Improved Treasury Management System Early 2012

KINGSTON — The public sector is soon to benefit from an improved treasury management system, which will better facilitate the financial resources of the government Ministries and departments.

The Central Treasury Management System (CTMS), to be implemented early 2012, will ensure better management of public resources by bringing the responsibility for treasury management under one agency.

Head of the Financial Systems Unit at the Ministry of Finance, Berome Edwards, explains to JIS News that the CTMS will replace the current decentralised system of cash management.

“By cash management, we mean the method by which Ministries, departments and agencies actually receive and spend funds,” Mr. Edwards says, adding that currently the Ministries and departments receive monies from the Accountant General (AG) on a monthly basis, sometimes once or twice per month.

“The monies that are given to the Ministries and departments are based on a document signed by the Minister of Finance each month, called a warrant. The Minister, on this document stipulates how much funds each Ministry and department should receive for each month and, on the basis of that document, the Accountant General will remove the funds from the Consolidated Fund, where all the revenues are, and transfer the relevant funds to each Ministry and department’s bank account,” he explains.

Under the new system, he highlights that the Ministries and departments will not get that cash but, instead, the funds will be transferred to a Single Treasury Account (STA) held at the Bank of Jamaica and operated by the AG.

“This means that in order for ministries and departments to execute their payments, they will have to submit to the Accountant General the schedule of persons to be paid and a request for the AG to effect those payments on their behalf,” Mr. Edwards outlines.

He notes that the entire process will be operated through automation or electronic means, whereby the AG will have an electronic interface with Ministries and departments, allowing them to submit their requests for payments electronically and the AG, in return, will effect payments electronically to the persons or entities listed.                                                           

The purpose for the centralised system is to have a single bank account held at the Accountant General, as a means of improving cash management.

To justify, he states that when Ministries and departments have cash in their bank accounts, they might not need all of it at any one time, while there might be another Ministry or department that needs money and, often time, Government may have to end up borrowing money when there is a Ministry that has funds sitting in their bank account.

“So by pooling all the monies in one bank account, we ensure that we improve our cash management system…so payments will be centralised, there will be treasury management, meaning these payments will be done by the treasurer for the government -the Accountant General,” he points out.

Mr. Edwards also notes that when the system rolls out next year, there will be a 24 to 48-hour turn-around time, between the submission of requests to the AG and the payment period.

“Ministries and departments will have access, to see how far in the process the Accountant General is in making their payments, and will also see when the payments are made. The vendors and clients will be provided with an electronic advice, either through email or a text message when the payments have been made to their bank account,” he explains.

In terms of the implementation of the CTMS, Mr. Edwards informs that the system is at the stage of development, and is intended to be rolled out early next year after a three-month pilot in three Ministries.

“We intend to install the system in the Ministries of Transport and Works, Finance and Education as soon as the system is completely developed and the software tested and working. We expect the software to be finished by the middle of October and by the end of October or early November for the pilot to begin,” Mr. Edwards highlights.

He notes that following the three-month pilot, evaluation of the system and with the necessary adjustments and amendments made, there will be full implementation of the CTMS by early next year.

“What we need entities to start doing, is collect the bank accounts of their suppliers and vendors as this is critical, because the use of cheques will be abolished as all payments will be done electronically,” Mr. Edwards stresses.

He adds that entities should collect their clients’ banking information, such as the particular bank, branch and account number, and have them stored electronically to shorten the implementation process.

Highlighting the benefits to be gained from the system, he states that it will aid in minimising borrowing; improving management of cash and efficient control and monitoring of funds allocated.

“We will also have savings in terms of the time value of money as we expect that as soon as the requests come to us, payments will be made within two days…suppliers and clients will have that expectation, so once the request and information reach the Accountant General, these payments will be made promptly, so people and/or entities can plan better,” Mr. Edwards points out.

By KADIAN BROWN, JIS PR Officer