2. Evaluation of the reliability of the prosing entity3. Matching of the proposal with other existing constraints such as

macroeconomic consistency, structural adjustment terms, etc…4. Successful applications are screened for substance

in order to create a ranking for final selection

Page 14: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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DQualifications of resources involved in the screening and ranking process

A) Minimum requirements of each single member

1. Moral character2. No private interest in the selection and ranking process

B) Requirements of the group as a functional unit

Having enough duly trained personnel to perform the evaluation and ranking of the specific endeavour.

Page 15: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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DOne of the safety features of Italian ODA system

Managing the ODA activities through the State accounting law requires the presentation to the MoEF branch (within the MoFA) of an application to disburse funds containing all documentation evidencing :

a) Resolution (political will);b) Terms and conditions of the commitment;c) Availability of funds of relevant chapter.

Page 16: Italian Ministry of Economy and Finance – GAD Italian ODA financial management system Regional conference of V4 countries Bratislava, May 17 – 18, 2006

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Monitoring and reporting of the relevant endeavour

A) Preparation of reports for various authorities

B) Internal and External Audit (Supreme Audit Court).