Fiscal Sector Reform Activity in Bosnia and Herzegovina: Analysis of the Existing Status of Treasury Systems in FBiH

The existing treasury system in FBiH was introduced in 2000 with the help of USAID and the US Treasury, which dismantled the Payment Bureau and introduced treasury operations in the country. The Oracle-based treasury software was implemented in two entities, with the RS rolling out the same solution to municipalities in RS and FBiH deploying it in 10 cantons. However, the municipalities in FBiH were not included in these projects, leading to a chaotic situation with multiple treasury software solutions in use. Many municipalities did not introduce a treasury system, while others implemented one of the existing solutions without integration and automatic data exchange with higher government levels. USAID GAP projects helped introduce the treasury software to 19 municipalities in FBiH. The Treasury System (TS) plays a crucial role in executing budgets and public administration spending, making it essential for all FBiH municipalities and their users to be properly integrated into the TS. Given that municipalities' budgets represent a significant part of the FBiH budget, the need for integration is urgent. This document describes the current situation in FBiH regarding TS and suggests potential actions to improve the situation. The entity treasury system in FBiH is built with the help of USAID and the US Treasury, with the FBiH upgrading the hardware and software several times. At the moment, they are in the process of upgrading hardware and software, and their TS is in a good shape. In contrast, the cantonal TS is implemented as a centralized solution hosted in the FBiH Ministry of Finance, with each canton having its own treasury system. The municipalities in FBiH have a diverse range of treasury systems, with some having a centralized solution and others having a decentralized system. The survey conducted by the FAR project and the Association of Municipalities and Cities in FBiH found that many municipalities do not have a treasury system, while others have multiple systems in use. The document suggests potential actions to improve the situation, including the development of a centralized treasury system and the integration of municipalities into the existing entity and cantonal TS. The FAR project aims to improve the treasury systems in FBiH by developing a centralized treasury system and integrating municipalities into the existing entity and cantonal TS. The project will work with the FBiH Ministry of Finance and cantonal ministries of finance to develop a plan for implementing a centralized treasury system and integrating municipalities into the existing TS. The project will also provide technical assistance to municipalities to help them implement a treasury system and integrate into the existing TS. The development of a centralized treasury system will require the development of a new software solution that can be used by all municipalities in FBiH. The software solution will need to be able to handle the financial transactions of all municipalities and provide real-time data on the financial situation of each municipality. The software solution will also need to be able to integrate with the existing entity and cantonal TS, allowing for the exchange of financial data between the different levels of government. The integration of municipalities into the existing entity and cantonal TS will require the development of a plan for implementing the integration and the provision of technical assistance to municipalities to help them implement the integration. The plan will need to take into account the different types of treasury systems used by municipalities and the different levels of technical expertise available in each municipality. The FAR project will work closely with the FBiH Ministry of Finance and cantonal ministries of finance to develop a plan for implementing a centralized treasury system and integrating municipalities into the existing TS. The project will also work with municipalities to provide technical assistance and support to help them implement a treasury system and integrate into the existing TS.