Cash management

The State Treasury is responsible for the central government’s cash management. The most important function of cash management is to manage and safeguard the government’s liquidity. According to the cash situation, the State Treasury either invests cash funds or borrows from the financial markets.

The State Treasury invests cash funds in financial instruments with a remaining maturity of one day to a couple of months. Borrowing is mainly in the form of overnight loans.

Investments must be as riskless as possible and it must be possible to liquidate these investments in a cost-efficient manner. The maximum amount that can be invested by the government with any single market participant is determined in accordance with the credit rating.

Placement of cash funds in the form of collateralized investments has increased recently. Collateralised investment activity has been carried out in the form of Triparty repo agreements. In addition, investment of cash funds with sovereign governments has been substantial.

Cash forecast system helpful in liquidity management

Government liquidity management is based on the Rahakas cash forecast system, into which government accounting units enter their income and expenditure forecasts. The State Treasury utilises the forecasts and monitors the central government’s income and revenue cash flows and ensures that the liquidity of government funds is adequate in all situations.

Published 2013-09-10 at  1:00 , updated 2015-08-11 at  13:50
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