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Setting up a Treasury in Russia

Foreigner: When was it decided to set up a treasury in Russia?

Russian: The decree on setting up a treasury was signed in December 1992. But it would be more correct to speak about the restoration of the system of treasury agencies in Russia.

F.: Yes, it's a fact that before 1917 the execution of Russia's budget and the use of state funds were traditionally supervised by the Treasury. What prompted the creation of the Treasury in the Russian Federation?

R.: The matter is that after the emergence of a great number of commercial banks and changes in the Central Bank's functions, supervision over purpose-oriented and thrifty utilization of state funds has become a matter of great importance. Besides, subnational budgets are independent now.

F.: In what way will the setting up of the Treasury help resolve these problems?

R.: The management of public finance is a real problem. The Treasury will be responsible for setting up and keeping up to date the register of all outstanding government debts both domestic and external. The task of the Treasury will be to organize and exercise control over the execution of the federal budget, to regulate relations between the federal budget and budgets of subjects of the Federation, etc.

F.: Have you used international expertise for setting up the Treasury?

R.: Yes. Leading international financial institutions were involved in working out the global concept of the Federal Treasury in Russia. Their experience is invaluable to us. F.: What practical steps have already been taken?

R.: We've started the work on setting up a global computerized network for obtaining complete information and control over the state of the federal budget at the local and regional levels.

F.: Then you'll soon be faced with the problem of training specialists for this purpose.

R.: You've raised an extremely important question. We've already started a pilot project for training employees for the Treasury agencies.

F.: I'm absolutely confident that the implementation of your plans will bring tangible results and justify all your expense.

Words you may need:

treasury restoration prompt     emergence   to resolve problems outstanding debts expertise global concept invaluable to be faced with a problem   pilot project confident tangible   to justify all expense казначейство восстановление побуждать, способствовать, вызывать возникновение, появление решать проблемы неоплаченные долги опыт глобальная концепция бесценный, неоценимый сталкиваться с проблемой пилотный проект уверенный ощутимый, осязаемый, реальный оправдать все расходы казначейство відновлення спонукати, сприяти, викликати   виникнення, поява   вирішувати проблеми неоплачені борги досвід глобальна концепція безцінний, неоціненний зіштовхуватися із проблемою пілотний проект упевнений відчутний, реальний   виправдати всі витрати


Ex. 12 Give extensive answers to these discussion questions:

1.Do you agree with the definitions of finance and financial system given in the main text?

2.What role do financial intermediaries play? Is financial inter­mediation developed in Russia?

3.What is public finance? What functions does it perform?

4.What is the major instrument of any financial system?

5. What is crucial for budget preparation?

6. What bodies are involved in the budget formulation? How is the budget process arranged in Russia now?

7. Is a deficit budget typical of Russia only?

8. Describe the budget system existing in Russia now.

9. What classification of revenues is accepted now?

10. What are the sources of revenues?

11. How are the budget revenues spent?

12. How is the problem of unequal possibilities for raising revenue in different regions of Russia solved?

13. How is the budget execution controlled?


In order to get prepared for participation in the class discussion of these questions, write several paragraphs on the following:

a) Finance and a financial system.

(Use: monetary relations, formation, distribution, turnover, net­work of institutions, surplus funds, financial intermediaries, to comprise, public, economic entities, functions)

b) A budget as a major instrument of a financial system.

(Use: to achieve priorities, to allocate, to distribute resources, re­venue, expenditure, to exceed, to prepare, to forecast, macro-economic impact)

c) Budget organization and budget process in Russia.

(Use: federal, regional, local, to approve, consolidated, source of revenue, expenditure responsibilities, autonomy)

d) Revenue sources and revenue-sharing arrangements in Russia.

(Use: taxes, to transfer, subject of the Federation, fixed revenue, regulating revenue, balance among budgets, to levy taxes, to meet the cost of services, insufficient, subventions, to grant assistance, ''equalization ")



Ex. 13 Prepare a short talk on the following:

a) If you were the prime minister, how would you spend the budget resources?

b) Say what you think about supervision over budget execution. If you have ever worked in the sphere of public finance, say what you think about the treasury system and budget execution supervision.

с) People have long used machines to help process data. Are computers used effectively in finance? Have you ever had any problems that were caused by computers? If so, describe the situation. How might the problems have been avoided if the computer system had been managed better?


Ex. 14 While reading newspapers and watching TV programmes, pay attention to how the budget discussions are covered by the media. Is the general public interested in the debates? What do people think about "budget federalism"?


Ex. 15. Read the text and name the facts from the text which are new to you:


Despite the many changes and reforms in Russia over the past few years, budget execution still presents significant problems. There is a lack of efficient control of expenditure, of information on extra-budgetary funds, of a well-defined procedure for the allocation of funds between different levels of government. In addition, there are problems with the budget classification, the obsolete system of public accounts, weak debt and cash management practices.

In 1993, Russia began its work on setting up the Federal Treasury, It consists of the Main Department of the Federal Treasury of the Ministry of Finance of the Russian Federation and its territorial bodies in republics, areas, and regions. The tasks of the Treasury are the following: to organize and exercise control over the execution of the federal budget; to regulate relations between the federal budget and federal off-budget funds; to exercise control over the receipt and use of the funds; to regulate relations between the federal budget and budgets of subjects of the Federation; to make short-term projections of financial resources and to manage them; to collect and compile information about the position of federal finances, to manage and service the state internal and external debt jointly with the Central Bank.

The new Treasury is expected to require that all spending units should report their operations at the commitment, verification and payment stages. The plan is that after verification of budget allocation and compliance with existing authorization the Treasury will issue the actual payment orders against a unified Treasury account with the Central Bank. This will imply a far-reaching change of budgeting practices in Russia. The new mechanism will allow the government to exercise effective spending controls in order to have updated information on government expenditure and for debt and cash management purposes. The new Treasury is also expected to help remedy other deficiencies in the process of budget execution. Effective implementation of the new Treasury system will lead to changes outside the budget execution, such as budget classification and accounting standards.

Words you may need:

despite lack obsolete public account   debt and cash management   to exercise control receipt internal and external debt   jointly (with) spending unit commitment verification authorization to issue payment orders   updated   to remedy deficiencies accounting standards несмотря на недостаток устаревший счет государственного учреждения управление долгом и наличными средствами осуществлять контроль получение, поступление внутренний и внешний долг совместно (с) бюджетная единица поручение проверка, контроль разрешение выдавать платежные поручения обновленный, скорректированный исправлять недостатки стандарты бухучета незважаючи на недолік застарілий рахунок державної установи керування боргом і наявними коштами здійснювати контроль одержання, надходження внутрішній і зовнішній борг спільно (з) бюджетна одиниця доручення перевірка, контроль дозвіл видавати платіжні доручення оновлений, скоректований виправляти недоліки стандарти бухобліку


Ex. 16 a) Read the article below quickly to find out the main facts about the reform of the financial system in Indonesia:

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