1 / 34

CASH MANAGEMENT IN TURKEY

Learn about cash management processes, treasury single account, and monitoring in the Turkish Treasury's Cash Management Department.

harmony
Download Presentation

CASH MANAGEMENT IN TURKEY

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. CASH MANAGEMENT IN TURKEY TURKISH TREASURY Cash Management Department

  2. 2 4 5 6 Contents Cash Management in General 1 Cash Planning Processes TreasurySingleAccountandMonitoring 3 RelationshipwithDebtand Risk Management Managing Cash Reserves PublicTreasurershipSystem

  3. 1 Cash Management IN general

  4. Public Financial Management Cycle MTP/MTFP PolicyMaking andRevision Budget Exp/Revenue Management Auditand Evaluation Final Accountand Reporting Cash andDebt Management Treasury

  5. Treasury Cash Flows Regulatory Bodies Special Budget Special Budget General Budget RevenueAdmin. Expenditures Deficits Surpluses TaxRevenues Social Security Ins. TREASURY CMD Deficits PrivatizationRevenues PrivatizationAdmin. LocalGovernment Transfersfrom CG Budget CapitalInjection/DutyLossTransfers New Borrowing Dividends DebtPincipalandInterestPayments Treasury DMD PublicBanks/ Entp. ExtrabudgetaryFunds

  6. Financing General Budget Budget Cash Based Primary Balance CashBasedPB MoF UT-CMD Other Cash Flows Privatization, Land Sales, Receipts from On-lendingsand SDIF Strategic Benchmark Change in Bank Accounts Principal+InterestPayments Debt Service Borrowing requirement ≤ Borrowing limit Borrowing

  7. 2 CASH PLANNING PROCESSES

  8. Annual Cash Planning Annualcash program is preparedbytheend of Octoberbased on budgetprojections Cash BasedRevenuesandExpenditures Cash Program on a Daily Basis AnnualFinancing Program Budget Mid -September End of October Sep-Oct. Sep-Oct. • AccrualBasedRevenuesandExpenditures in MTP and MTFP • Revenueside: subtractingone-time cashinflowsandcollectionsthat do not createcashinflows • Expenditureside: subtractingpayments do not createcashoutflowsandaddingpaymentsrelatedtopreviousyears’ budgets • Daily distribution of cashflowsconsidering: • Taxcalendar • Dividendpaymentschedules • Previousyears’ realizations • Determining: • Borrowingschedule • Borrowingtypes

  9. MonthlyCash Planning-I • Forecastingtaxandnon-taxrevenuesvia time seriesanalysisandreflectingchanges in regulations, recent economic developments • Regular coordinationwith related institutions (PublicShareholderExecutive, CBRT, Privatization Administration, DepositInsuranceFund, TreasuryOfficesetc.) Cash Inflows Taxandnontaxrevenues, one-offitemse.g. privatization • Forecasting non-interest expenditures by collecting the current cash needs of the public institutions via internet portal (CRS) both on a monthly and weeklybasis • Regular monthly meetings with the majorlineagenciesandMoF (budget appropriation information) • Previousspendingperformance is themajor determinant fortheallocations • Debt service projections are provided by Treasury’s back office. Cash Outflows Paymentstoministries, universities, specialbudgetadm., socialsecurityinst. etc.; debt service • Providing the expected non-borrowing financing amount and cash deficit information to the front office. • Determiningthedraftmonthlycash program accordingtotheborrowingprojections of thefrontoffice BorrowingRequirement Coordinationwithdebtoffice • Finalizingthedraftmonthlycashprogram viameetingwiththe DG • Finalizingthemonthlycash program viameetingwiththeUndersecretary Finalization Approval of the program bythe top management

  10. Cash RequestSystem-I Since 2011 an internet portal forcollectingcashrequests, online andreal time CRS eliminatespaperbaseddocumentation thedata of cashrequestsaresavedtoTreasurydatabase differentreports can be produceduponneeds

  11. Cash RequestSystem-II cash request information of 200 public institutions regional accounting units, central accounting offices and special budget accounting offices. CRS feedbackforthenextmonth’scashtransfers weeklyrevisionduringthemonth classificationbased on main expenditureitems

  12. Cash RequestSystem-III

  13. Daily Cash Planning • Monthly program figuresaretranslatedintodaily program figures • Specificday of theweek is determinedforpaymentsdepending on thetype of theadministration, e.g. tuesdaysforuniversities, wednesdaysforlineministries. • Daily cashrequestsarecollectedviaPublic Electronic PaymentSystem (PEPS) • Eachdayinstitutionssubmittheircashrequestscategorized as personnelpayments, otherobligatorypayments (e.g legal payments) andotherpayments. • Budget appropriationfiguresaregatheredfrom PEPS • Inorderto be abletomake a paymentallthebudgetaryprocesssesshould be completed. • Determinestheceilingforthepayments. • Cash reserves of theinstitutionsaregatheredfromthePublicTreasurship Information System • Helpstodeterminewhethertheinstitution is really in need of thecashor not. Alltheinformation is examinedsimulteanouslyandthenextday’scashallocationfiguresaredetermined

  14. 3 TREASURY SINGLE ACCOUNT AND MONITORING

  15. Evolution of TreasurySingleAccount • Paymentsaremadeaccordingtodailycash program. • Gettingmuchmoreaccurate data regardingtocashflows. • Forecastingcashflowsareeasierthanbefore. • Seperation of collectionandpaymentaccounts. • Allaccountsareheld in TCZB • Thesweepingmechanism • Accounting units accounts and main account held in TCZB • The accountingunits’ accounts are for bothcollections and payments • Weekly reconciliation 3rd Stage 2nd Stage 1st Stage 1972 2007 2011 1st Reform 2nd Reform • Duetothe; • Latency of realization data regardingtobothcollectionsandpayments, • Lack of controlsregardingtopayments of accountingunits, • TSA has beenreformed in 2007. • Allpaymentaccountsheld in Ziraat Bank closedandthepaymentaccountsforallaccountingunitsopened in CBRT. • Allcollectionsaregathered in TSA andallpaymentsaremadefrom TSA held in CBRT.

  16. TreasurySingleAccount-I comprises general budgetinstitutions held at the Central Bank of Turkey TSA alltherevenuesarepooled and allthepayments aremadevia TSA other bank accountsareusedfordebtpaymentsandreceiptsbeforepooled at the TSA CBRT can use ZiraatBankas itscorrespondent

  17. TreasurySingleAccount-II ExternalDebtPayments (for FX otherthan USD, Euro, JPY, GBP) CBRT Account No 416 • ExternalDebtPayments • Changes in Exchange Rate • TaxandNon-TaxIncome • CollectionsFromCustoms • Dividends • TreasuryLevyetc. TRZB Collection Account No 1000 CBRT ForeignCurrencyAccount CBRT Account No 410 - TSA • ExternalBorrowing • DomesticBorrowing in FX • PrivatizationIncome • Receiptsfrom SDIF • Changes in Exchange Rate • Paymentsto: • Central Accounting Units • Universities • PublicEnterprises • LocalGovernments • ExtrabudgetaryFunds • Social Security Institutionetc. TaxandNon-TaxIncome collectedbyregionalunits DomesticDebtPayments CBRT Account No 411 ReceiptsfromGovernmentDebtSecuritiesAuctions

  18. Monitoring Deviationsfromdailycash program arereporteddailytothe top management Deviationsfrommonthly program areexamined at themeetingwith DG andUndersecretary MonthlycashrealizationsaresharedwithpublicthroughTreasury’swebsite on a monthlybasis CMD’sKPIsaredefined as theaveragemonthlydeviation in the total revenuesandexpendituresand CMD is subjecttoTurkish Court of Acccounts’sauditsandaccountablefortheseKPIs Spendingunitsareevaluatedandrankedaccordingtotheirspendingperformance on a monthlybasisandtheyareregularlyinformedabouttheirperformance

  19. 4 ManagIng CASH RESERVES

  20. Remuneration of Treasury Cash Reserves Theobjective is to reduce the idle or low-yielding cash amount held atthe central bank. TL accounts are remunerated weeklyand FX accountsareremuneratedmonthlywith market rates. Also, remaining TL and FX accounts are remunerated dailyunder market rates. Treasurypaystransactionfeeto CBRT andZiraatBankforbankingoperations.

  21. Short-Term Money Market Operations Regulation on Financing Through Money Market Cash Operations; November 8th 2008. Theobjective is to minimize government borrowing costs by using short term cash instruments for managing cash flows. • 3 types of instruments to balance timing differences of cash inflows and cash outflows within a month. • Cash TransactionNote (CTN) • ReopenwiththeCommitmentorRepurchase (RCR) • DepositAuction Instruments have at most 30 days of maturity Not utilizedso far duetostrategicbenchmark on holding strongcashreserves

  22. 5 RELATIONSHIP with DEBT AND RISK MANAGEMENT

  23. Relationshipwith Risk Management-I Strategic Benchmarks Criteriafor Cash Reserves Daily Available Cash Reserves LiquidityBuffer Minimum Level FX Reserves Money Market Operations Maximum Level

  24. Relationshipwith Risk Management-II Treasurykeeps LB toconrol; • time differences between cash inflows and outflows • revenue-based deviations • expenditure-based deviations Maximum level of FX reservesdetermined. Iflevel of FX reservesexceedmaximumlevel, theexcessamount is convertedto TL. Minimum dailycashbalance is determinedtoreducetherisksstemmingfromdailytransactions. ShortTerm Money Market Instruments usedwhendailyavailablecashreservesfallsbelowthedeterminedlower limit for a temporaryperiod.

  25. Relationshipwith Risk Management-III TheAdvantages of LB: Enhances market confidence Gives positive signals to the investors Prevents liquidity squeeze in the market Helps coping with the debt distress periods

  26. RelationshipwithDebt Management-I Sharing realistic cash flow forecasts regarding the timing and magnitude of public revenues and expenditures made by cash management units guides debt managers, provides flexibility, facilitates to be prepared against possible risks and increases efficiency in debt management by allowing determination of appropriate tools, timing and amount of borrowing more accurately (Williams, 2010) Borrowingprogram is formed based on the revenue, expenditure and cash deficit forecasts of government cash management units. Preparingand implementing borrowing strategies and financing programs properly requiresthe integration or at least close cooperation of debt management units with cash management.

  27. RelationshipwithDebt Management-II Shorttermmoney market operationsare not considered as part of theborrowing program. Foreffectivenessandtranperancy, coordinationwithdebtmanagement is essentialduringshorttermmoney market operations. Thereareseveralreasonsfor buy-backoperationswithregardstobothcashanddebtmanagement. So buy-backoperationsrequiresclosecoordinationbetweenthesetwounits. Cash managementunitshouldwork in coordinationwithdebtmanagement in ordertoeleminateliquidityrisksin casecontingenciestakeplaceregardingcashflows .

  28. 6 Publictreasurershipsystem (PTS)

  29. PublicTreasurershipSystem Since 1996 formulates general principlesfortheutilization of publicfinancialresources PTS bankssendinformationregardingpublicfinancialresources based on taxidentificationnumber reportsproduced on a dailybasis data receivefrom PTS used in cashmanagementoperations

  30. Scope of PTS TD: Time Deposit, DD: DemandDeposit, B: Bonds, R: Repo/Reverse Repo CBRT: Central Bank, TRZB: Ziraat Bank, OPB: OtherPublicBanks

  31. Public Financial Resourcesfrom PTS As of 31/12/2015

  32. Distribution of Public Financial Resources on theBasisInstitutions As of 31/12/2015

  33. Thank You! TURKISH TREASURY Cash Management Department

  34. ANNEX-Abbreviations • MTP: MediumTerm Program • MTFP: MediumTerm Financial Plan • CMD: Cash Management Department • DMD: Debt Management Department • CG: Central Government • MoF: Ministry of Finance • UT: Undersecretariat of Treasury • PB: PrimaryBalance • SDIF: SavingsDepositInsuranceFund • TSA: TreasurySingleAccount • CBRT: Central Bank of Republic of Turkey • TRZB: TurkishRepublic Ziraat Bank • CRS: Cash RequestSystem • KPI: KeyPerformanceIndicator • PTS: PublicTreasurershipSystem • TD: Time Deposit • DD: DemandDeposit • B: Bonds • R: Repo/Reverse Repo • OPB: OtherPublicBanks

More Related