Moscow, Russian Federation, April 0 4- 0 6, 2017

1. PEMPAL TCOP thematic group workshop PEMPEMPAL TCOP Thematic group workshop cash Management and ForecastingThe relationship between the Cash Management function of Treasury & Central Bank A T Moscow, Russian Federation, April 04-06, 2017

2. Contents • CB in

3. 1. The coordination arrangementsrelating to policy and operations

4. 1. The coordination arrangementsrelating to policy and operations • Technical working groups for specific themes: 1. Preparation of budget and monitoring 2. Monitoring of payments/arrears (day to day priorities) 3. Management of Eurobond contract 4. Revision of macro framework 5. Management of fiscal risk (by performance indicators)

5. 2. Thedocumentations of the arrangements Legislation SLA Framework Others

6. 3. The handle of the key operational issues • There is no joint program for the development of the money market, it’s the responsibilities of CB, which reports its market’s views about the debt/cash management program and operations in the joined respective Committees to get the proper decisions from MoF. • Policies and operations for securities issuance and the respective roles of Central Bank and Treasury are handled in SLA. CB serves MoF: • in the organization of securities auction by AFISAR (MoF is directly participating in AFISAR by VPN), settles securities transactions (by MoF authorisation for secondary market), keep records of them; • offers instruments for the liquidity management; • gives opinions on: (i)fiscal policy/debt management /financing from external resources, (ii)foreign exchange market and the suitability of the MoF's actions in this market; • transfers net annual profits of its activity to STA until April of the next fiscal years, after financial statement certification, while MoF recapitalizes its lost (of activity/reserves revaluation from FX rates volatilities) by 6 months TBills traded, which will be owned from CB. • MoF decides for the min/max yield in primary/secondary market; report on (i)the requests/results detailed by participants in auction; (ii)statistical data on auctions,(iii) the stock of securities by holders, (iv)securities transactions, (v)coupon payments (bonds).

7. 4. The key requirements for both parties covered in the servicelevel agreements • The CB in the role of a banker, advisor and fiscal agent (by Bank Law): • is settling government securities (TBills/Bonds); Both sides would give the impending change in the auction pattern or timetable • is handling some transactions, e.g. SWAP instrument, level of buffer through rules of deposit instrument, foreign currency transactions ‘manual payments, assigning of the annual amount for auction of exchanging ALL to other foreign currency, etc. • has the function as government cashier. • CB’s Supervising Council would lend to government, conditioned from the securities issues by agreement (measured by bank employees’ retirement fund’s investment and secondary market purchasing) • The technical/organizative costs for the services are covered form BoA. No payment of interest on the STA balances (buffer); there are payments of interest on the balances of other special accounts of government. • The handling of any business continuity problem such as solving issues during processing the cash inflow from commercial banks or wrong instruction in electronic payments documents.

8. 4. The key requirements for both parties covered in the servicelevel agreements • Exchanging every day the details of information flows in either direction, with intended timing: Ministry of Finance:Bank of Albania: • 1.Daily flows of TSA detailed by items: • Tax revenues • Nontax revenues • Expenditures and interests • Internal financing (borrowing) • External financing • Instruments • 2.Monthly (3 days after MoF confirmation of reconciliation) government revenues/expenditures total • 3.Monthly stock of issued securities • 4.Daily exchange rate • 5.Daily bank statement of government bank accounts (main/special accounts) • 6.Quaterly information on debt to residents and non-residents by specified format • Daily cash flows’ forecasts (in ALL and foreign currency) each week and monthly/yearly trends (by items as listed under BoA information), including daily auction calendar for a quarter. • Exchanging of data for transactions across the TSA accounts in daily basis (for reconciliation) • Data on performance of consolidated fiscal indicators in monthly basis. • Tax revenues by sectors • Functional classification of expenditures • Number of employees salaries category • List of financial institutions under MoF • Payments of quantization to international organizations • Quarterly fiscal data by SDDS format

9. 5. Detail any issues or lessons learnt from the arrangements • The arrangement are helpful when both parties respect the rules and timeliness of handling the relevant transactions (e.g. as fiscal or settlement agent) • SLAs are needed: • To avoid idle cash balance outside TSA • To avoid the volatility of the money market • To consider the management of operational risk • To standardize the accounting and business processing • To respect the timelines of the periodic reconciliation and financial reporting • To define the audit tracks of financial transactions

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