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State funds to be better tracked

State Coffer System to allow for compliance with EU standards

By František Bouc
Staff Writer, The Prague Post
February 14th, 2007 issue

The final count of the 2006 state budget deficit last month came as such a shock that, for the first time, not only independent analysts but even Cabinet ministers said the government was losing control over its purse strings.

But the state looks to be finally getting some tighter control over its spend-happy ministries. The Finance Ministry announced a new integrated system of state budgets, the State Coffer System (SSP), Jan. 30 in an effort to make funds more transparent and to improve their management. The system should be completed by June 2008.
The first step will be integrating ministries’ information technology systems so that more timely data can flow to the SSP. Currently, some ministries can only provide data that is four months old.
“The IT systems currently used by each ministry are not capable of providing real-time information about money flow,” Finance Ministry spokesman Jaroslav Růžek said.
“The time lag prevents the government from making adjustments according to immediate developments. Describing a problem four months after it happened is basically pointless.”
The SSP will be used for both monitoring and managing the state coffer, and should not only provide a real picture of them but enable the calculation of future incomes and expenditures.
Furthermore, the consolidated general ledger should help the government reduce the amount of state bond issues that are used for covering deficits.
“If there is a surplus of money in the accounts of some state institutions, then there will be no reason to borrow money on capital markets,” Růžek said.
The launch of the SSP will enable the government to put together financial reports needed for euro adoption. Reports delivered to Brussels so far have been mostly based on data from secondary sources because data received from primary sources is generally delayed, Růžek said.
The European Union requests that at least 80 percent of data be generated from primary sources.
The government will pay 1.6 billion Kč ($74 million) to build the IT system, and the EU will contribute 176 million Kč to launch the SSP under a program that helps sponsor development in member states.
The Czech Republic’s public finance accounts sank deeper into the red in 2006 than originally expected. Instead of the projected 83.6 billion Kč deficit, the final loss reached 97.3 billion Kč.

František Bouc can be reached at fbouc@praguepost.com


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