Govt. could save $266M annually by switching to electronic payments - Central Bank report

Govt. could save $266M annually by switching to electronic payments – Central Bank report

Apr 18, 2018 News

The government and its related agencies could save up to $266m annually by switching from paper-based payment mechanisms to electronic payments.
This is according to a report that was prepared by the Central Bank. That document provides guidance on Guyana’s National Payments Development System.
Central Bank noted that the sum of $266M is based on a study that was done by the World Bank’s Payment Systems Development Group (PSDG) in 2015.
It went further to explain the extent to which government and its agencies make use of paper-based payments. In this regard, Central Bank said that the Government is the single largest end-user of payment services.
In volume terms, Central Bank said that the vast majority of Government disbursements are associated with large payment programmes. It said that these include salary payment, pension, social assistance, and revenue collection.
Central Bank went further to explain that the Ministry of Finance, National Insurance Scheme (NIS) and Ministry of Social Protection (MSP) manage the largest of the outgoing payment programmes. In terms of inward flows, the Guyana Revenue Authority (GRA), and the NIS, both quasi-government agencies, manage the largest.
Excluding revenue collection, Bank of Guyana said that the programmes managed by the Ministry of Finance, NIS and MSP account for an estimated 260,000 payments a month (a daily average of over 11,000) and over three million a year.
Bank of Guyana said that the Ministry of Finance has the most sophisticated internal system.
The Finance Ministry uses a centralized, fully automated programme called the Integrated Financial Management and Accounting System (IFMAS). This system is capable of generating electronic payment orders for all 10,000 to 12,000 government employees, 8,000 to 9,000 government pensioners, and all the vendors that supply goods and services to the Government. Yet, due to the weaknesses in the nation’s payments infrastructure and despite the sophistication of its internal system, Central Bank said that the Ministry of Finance must still print and hand deliver paper cheques to meet these payment obligations.
The Accountant General’s office has a dedicated “pay-station” connected to IFMAS, which prints 2,000-3,000 cheques per day, with a particularly heavy load on paydays.
As for GRA, this entity includes two divisions: Internal Revenue (responsible for collecting taxes) and Customs and Trade Administration.
Central Bank noted in its report that Internal Revenue uses the TRIPS electronic tax administration system developed by Crown Agents. Despite this, all taxes are currently paid either in cash or by cheque. Customs and Trade Administration is planning to implement the ASYCUDA (Automated System for Customs Data) system next year.
Furthermore, Central Bank noted that Government employee and pensioner payments are deposited via indirect means into the accounts of the recipients by the Finance Ministry.
It said that a multi-step process is required to make the salary and pension payment deposits. It said that the Finance Ministry delivers a single, consolidated cheque payment order (electronically and in paper form) to each bank for all the employees that hold accounts at that bank. The bank then deposits the funds due to each employee (as specified in a file sent to that bank by the Finance Ministry) to that employee’s account. Central Bank said that this process requires manual handling, and is subject to delays in crediting of employees’ accounts and raises the risk of error.
Notably, Central Bank said that the recipients of government salaries and pensions whose payments are delivered electronically into their bank accounts make little or no use of their accounts to conduct payments electronically. It highlighted that most recipients fully cash out their payments via ATM withdrawals as soon as the funds are made available for their use.

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Govt. could save $266M annually by switching to electronic payments – Central Bank report

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Govt. could save $266M annually by switching to electronic payments – Central Bank report

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