How to Develop A Framework for the Investment of Temporary Government Cash Surpluses

Israel Fainboim Yaker, Sandeep Saxena and Michael Williams

No 2020/003, IMF Fiscal Affairs Department from International Monetary Fund

Abstract: Well-developed cash management aims to improve government operational efficiency and facilitates better service delivery by ensuring liquidity to meet payment obligations as they fall due. Liquidity, however, comes at a cost. Governments can reduce the cost of maintaining liquidity by proactively managing their cash balance at an appropriate level and prudently investing any excess liquidity. This note discusses the policy framework and processes that governments should put in place to identify, guide, and govern the investment of their surplus cash resources.

Keywords: FADHTN; HTN; cash manager; surplus cash; cash surplus; cash balance; reverse repo; liquidity risk; cash buffer; market risk; debt management; market liquidity; Currencies; Government cash management; Government cash forecasting; Money markets; Credit risk; Global; Africa (search for similar items in EconPapers)
Pages: 25
Date: 2020-12-21
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