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Fiscal Affairs Department

How to Build Cash Management Capacity in Fragile States and Low-Income

Developing Countries Prepared by Sailendra Pattanayak, Racheeda Boukezia, Yasemin Hurcan,

and Ramon Hurtado

Names: Pattanayak, Sailendra, author. | Boukezia, Racheeda, author. | Hurcan, Yasemin, author. | Hurtado

Arcos, Ramon, author. | International Monetary Fund. Fiscal Affairs Department, issuing body. | International

Monetary Fund, publisher. Title: How to build cash management capacity in fragile states and low-income developing countries / prepared

by Sailendra Pattanayak, Racheeda Boukezia, Yasemin Hurcan, and Ramon Hurtado. Other titles: How to notes (International Monetary Fund). Description: Washington, DC : International Monetary Fund, 2022. | NOTE 22/01 | Includes bibliographical

references. Identifiers: ISBN 9781557754431 (paper)

Subjects: LCSH: Cash management — Developing countries. | Revenue management — Development countries. Classification: LCC HG4028.C45 P38 2022

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Contents

• Acronyms

• I. Introduction

• II. Key Objectives and Building Blocks of a Cash Management Function

• III. Consolidating Cash Resources Under Treasury Oversight

  • Key Challenges

  • Key Measures for a Progressively Consolidated View of Cash Resources

• IV. Forecasting Short-Term Cash Inflows and Outflows

  • Key Challenges

  • Key Measures for the Progressive Development of a Cash Forecasting Function

• V Managing Cash Balance and Ensuring Institutional Coordination

  • Identifying Short-Term Financing Options to Address Seasonal Cash Shortfalls

  • Building a Buffer to Meet Any Unforeseen Demands for Cash

  • Managing the Relationship between the Ministry of Finance and the Central Bank

  • Establishing an Institutional Mechanism for Cash Management Decisions

• VI. Developing a Sequenced Strategy for Cash Management Reforms

  • Conducting a Diagnostic to Understand the Context and Institutional Weaknesses

  • Identifying Reform Priorities and Developing a Sequenced Reform Strategy

• Annex 1. Illustrative List of Functions of a Cash Management Unit (CMU)

• References

• Boxes

  • 1. Factors Inhibiting TSA Reform in Fragile States and LIDCs

  • 2. Maintaining Government Accounts in Commercial Banks: The Example of Mali

  • 3. Political Commitment for TSA Reform: The Example of Afghanistan

  • 4. Treasury Single Account Reform: The Examples of Haiti and Sudan

  • 5. General Issues Hindering Improved Coverage and Quality of Cash Forecasts

  • 6. The Cash Flow Forecasting Analytical Tool

  • 7. Categorizing Cash Flows According to Their Predictability and Seasonally

  • 8. Example of a Treasury Committee: Guinea Bissau

• Figures

  • 1. Relative Share of Donor Resources in Fragile States, 2013–17

  • 2. Cash Management Function in Fragile States Relative to Other Country Groups

  • 3. Indicative Task Distribution among Staff of CFU

  • 4. Cash Management Decision Flow Chart

  • 5. Focus Areas of Forward-Looking Diagnostic

  • 6. Three Key Pillars of a Cash Management Reform Strategy

• Table

  • 1. Information Providers for Cash Forecasting

Acronyms