The Governance Brief: Government Cash and Treasury Management Reform (Issue 7-2003)
Storkey, Ian | July 2003
Abstract
Governments in developing countries need to reform the public sector to overcome banking and cash management inefficiencies and adopt international best practices. Inefficient cash management presents to governments a significant opportunity cost, often overlooked as it is not appropriated. Government cash and treasury management in most developing countries uses manual processes with check- and cash-based payments, multiple bank accounts, large cash floats, and idle balances earning little or no interest; and focuses on budget expenditure control rather than efficient banking and cash management. In large developing countries, the float commonly exceeds $1 billion. If the average cost of borrowing is 4%–6% and the average interest earned is zero or close to zero, this float could cost up to $50 million yearly. Cash management is having the right amount of money in the right place and time to meet the government’s obligations in the most cost-effective way.
Citation
Storkey, Ian. 2003. The Governance Brief: Government Cash and Treasury Management Reform (Issue 7-2003). © Asian Development Bank. http://hdl.handle.net/11540/2652. License: CC BY 3.0 IGO.Keywords
Financial & Private Sector Development
Private Sector Investments
Private Sector Participation
Private Sector Projects
Public Sector Infrastructure
Public Sector Management
Public Sector Projects
Private enterprises
Private ownership
Government
Public enterprises
Public finance
Infrastructure projects
Development projects
Financial loss
Central local government relations
Administration
Decentralization in government
Subnational governments
Government monopolies
Intergovernmental fiscal relations
Investment of public funds
Local finance
Government services
State governments
Municipal government
Bank failures
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