Public Sector Governance and Accountability Series: Budgeting and ...

314 Daniel Tommasi
If compliance is weak and commercial banks are subject to political pressure,
the TSA model that centralizes only the cash balances (case 2) could present
higher fiduciary risks than the TSA model that centralizes all payment transactions
(case 1).
In the case of the TSA model that centralizes all payment transactions,
different control systems can be considered, as noted earlier. At first glance,
the variant that places controls on the processing and accounting of payment
transactions under the full responsibility of the treasury department might
seem more efficient from the viewpoint of both cash management and
expenditure control. However, the experience of some francophone systems
indicates that the centralization of accounting controls and the central
management of floats can lead to inefficiencies—and even corruption—in
countries with poor governance, particularly where the treasury is responsible
for selecting the suppliers to be paid. Such a system should evolve
toward making line ministries more responsible and accountable. Implementing
a financial ledger system, in which all transactions are recorded,
is generally seen as a good method for balancing properly the needs for
control and the needs for giving line ministries full responsibility.
For remote agencies, the organization of the payment system must take
into account the system of public administration and banking infrastructure
in the country concerned. Using an imprest system can be considered
for these agencies. Because most countries use the greater portion of their
cash either for transactions at the central level (for example, debt payments
and expenditures managed by the central departments of line ministries) or
for payments that are due on a fixed date (for example, wage payments),
such arrangements would allow most cash balances to be centralized. In
many countries, streamlining cash management could consist of (a) daily
centralization of transactions made at the central level, through a TSA, and
(b) for remote agencies, a procedure based on imprest advances.
Whatever the institutional arrangements, the centralization of cash
balances should cover all the government accounts used for payment transactions,
including accounts managed by extrabudgetary funds.
Tax collection
The interval between the time when cash is received and the time it is available
for carrying out expenditure programs should be minimized. Revenues
need to be processed promptly and made available for use. By virtue of the
banking sector infrastructure, commercial banks are often able to collect
revenues more efficiently than tax offices can. Tax offices should therefore
focus instead on tracking taxpayers, issuing tax assessments, monitoring