Deploying Treasury Management System: to digitize all transactions of the State Treasury

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With the Treasury Management System, all transactions between the Treasury and the bank are electronic.Photo: Thuy Linh

Pilot Treasury Management System

According to the State Treasury, pursuant to the Law on State Budget in 2015, Decree No. 24/2016 / ND-CP dated April 5, 2016, of the Government regulating the regime of state budget management and circulars.The guidance of the Ministry of Finance and the State Treasury implemented reformsto increase transparency and effective fund management.

Specifically, the centralized payment account is built, concentrating on the balance of funds from the local level to the central government and deposited entirely at the State Bank, contributing to the formation of a single Treasury account according to international practices, improving the efficiency of fiscal policy management and monetary policy.

Funding management tools have also been developed and implemented such as cash flow forecasting, budgeting and compensating for temporary shortfalls.Treasury management is also closely linked with state budget fund management and debt management, thereby reducing the cost of borrowing for the budget and initially creating more revenue for the state budget.

According to the State Treasury, in 2019, the State Treasury paid VND5,000 billion and it is expected that by 2020, VND3,000 billion of revenue from these professional activities will be paid into the state budget.

One of the important factorscontributing to the increase in state budget revenue is the regulation that temporarily idle state funds will be deposited at state-owned commercial banks and the maximum time to deposit is no more than three months.

However, one of the limitations of treasury management is that the depositing of the State Treasury temporarily idle funds is done manually.That is, when the State Treasury announces to send money to the bank, banks will send an offer of interest rates to the State Treasury,then the State Treasury will set up a council to open interest rate offers and select a reputable, guaranteed bank with high interest rates, then the two parties make an annex for the State Treasury to deposit money.

According to the State Treasury, with this process, Treasury officials will have to completea lot of affairs such as making offers for the amount to be deposited and then manually sending paper to banks.

Banks also have to make an offer of interest rates, seal and personally bring the interest rate offer to the treasury and the representatives of the two sides, which must sign and receive it clearly.

To overcome this situation and implement regulations on the management of state funds of the Government and the Ministry of Finance as well as enhancing the application of information technology in term deposits at banksfor commercial goods, the State Treasury has built a Money Management System to electronically make time deposits.The budget management system has been upgraded from the treasury management system for cash flow forecasting.

Currently, the State Treasury is preparing to launch a pilot Fund Management System to electronically send time deposits.According to information from the Treasury Management Department at the State Treasury, the Treasury management system will be piloted in November.

Accordingly, overtwo days (November 10-11), commercial banks will participate in running the Fund Management System.From November 16 to 30, a pilot implementation of the Treasury Management System was implemented (implementing the current process of sending money through the Treasury Management System and the current manual deposit process).From December 1, the Fund Management System will beofficially deployed.

Digitize all transactions

According to Mr. Luu Hoang, Director of the Treasury Management Department, to prepare for the successful pilot implementation, the State Treasury and commercial banks are cooperating to amend and supplement framework contracts on issuesrelated to the implementation of the process of time deposit via the treasury management system and electronic contract appendix.

At the same time, the State Treasury also requested commercial banks to prepare necessary technical conditions (including digital certificates of commercial banks, digital certificates of the person authorized to sign the deposit offer form, the recipient authorized to sign an annex of an e-contract issued by a public digital signature authentication service provider) to be ready to participate in the pilot implementation of the Treasury Management System from November 16, 2020.

With the Treasury Management System, all transactions between the treasury and the bank are electronic.Accordingly, the State Treasury sends the electronic offer to commercial banks and commercial banks also respond with anelectronic offer.The fund management system will automatically select the appropriate bank.On the specified date and time, both the State Treasury and the commercial bank will open the offer, the selected commercial bank will jointly sign the contract addendum with the State Treasury electronically, the sheet of paper is physically notsigned.

Mr. Luu Hoang said that this process ensures the application of information technology to professional processes.At the same time, it can reduce time and effort for the Treasury and Bank's human resources, ensuring objectivity, transparency and safety because there is no human intervention.In particular, with the implementation of the Treasury Management System, Treasury employees will not take time to do affairs, so the State Treasury will spend time opening new transactions such as term repurchasing government bonds thatwill be carried out in the future.

Thus, along with coordinating budget collection with commercial banks, implementing online public services and now implementing temporary idle budget management at commercial banks electronicallyshows that the goal towards forming an electronic treasury in 2020 with no customers, no paper documents, no cash; the goal towards the digital treasury will soon be achieved.