Linking MTDS to the Annual Borrowing Plan Joint Vienna Institute, Vienna, Austria February 23-27, 2015

Transcription

1 Linking MTDS to the Annual Borrowing Plan Joint Vienna Institute, Vienna, Austria February 23-27, 2015

2 How Does the Financing Plan for the Next Budgetary Cycle Look Like? Determine the gross borrowing needs for each type of instrument to cover expected budgetary needs roll over needs/amortization needs Are these consistent with the debt strategy? Borrowing plan. What is the timing?

3 Timing Issues and program design The debt program needs to be consistent with the cash management program. Calendar of issuances. Quarterly? Inputs: revenue & spending (including debt service) programming Level of deposits, TSA balances Programmed grants/loans disbursements

4 5000 IMF-WB Workshop on Medium Term Debt Cash Management: rough tuning: An Example Rough Tuning with weekly issue of Treasury Bills only Converts this profile to this profile [Fine tuning makes it flat] Cumulative Daily Cash Flow Cumulative Daily Cash Flow Cum Daily Cash Flow after Bill Issuance

5 Who does what? Various national models no right approach but emerging good practice Spending units and tax departments provide above the line data In MoF/Treasury/Debt Management Unit identify: Who aggregates above the line forecasts; and takes responsibility for the projection of the total Who adds below the line transactions often the debt managers Who makes decisions about investment of surpluses or issuance of TBills to manage cash flow - increasingly integrated with debt management unit Central bank provides banking services and information flows Good practice guidance Identify who is responsible for what others should not second guess Establish coordination structures where necessary eg with central bank on respective money market operations Single focus for final compilation and decision making Often a regular [weekly] meetings of those responsible in MoF to review forecast updates, decide on investment / issuance policies, establish risk parameters

6 Ministry of Finance Tax and spending data Fiscal position forecasts Daily cash flows Defines debt and cash management policy Back Office Middle Office Front Office Debt manager Borrowing to meet medium/long term needs Developing domestic market Interfaces to investor base and creditors Central Bank Government s banker Manages monetary policy Key relationships: need for prompt updates

7 Main Goal: IMF-WB Workshop on Medium Term Debt Keep carry costs at low.. while ensuring domestic and external obligations are meet at conditions consistent with the objectives (cost-risk trade off and domestic debt markets development).

8 Filling the Domestic and External Borrowing Plans: Consistency Domestic Borrowing: Options Marketable debt Instruments Overdraft facilities (emergency/exceptional) Non-marketable instruments Pre-funding External Borrowing: Options Official sector flows Access to market sources Financing from reserves (Fall back) Financing secured from FX market Issues Market development objectives Fiscal dominance? Issues Difficult to forecast timing of disbursements Need for sterilization, bridge financing? Identifying the matching liability

9 Sample Borrowing Plan

10 Auctions Choices and Constraints Total required: UTP20 Can issue 5-year and 3-year Bucket sizes 5-year size is UTP1.5; 3-year size is UTP2.0 Market can absorb only 5 issues of 5-year bonds; thus need balance from 3-year So how many times should we issue? Seasonality slow conditions in August and December Best to issue 5-year at beginning of quarter Best to issue 3-year at beginning of month Best not to overlap 5 and 3-years in same month