Republic of Zambia
2015 BUDGET IMPLEMENTATION COMMENCES
Lusaka, Sunday, 4th January, 2015. Secretary to the Treasury Fredson Yamba has said a new payment system which will be implemented during the 2015 Budget Cycle is imbedded with immediate benefits for suppliers of goods and services to the Government.
Following approval by Parliament in December, 2014, the implementation of the 2015 National Budget constitutionally commenced on 1st January, 2015.
Mr. Yamba said the commencement of the 2015 Budget Cycle also signals inauguration of the Treasury Single Account [TSA] System. The TSA System is a unified structure of bank accounts which gives a consolidated position of Government’s cash resources. The TSA System aims to improve the Government’s ability to efficiently and effectively manage public financial resources by refining current payments processes, and eliminating redundant procedures between itself and its clients.
To ensure the success of the TSA System, the Ministry of Finance has established a high-tech VPN-Link to Bank of Zambia, which will provide a reliable and real-time information exchange interface between the Integrated Financial Management System [IFMIS] at the Ministry and the Real Time Gross Settlement System hosted by the Bank of Zambia.
“The system will initially be piloted at the Ministry of Finance and at the Provincial Administration in Eastern Province starting tomorrow, Monday 5th January, 2015. All other Ministries, Provinces and Government Spending Agencies [MPSA’s] will be assimilated by 31st December, 2015,” said Mr. Yamba.
The Secretary to the Treasury said the ongoing Public Financial Management [PFM] Reforms present an opportunity for strengthening procedures and processes in the budget cycle; including planning and budgeting, internal controls, procurement, debt management, accounting and reporting, and monitoring and evaluation. The TSA System itself is designed to streamline Government bank accounts and introduce direct payments into supplier’s accounts. The major benefits of the TSA System are:
- Elimination of idle balances in commercial banks and reduction in the costs related to maintenance of numerous accounts in each MPSA;
- Improvement of cash analysis, reduction of unnecessary Government borrowing through short-term bridge financing, and elimination the unethical practice of Government borrowing its own money through treasury bills and bonds bought by Commercial Banks from BOZ using Government’s idle balances;
- Facilitation of planning and improvement of operational control and efficiency during budget implementation in an efficient and effective manner; and
- Efficient transmission of authorized payments from MPSA’s to BOZ for settlement via the RTGS System.
“Commercial Banks will remodel their businesses and develop better strategies for attracting private sector deposits. In the long-run, they will enhance their financial inclusion activities in order to attract the unbanked sectors of the economy and streamline interest rates,” said Mr. Yamba.