Cash Management Practices - Afghanistan - METAC

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Nov 10, 2013 (3 years and 5 months ago)

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Afghanistan Treasury

Cash Management Practices

and TSA Mechanisms

Lebanon
-

Beirut

July 2013


Mohammad Aqa

Director General


Treasury

Islamic Republic of Afghanistan



Cash Management Framework

CMU (cash management unit) is a unit within the

Treasury Department of the Ministry of Finance that is

responsible for cash management and cash reports. The

unit is consisting of ten main activities within
theTreasury
.




Continued


CMU deals in (1) financial planning, (2) providing
weekly and monthly forecast revenue and expenditure
reports of government, (3) Daily cash reports, (4) Cash
transfers to the provincial
mustofiat

(secondary units
of Ministry of Finance) expenditure account, (5)
Control and account opening for budgetary units, (6)
Opening of LC, (7) conducting of cash management
committee meetings (8) variance analysis of actual and
projected cash flows (10) cash projection by location.




Treasury
-

Cash Flow Projections for the Core Budget 1392

Amts in Bn Afs

Actual

Actual

Actual

Actual





















Particulars

Jadi

Dalva

Hoot

Hamal

Sawr

Jawza

Saratan

Asad

Sunbula

Mizan

Aqrab

Qaus

Total

Budget

1

2

3

4

5

6

7

8

9

10

11

12

1392

1392

Opening cash balance

22,902

50,946

42,150

33,891

35,491

39,578

29,989

27,368

22,167

15,082

17,863

10,108

22,902

22,902

Total domestic Revenue

6,894

6,663

8,814

8,395

8,845

8,408

9,291

9,159

9,648

9,717

9,017

15,621

110,473

125,860

Donor grants

29,496

0

486

12,819

14,194

0

11,958

5,053

2,479

12,299

8,308

2,479

99,571

105,926

ARTF (recurrent & development budget)

0

0

0

2,704

4,510

0

0

0

0

0

1,694

0

8,908

8,908

LOTFA

5,106

0

0

0

9,684

0



5,053

0

0

6,614

0

26,457

26,457

CSTC
-
A (MOD)

18,019

0

0

6,279

0

0

11,958

0

0

11,980

0

0

48,236

48,236

CSTC
-
A (MOI)

5,211

0

0

3,836

0

0

0

0

0

0

0

0

9,047

9,005

Other donor receipts under operating budget

0

0

486

0

0

0

0

0

0

319

0

0

806

806

Discretionary donor receipts (world bank
DPG)

0

0

0

0

0

0

0

0

0

0

0

0

0

2,600

ARTF (development budget)

1,161

0

0

0

0

0

0

0

2,479

0

0

2,479

6,118

9,914

Total discr. resources available

59,292

57,609

51,451

55,105

58,530

47,986

51,238

41,579

34,293

37,098

35,188

28,208

557,579

254,688

Use of discretionary resources

8,346

15,459

17,560

19,614

18,952

17,997

23,871

19,413

19,211

19,235

25,081

30,798

235,537

235,318

Expenditure ( Recurrent)

1,366

13,907

18,823

18,551

16,838

15,610

20,455

16,802

16,716

17,682

21,037

25,159

202,947

202,510

Expenditure (dis
-
dev)

0

66

806

1,484

2,531

3,569

3,684

2,628

3,986

3,691

4,291

5,938

32,674

32,808

Treasury closing cash balances

50,946

42,150

33,891

35,491

39,578

29,989

27,368

22,167

15,082

17,863

10,108

-
2,591

322,042

19,370































50,946

42,150

33,891

35,491

39,578

29,989

27,368

22,167

15,082

17,863

10,108

-
2,591

-10,000
0
10,000
20,000
30,000
40,000
50,000
60,000
Jadi
Dalva
Hoot
Hamal
Sawr
Jawza
Saratan
Asad
Sunbula
Mizan
Aqrab
Qaus
Treasury cash balances

Excludes non discretionary development budget and ARTF & PRGF funds

Monthly cash forecast template



Weekly cash forecast template

-
1E+10
0
1E+10
2E+10
3E+10
4E+10
5E+10
6E+10
7E+10
1
2
3
4
5
6
7
8
9
10
11
12
13
14
0
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
Amt in Bn Afs
period (weeks)
Treasury Cash Balances FY 1392
(Excludes non discretionary development budget and ARTF & PRGF funds)
Projected Treasury Cash Balances(cumulative)
Actual Treasury Cash Balances(cumulative)


Recent improvement in cash management practices

Following significant improvements have been achieved
in cash management practices in the Treasury
Department of the Ministry of Finance over last
decade


Bank reconciliations are prepared monthly within 25
days of month end.


Daily cash balance reports, weekly and monthly cash
forecasts are prepared for distribution to MOF
Management.




Continued


The key source of information for cash forecasts are
financial plans prepared by all budgetary units,
information flowing from aid management unit and
AFMIS (Afghanistan financial management information
system),


Timeliness of information improves as AFMIS is rolled out
to all provincial
Mustofiats

providing real
-
time information
on expenditures processed through the
Mustofiat
.


Cash transfer to provincial
Mustofiats

is timely


Revenues accounts are generally swept on a regular basis.




Continued


Revenues accounts are generally swept on a regular basis.


Monthly meetings of the Cash Management Committee, involving
representatives of Treasury Department, central bank, Budget
Department, fiscal policy unit and Revenue Department.


Revenues accounts are generally swept on a regular basis.


Centralization of government cash balances


establishing a single
Treasury Account System used to pool all available unrestricted cash
resources


Clear understanding of the coverage of the cash planning framework


Timely information sharing between the Central Treasury, revenue
-
collecting agencies, spending ministries and/or Treasury branch offices




Introduction to TSA


TSA mechanisms implemented in 2002


TSA (Consolidation) account opened in
Da

Afghanistan Bank (Central Bank)


All government accounts opened and
maintained under the TSA Umbrella


‘No Overdraft’ policy enforced for bank
accounts


Overall responsibility of managing cash
resources with the treasury



Managing the TSA


Overall responsibilities of treasury include :


Controlling collection and the release of funds


Monitoring progress on budget implementation


Managing the cash resources of the government


Revenue collecting agencies deposit collections to designated revenue
collection accounts at the centre and provinces


90% of revenue collection accounts setup to sweep collections to the
TSA on a daily basis


Periodic fund transfers made to expenditure accounts (provinces)for
effective budget execution. Central agencies execution from central TSA


Balance of expenditure funds in provinces swept to main TSA account at
end of each fiscal year (No free float in provinces at year end)


Spending agencies execute budget within appropriations based on
payment instructions issued by the treasury



Cash Management Tools


All 34 provinces and central line ministries connected to the
FMIS


100% of budget execution captured on real
-
time basis


Funds are transferred to provinces for meeting payment needs ,
on the basis of outstanding allotments and projected
expenditures


Daily cash status position is circulated at the beginning of each
day


Fortnightly cash projections submitted to Central Bank


Cash Management Committee constituted in 2007, monthly
meetings of the committee held since then


Modern Public Finance and Expenditure Management Law and
Procurement Law adopted and under implementation


Chart of Accounts aligned for effective cash management



Way forward


Zero balance accounts in provinces (
dependent on central
banks ability to connect all provincial bank branches
)


Development of Domestic Debt Market and domestic
borrowing (
Sukuk
)


Electronic settlement of payments and revenue collections
(
Inter bank clearing system being setup by DAB
)


Better management of discretionary development budgets
(
currently facing funding deficit
)


Remunerating idle cash balances


Closely working with budgetary units and line ministries
for improvement of financial plans




















Challenges


Shortening revenue transmittal delays.


Coping with seasonality and “lumpiness” in cash
inflows.


Assessing the impact on cash projections of
expenditure commitments in the pipeline.


Processing expenditure approvals and payments
efficiently.


Extending TSA coverage.


Using banking facilities.




THANK YOU