Milestones in the National Treasury Secretariat trajectory

Centralization of federal financial activities resulted in a process of modernization and reorganization of Brazilian public administration, leading to the creation of the Integrated System of Federal Government Financial Administration (SIAFI), in January 1987, interconnecting five thousand management units with approximately 34,000 users charged with Fiscal and Social Security budget execution. The same year witnessed creation of the finance and control career which is designed to select and train personnel specialized in performing the activities reserved to the National Treasury.

Transparency

The 1988 substitution of the Government Operating Account at Banco do Brasil by the Treasury Operating Account at the Central Bank created a direct link between the management and control of federal finance and the budget operations of the various management units. Implementation of the Operating Account eliminated more than five thousand government bank accounts and made it possible to exert more effective control over the government cash flow. Parallel to this, the monetary budget was eliminated and the various government budgets were unified in such a way as to subordinate government spending to prior congressional authorization. Toward the end of the 1980s, agricultural and export development programs were transferred from the Central Bank to the National Treasury, which also took on those activities related to domestic public debt management.

Other measures were taken in the 1990s with the aim of further improving federal government financial and budget administration. Among the most important of these measures, one could cite centralization of activities related to external debt management (making it possible to incorporate this service fully within the General Federal Government Budget), the debt securitization process using privatization currencies and operations involving restructuring of the Treasury Bonds Portfolio at the Central Bank.

Enhanced Control

The responsibility for the control and operation of the special foreign currency accounts created as a result of external agreements formalized with multilateral organizations and credit agencies was transferred to the National Treasury in August 1993, by Decree nº 890.

Consequently, the National Treasury Secretariat assumed responsibility for the control and administration of the federal domestic and external, bonded and contractual public debts, thus centralizing responsibility for management of all federal government financial commitments within a single government unit. Since all payments are included within the General Federal Government Budget approved annually by the National Congress, the result of this process is enhanced budget and financial transparency.

The new structure has been a factor of decisive importance to the nation’s relations with multilateral organizations and international credit agencies, where the results achieved by the STN are reflected primarily in lower interest rates and standby fees in operations with the World Bank and in lesser credit insurance rates for Brazil in operations with government credit insurance agencies, thanks to the punctuality with which the country has paid its debt service.

Responsibilities

As a further step in improving public debt management (the last one was the prohibition in the Fiscal Responsibility Law for the central bank to issue domestic public debt bonds, relying on National Treasury bonds for monetary policy purposes), activities related to issuance and implementation of structured operations involving external Treasury bonds has been performing exclusively by the National Treasury Secretariat.

Financial relations between the federal government and the states improved considerably with the new legislation regarding debt rolling (1993), which defined more favorable interest rates and maturities for payment of debts with the federal government. Furthermore, in order to avoid future defaults, this legislation earmarked specific percentages of the State and Municipal Revenue Sharing Fund as debt guarantees. In 1995, the responsibilities consequent upon State and Municipal Fiscal Adjustment Programs were transferred to the National Treasury Secretariat as an instrument for further strengthening relations between the federal government and the states. In 1997, the activities involving restructuring and assumption of contingent liabilities were incorporated into the institutional functions of the Secretariat.

In order to ensure efficient performance of the new responsibilities of the National Treasury Secretariat, important improvements were introduced into the administrative organization and human resources management of the institution. In early 1994, the functions of financial administration and control and auditing were segregated, with the latter being placed under the responsibility of the Federal Secretariat of Control. This measure made it possible to achieve high levels of specialization, while resolving questions raised by the overlapping of activities. In the same year, the wage structure of the finance and control career was totally overhauled, conditioning earnings to the institutional performance of the National Treasury and the individual performance of its employees. Since that time, this system has become a model to the Brazilian public service system as a whole.