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How to Build Cash Management Capacity in Fragile States and Low-Income Developing Countries
Author:
Sailendra Pattanayak
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,
Racheeda Boukezia
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Yasemin Hurcan
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Ramon Hurtado
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Series:
IMF How To Notes
Volume/Issue:
Volume 2022: Issue 001
Language:
English
Publication Date:
01 Mar 2022
DOI:
https://doi.org/10.5089/9781557754431.061
ISBN:
9781616359805
ISSN:
2522-7912
Pages:
33
Keywords:
cash management decision flow chart; factors inhibiting TSA reform; cash management function; Treasury committee; cash inflow; Government cash management; Government cash forecasting; Currencies; Fiscal accounting and reporting; Treasury Single Account; West Africa
Legal-disclaimer:
Fiscal Affairs Department (FAD) How to Notes offer practical advice from IMF staff members to policymakers on important fiscal issues. The views expressed in FAD How to Notes are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Fiscal institutional capacity in most fragile states (FS) and several low-income developing countries (LIDCs) is much lower than in other countries. Governments in these countries face several cash management challenges because they often lack credible budgets, have smaller and less diversified revenue bases, have limited access to financial markets, and rely largely on donors to fund a large portion of their budgets. Available public funds in these countries often remain dispersed outside the control of the ministry of finance. In the absence of a good cash forecasting function, these countries typically resort to cash rationing to meet their priority spending needs, often in an ad hoc manner, which can adversely affect budget execution and achievement of fiscal policy targets. This note sets out the key objectives and building blocks of a cash management function in FS and LIDCs. It suggests several measures to progressively build cash management capacity in three interrelated areas: consolidating cash resources, forecasting cash flows, and managing cash balances with sound institutional setups.
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Cover IMF How To Notes
IMF How To Notes
ISSN:
2522-7912
Publisher:
International Monetary Fund
Volume 2022: Issue 001