WORLD BANK TO FINANCE PAYMENTS REFORM

In this way the Ukrainian treasury comes close to working according to international standards. According to Udilberto Segura, head of the World Bank representation in Kyiv, the project will assist Ukraine in managing its financial resources. The greater part of the loan ($13.1 million) will be used to purchase hard and software. The rest will be used for staff training.

According to the deputy finance minister and treasury head Petro Petrashko, lack of money and the brain drain are holding up development of treasury system. Without the foreign loan it would be impossible to solve these problems.

45% of state budget expenses were financed through the state treasury system in 1997. According to Petrashko, this will grow to 75% this year. An experiment in treasury control of the payments system has already been conducted in Dnipropetrovsk oblast, and analogous experiments are to be carried out in rest of the country this year. Most organs of central authority have already switched to the treasury payments system. The armed forces, police, agricultural complex, and customs authorities will convert to this in the immediate future. Authorized banks will only control the cash turnover, according to Petrashko.

Of course, software will be crucial in the project. In order to choose the most effective system, the treasury intends to conduct an open tender late this year. A few legislative changes will also have to be made.

The loan for treasury system development is the first World Bank loan to Ukraine in 1998 and is subject to parliamentary ratification.