The Target Cash Buffer - World Bankpubdocs.worldbank.org/pubdocs/publicdoc/2015/9/361801442253296095/...The Target Cash Buffer ... under the Government Bond Market Peer Group Dialogue

The Target Cash Buffer

Government Bond Market Peer Group Survey Analysis

August 2014

Capital Markets and Corporate Governance Service Line

Finance & Markets Global Practice

The Government Bond Market Peer Group Survey Analysis – “The Target Cash Buffer” – was produced

under the Government Bond Market Peer Group Dialogue program of the World Bank. The views

published should not be attributed to the World Bank or any affiliated organizations. Nor do any of the

conclusions represent the official policy of the World Bank or of its Executive Directors or the countries

they represent.

The survey was prepared by Mike Williams ([email protected]) and Indhu Raghavan

([email protected]) and responses were consolidated and analyzed by Zauresh Kezheneva

([email protected]), with technical supervision provided by Indhu Raghavan. Please refer to

the Annex 2 for the list of contributors to the survey and their contact information.

http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTFINANCIALSECTOR/0,,contentMDK:22213130~menuPK:6323120~pagePK:210058~piPK:210062~theSitePK:282885~isCURL:Y,00.html

mailto:[email protected]



I. Introduction

The issue of the Target Cash Buffer and its management is an important policy question for debt

management offices. As countries move to manage their cash more actively, smoothing the net

flows across the Treasury Single Account (the ‘TSA’), they have to consider what cash buffer

they need. A buffer is required to meet late unanticipated outflows and manage debt servicing

and other priority commitments during times of market stress. One of the lessons of the 2008-

2009 financial crisis was the importance of being able to access cash in the very short term.

However, too large a buffer carries a cost since the interest earned on the cash balance is almost

always less than the cost of the additional borrowing.

The Target Cash Buffer was chosen as a topic for discussion in the Government Bond Market

Peer Group Dialogue meetings, organized by the World Bank Group on May 6 and 7, 2014.1 The

discussion addressed how this policy issue can be approached and how in practice cost and risk

are traded-off.

The Target Cash Buffer country survey (the ‘Survey’) was conducted in preparation for the

meetings2 to analyze and compare country practices with regards to the use of cash buffers by

government debt management offices. The objective of the Survey is to serve as a reference

guide and a learning tool for debt managers.

The responses to the Survey were collected from 11 countries: Brazil, Chile, Colombia,

Hungary, Kenya, Morocco, Nigeria, Peru, Poland, Turkey and Uruguay.

The Survey results are organized in tables 1-5 below along the following four broad categories:

adoption of a target cash buffer; composition of a target cash buffer; investing the cash buffer;

and signaling to the market. The Annex 1 provides detailed country-by-country Survey

responses.

II. Survey Findings and Analysis

1. Adoption of a Target Cash Buffer (Table 1 and Table 2)

The benefits of a cash buffer are generally recognized among the respondents to the

Survey. Half of the Survey respondents have target cash buffer policies (Brazil, Turkey,

Morocco, Uruguay and Hungary) and Peru is in the process of adopting one.

The motives for adopting a target cash buffer vary. Predominantly, a cash buffer is

maintained to manage cash flow volatility (which may be referred to as a ‘transaction

buffer’) and to cushion market stress events, including disruptions in the capital market

1 Government Bond Market Peer Group Dialogue (PGD) is an initiative within the Government Bond Market

Advisory Services program, which brings together and facilitates technical discussions among emerging market

countries on critical issues in development of local currency government debt markets. PGD activities include (i)

periodic meetings via teleconference and web-meeting guided by World Bank Group experts and consultants; and

(ii) production of background materials, presentations, and surveys on key topics, all of which are disseminated via

the PGD website. Participants include representatives from different combinations of approximately 33 emerging

market countries, depending on the topic being discussed. 2 Two of the country responses were received as a follow-up to the meetings.

for a certain period when no bond issuances would be possible (which may be referred to

as a ‘safety buffer’). In addition, it is also retained to support liability management

operations (buy-backs) and to reduce refinancing risk.

Some respondents have no target cash buffer policy: Poland, Chile, Kenya, Nigeria

and Colombia. The reasons are quite varied: either ample cash balances (Chile and

Colombia) or, on the contrary, cash shortfalls that preclude the country from maintaining

a buffer (Kenya). In some cases, debt managers may be less concerned with adopting a

target cash buffer if there is a negligible cost of carry; in this case, market conditions and

the issuance policy determine the actual cash buffer (Poland).

All countries in the Survey have some safety nets, regardless of the availability of a

target cash buffer. The popular safety nets include deposits with the Central Banks

(Peru, Hungary), overnight borrowing from commercial banks (Morocco, Hungary,

Poland, Chile), contingent credit lines (Uruguay, Hungary, Poland, Colombia) and

borrowing from the Central Banks (Kenya, Nigeria).

For countries with target cash buffer policies (Brazil, Turkey, Morocco, Uruguay and Hungary)

2. Composition of a Target Cash Buffer (Table 3)

Defining the target: The target is often expressed as the number of months of financing

needed to provide a cushion, particularly for debt servicing (from 1.5 to 12 months). In

Brazil, for instance, a minimum cash balance of 3-months of debt servicing serves as a

prudential reference. In practice, the cash buffer is way above this reference point.

Similar to Brazil, in Uruguay and Hungary a cash buffer is targeted to cover a certain

timeframe of financing needs. In Morocco, a target buffer is a nominal amount equal to a

certain percentage of revenues. Turkey has two targets: a nominal amount for daily

purposes and a monthly reserve covering a specific percentage of debt redemption for the

month.

Calculation methodology: Each of the respondents has a different methodology. Turkey

uses a statistical model based on historical volatility of data, accounting for shrinking

demand duration, Treasury financing options, surplus and privatization revenues, debt

redemption, and non-interest expenditure projections. Morocco uses a cash flow

forecasting methodology to calculate allowance for a forecast error (a transaction buffer).

Brazil maintains an allowance for a period of extreme market stress (a safety buffer).

Hungary includes allowance both for a cash flow forecast error and for a period of

extreme market stress.

Effect of the financial crisis of 2008-2009: Except for Hungary, the responding

countries have not raised the target level of cash buffers in response to the financial crisis

of 2008-2009. Hungary increased the target to promote investor confidence and mitigate

international market risk.

3. Investing the Cash Buffer (Table 4)

All responding DMOs, except for Uruguay, invest the buffers at the central banks

and receive an interest: at market-related rates for public debt (Brazil, Morocco), at the

central bank’s repo rate (Turkey) or at the central bank’s base rate (Hungary). In

Uruguay, the central bank manages the buffer under the same guidelines as the

international reserves and the interest is owned by the central bank.

4. Signaling to the Market (Table 5)

Publishing the target: Most responding countries with a target cash buffer publish

information on the availability of the cash buffer, without disclosing the actual nominal

level of the buffer.

Effect of the buffer: The countries acknowledge that, in addition to the primary function

of countering rollover and liquidity risks, the maintenance of the cash buffer has a

positive signaling effect on market participants and provides flexibility to the debt

management offices to execute debt financing strategies, especially in times of high

volatility in government bond markets.

III. Survey Results Tables

Table 1: Adoption of the target cash buffer

BRAZIL TURKEY MOROCCO URUGUAY HUNGARY PERU

Adopted

the target

cash buffer

Y Y Y Y Y In the process

Purpose of

the target

cash buffer

• Cushion for market

stress

• Part of the strategy to

smooth public debt

issuance

• Cushion for market

stress

• Managing cash flow

volatility

• Managing cash

flow volatility

• Cushion for

market stress

• Supporting

strategic

transactions such as

debt buybacks

• Cushion for market stress

• Managing cash flow

volatility

• Supporting strategic

transactions such as debt

buybacks

-

Other

significant

short-term

safety nets

• Budget resources

deposited in the

Treasury Single

Account

• Borrowing on money

market (with

maximum 30 day

maturity)

• Borrowing from

commercial banks

• Contingent credit

lines

• Borrowing from commercial

banks via repos

• Contingent credit lines

• FX deposits in the central

bank

• Term

deposits in

the central

bank

Notes:

1. Brazil: The cash buffer enables the Treasury to raise resources in advance of concentrated debt repayment. The buffer is part of the strategy to reduce

rollover risk and to smooth the issuance, thus improving the liquidity of government bonds. The Treasury Single Account contains other additional resources

that are not exclusively allocated to pay debt, but that can be temporarily used for that purpose.

2. Hungary: FX deposits serve as an additional safety net that can be used for temporary financing, if needed (their original purpose is to finance future FX

maturities).

3. Peru: The adoption of a target cash buffer is part of the Assets and Liabilities Management Strategy established for the country in 2013.

Table 2: Countries without the target cash buffer

POLAND CHILE KENYA NIGERIA COLOMBIA

Adopted the target

cash buffer N N N N N

Reasons for not

adopting the target

cash buffer

• Negligible cost of

carry

• Ample cash balances • Chronic cash shortfalls

make it unviable to

build/maintain a buffer

• Approved purposes of

borrowing do not allow

the build-up of a buffer

• Ample cash balances

Other significant

short-term safety

nets

• Borrowing from

commercial banks

• Contingent credit

lines

• Seasonal amounts

derived from local

placements

• Assets in the sovereign

wealth fund

• Repos with commercial

banks

• Borrowing from the

central bank

• Borrowing from the

central bank

• The FGN Cash flow

Adjustment Note

• Contingent credit lines

• Borrowing from Funds

under management of

the Treasury

Notes:

1. Poland: The level of the cash buffer is determined by the issuance policy. The aim of this policy is to borrow in stable/favorable market conditions,

according to debt management objective, which is the minimization of the long-term debt servicing costs subject to constraints of some risks connected with

debt. It is economically efficient because direct cost (cost of carry) is not significant and the higher level of funding has positive impact on the debt pricing

and yields in other auctions (indirect effect).

2. Chile: At the moment, the Treasury does not see the need in the target cash buffer policy, given large amounts of assets in the sovereign wealth fund, the

budget surplus and low indebtedness of the country.

3. Nigeria: The FGN Cash flow Adjustment Note is a new short-term borrowing instrument, designed to meet short–term funding gaps.

Table 3: Composition of the target cash buffer

BRAZIL TURKEY MOROCCO URUGUAY HUNGARY

The target • For domestic debt: minimum

of 3 months of debt servicing

(principal and interest);

• For external debt: no target.

In practice: a FX cushion

covering 12 months of maturing

debt and interest is maintained.

• Daily target: a specific

daily cash reserve in

Turkish Liras;

• Monthly target:

specific percent of debt

redemption for the

month

• A nominal amount

= 1% of revenue

• 12 months of debt

servicing

• 1.5 months of

financing needs

What is included

in calculation of

the target

• An allowance for a period of

extreme market stress

• A statistical calculation

based on data of past

volatility and the implied

risk of exhausting the

cash balance

• An explicit

allowance for cash

flow forecast error

• An allowance for a

period of extreme market

stress

• A statistical calculation

based on data of past

volatility and the implied

risk of exhausting the

cash balance

• An explicit

allowance for cash

flow forecast error

• An allowance for a

period of extreme

market stress

Increase in the

target in response

to the financial

crisis of 2008-2009

N N N N Y

Notes:

1. Brazil: In practice, the cushion has often been maintained above the prudential reference of 3-month debt servicing.

2. Turkey: The statistical calculation of the target accounts for: (i) average duration of demand shrinking in the markets for previous years; (ii) at times of

demand shrinking, the ratio of financing via borrowing among overall Treasury financing; (iii) monthly average expected primary surplus and privatization

revenues for relevant year; (iv) monthly decomposition of debt redemption for relevant year; and (v) non-interest expenditure projections for relevant year.

3. Hungary: Increase in the target cash buffer had a positive signaling effect to the market: market participants, analysis and credit rating agencies have been

reassured by showing that the Debt Management Office (DMO) had large liquidity reserves in the time of volatility in the Hungarian market. The DMO in

its Debt Management Outlook publication indicated that the increase in the buffer was “due to increased international market risks”.

4. Uruguay: The calculation of the buffer is based on a statistical model estimating, under a certain probability, the amount of working days that the Treasury

might not be able to tap financial markets, either because markets are literally closed for the asset class or because the particular issuance conditions are not

acceptable for the country (Access-at-Risk approach).

Table 4: Investing the target cash buffer


Where invested • At the central bank • At the central bank • At the central bank • Invested by the central

bank under the same policy

as international reserves

• At the central bank

Interest received • At market-related rate • At central bank’s repo

rate

• At market-related rate • At market-related rate

• Interest is owned by the

central bank, not the

government.

• At the central bank’s

base (policy) rate

Notes:

1. Brazil: The buffer is remunerated according to the average interest rate on the public debt held by the Central Bank. Such public debt is issued at market

rates (specifically, yields of public debt securities are defined on primary market auctions). Thus, the remuneration of the buffer is equivalent to the

financing cost of the federal government public debt in the market.

2. Turkey: The buffer is remunerated at one-week repo interest rate of the central bank. This rate is almost below the market-related interest rates.

Table 5: Signaling to the market


Publish

availability of a

cash buffer

Y

N

N

Y Y

• Published is the

information on

Treasury’s adherence to

maintaining a cushion of

at least 3 months of debt

servicing

• The actual nominal

level is not published.

• Published is the

information on

availability of a cash

balance above 1.5-month

of possible financing

needs.

• The actual nominal

level is not published.

IV. Annex 1 - Complete Survey Results by Country

Brazil

1. Has your country adopted a target cash buffer, whether formally or in practice?

Answer: Yes

2. If yes, what is the purpose of this buffer? (Indicate all that apply)

Answer:

To provide a cushion for times of market stress

Other: The Federal Public Debt in Brasil has bonds maturities concentrated in specific dates of the year (so that

the bonds dates of maturities as standardized), as part a policy of increasing liquidity of government bonds in

the Brazilian secondary market of fixed rate bonds. In this context, the cushion is part of a strategy to reduce

rollover risk of debt, once it allows the Treasury to raise resources in advance (through issuances or fiscal

budget) to pay big amounts of debt maturing in only one day. In this context, the cushion helps smoothing along

weeks the volume of issuances of the annual borrowing plan, even though bonds dates of maturities are

standardized. Indirectly, the cushion contributes to implement a strategy that seeks to improve liquidity of

government bonds and develop the bond markets in Brazil.

2.1. Are the target and the purpose published?

Answer: Yes

Usually, the National Treasury has mentioned in the Annual Borrowing Plans, which are published on a yearly

basis, its internal policy of maintaining at least 3 months of debt servicing (principal plus interest) as a cushion

for domestic debt. However, there is not a formal target to be pursued.

Besides the cushion policy for domestic debt (which represents about 95% of total debt), there is another

cushion in foreign convertible currency maintained exclusively to pay the federal government external debt

(which represents about 5% of total debt). For this second cushion we do not have a target or floor. However, it

has been equivalent to the amount required to pay at least 12 months of external debt maturities (principal plus

interest) in advance.

2.2. What is the target and how is it expressed? (For example, a nominal amount, a percentage of revenue or other

aggregate, or equivalent to “x” months of debt servicing or similar. If a nominal amount, please indicate what that

is as a percentage of revenue.)

Answer:

We consider at least 3 months of debt servicing (principal plus interest) as a prudential liquidity cushion. Note

that this minimum cash balance is a prudential reference instead of a target properly speaking. In practice, our

cushion have been consistently above our prudential limit.

2.3. Has the target increased since the financial crisis of 2008-09?

Answer: No

4. What is the basis of the target and what does it include? (Indicate all that apply.)

Answer:

An allowance for a period of extreme market stress

The Treasury has maintained a cushion equivalent to at least three months of service of the debt on the market,

a position considered comfortable when viewed in the context of the current maturity structure. As a result, in

adverse conditions, the government is capable of maintaining its operations for a corresponding period without

the need for seeking funding to refinance the FPD.

This prudential limit is consistent with the current debt profile. Focusing on the Federal Public Debt, the

percentage maturing in 12 months has registered consistent reductions since 2004, when it accounted for almost

40% of the outstanding debt or the equivalent of 20% of GDP. This indicator registered 24.8% of FPD or

approximately 11% of GDP in 2013 and has closed below 25% of FPD since 2009. This picture combined with

the liquidity cushion of at least three months of maturities is considered historically comfortable from the

viewpoint of refinancing risk management.

It is important to mention that payment of debt maturities with the liquidity cushion would impact banking

liquidity, forcing the Central Bank to carry out repo operations. In other words, there would be a reduction in

the Treasury debt, but the impact would be nil on the gross general government debt (*). Consequently,

utilization of these resources is reserved to adverse market situations, in a context in which seeking of

refinancing of debt maturities would introduce additional volatility into the domestic market.

(*) The Brazilian statistics for gross general government debt includes Central Bank –CB - repo operations

(once those repo operations have Treasury bonds as collateral).

5. Where is the cash buffer/balance invested? Indicate all that apply.

Answer: At the central bank

5.1. Does the cash balance earn interest at a market related rate?

Answer: Yes

The Treasury Single Account is deposited at the Central Bank of Brazil. It is remunerated according to the

average interest rate of the portfolio of public debt securities held by the Central Bank. Those securities are

issued by the Treasury at market rates (to be more specific, yields of those securities are defined on primary

auctions to sell bonds to the market). Therefore, the remuneration of the Single Account is equivalent to the

financing cost of the federal government public debt in the market.

6. Are there other significant short-term safety nets? Indicate all that apply.

Answer: Yes

Other: The cushion is composed of budget resources deposited in the Government Current Account in the

Central Bank (Single Account) and available exclusively for FPD payments. However, the Single Account

encompasses other additional resources that are not exclusively allocated to pay debt, but that can be

temporarily used for that purpose. The Brazilian fiscal policy has long been characterized by surpluses. As a

consequence, the Single Account balance has been bigger than the debt cushion.

Borrowing from central bank to the Treasury is not allowed by the Constitution.

7. Other comments regarding adopting or not adopting a target cash buffer:

Answer:

In Brazil, maintenance of a cash buffer has provided flexibility to execute debt financing strategies, especially

during times of higher volatility in government bonds market. The cushion not only allows the Treasury

managing the rollover risk of debt, but also constitutes an instrument that allows actions to provide liquidity and

price reference to domestic market in moments of stress.

Turkey


Answer: Yes


Answer:

To manage cash flow volatility



Answer: No




Answer: There are two main targets.

First is for daily purposes: minimum daily cash reserve should be at least a specific amount of Turkish Liras.

Second is for monthly purposes: the monthly minimum cash reserve should be at least a specific percent of debt

redemption of relevant month.


Answer: No


Answer:

A statistical calculation based on data of past volatility and the implied risk of exhausting the cash

balance. A brief description:

Benchmarks are determined by considering:

Average duration of demand shrinking in the markets for previous years.

At times of demand shrinking, the ratio of financing via borrowing among overall Treasury financing.

Monthly average expected primary surplus and privatization revenues for relevant year.

Monthly decomposition of debt redemption for relevant year.

Non-interest expenditure projections for relevant year.




Answer: Yes

One week repo interest rate of Central Bank of Turkey is used as return rate. This rate is almost below the

market related interest rates.


Answer: Yes

Other: In case there are tools that can be used for short term cash needs called money market cash operations.

By using these tools, Treasury may borrow to compensate short term cash requirements with maximum 30 day

maturity.


Answer:

Cash buffer is used to eliminate market related risks and liquidity risks regarding government payments. The

level of buffer can be changed according to tools that Treasury have to be used to compensate the urgent short

term cash needs, financial deepening, volatility in market rates and government revenues, forecast errors

regarding to cash inflows and outflows and other things. The capacity of convenience and fastness regarding

short term borrowing operations are the key elements of determining cash buffer level.

Morocco


Answer: Yes


Answer:



Answer: No




Answer: A nominal amount = 1% of revenue


Answer: No


Answer:

An explicit allowance for cash flow forecast error




Answer: Yes


Answer: Yes

Borrowing (e.g. overnight) from commercial banks


Answer: N/A

Uruguay


Answer: Yes


Answer:

To carry out strategic transactions such as debt buybacks



Answer: Yes




Answer: 12 months of debt servicing


Answer: No


Answer:

Government ample liquidity buffers allow withstanding stress scenarios, including events that could restrict

market access. In 2007, the DMU developed a methodology to determine the optimal precautionary cash

balance for the Uruguayan treasury. As a result, the main source of uncertainty is derived from occurrences of

periods when market is close. Consequently, the Central Government should have enough liquidity to meet

market debt amortizations (plus an estimated maximum fiscal gap) taking into account: i) 5% of probability

markets will be closed 9 months, ii) 1% of probability markets will be closed 14 months.3


Answer:

Other: The Central bank manages the liquid assets of the government investing under the same guidelines of

the international reserves.


Answer: Yes

Yes, but the government does not earn that interests, they are owed by the Central Bank.

3 This information and the related details were provided as a follow-up to the meetings.


Answer: Yes

Contingent credit lines


Answer: N/A

Hungary


Answer: Yes


Answer:


To carry out strategic transactions such as debt buybacks



Answer: Yes




Answer:

The target is not disclosed to a full extent. The published information states only that there is a defined optimal

level of cash buffer on the TSA based on 1.5 month’s possible financing needs and that the DMO intends to

keep the end-of-day TSA balance above the optimal level. The actual nominal level is not public information.

(It is also published that the DMO’s safety net is further strengthened by FX deposits and stand-by credit

facilities, but no exact figures are disclosed.)


Answer: Yes

2.4. If yes, please explain the reasoning behind the increase.

Answer:

Liquidity risk increased significantly in these years. Hungary experienced serious distress in its local

government bond market (though T-bill and retail securities sales were not affected), bond auctions were

temporarily suspended and there was massive secondary market sell-off by non-resident investors. Market

consolidation was helped by an IMF/EU loan package, ÁKK resumed bond auctions after a few months’ time.

Since then it became evident that market participants, analysts and credit rating agencies could be reassured by

showing that the DMO has large liquidity reserves. Another factor is that Hungary has substantial FX debt and

the DMO prefinances the FX maturities, sometimes several months before the maturities. By showing large FX

deposits as well, investors can be sure that the FX redemptions will be fulfilled without any problems.

2.5. If yes, is the reason also published?

Answer: Yes

The reasons are given as “due to increased international market risks” in the DMO’s Debt Management Outlook

publication, but in press interviews, road shows etc. the DMO gives a broader picture, mainly to reassure

investors (without stating the exact figures).


Answer:

An explicit allowance for cash flow forecast error

An allowance for a period of extreme market stress




Answer: Yes

The government receives the central bank’s base rate (main policy rate) on the TSA cash balance held in the

CB.


Answer: Yes



Other: Besides the TSA in the CB, FX deposits (also in the CB) serve as safety nets. Although the original

purpose of these is to finance FX maturities in the future, they can be used for temporary financing as well, if

needed.

Note that borrowing from commercial banks is done via repos, i.e. the borrowing is collateralized.


Answer:

A target cash buffer is one of the most important benchmarks used in ÁKK’s debt management and cash

management activities. It is clearly defined, which makes cash management decisions simple (e.g. the amount

of repos to be made). Even without publicly disclosing the target level, the high level of reserves (which the

public monitors through the CB’s balance sheet) has a positive signaling effect to market participants.

Peru


Answer: No

3. If no target has been adopted, why is this so? Indicate all that apply.

Answer:

Other: We prepared an estimation of the amount we will need for the cash buffer, it is not part of the law yet,

but it will be.


Answer: Yes

Other: term deposits in the central bank


Answer:

The adoption of a target cash buffer is part of the Assets and Liabilities Management Strategy established for

the Republic the last year.

Poland


Answer: No


Answer:

In practice, the cost of carry is small or negligible

The main factor which is taken into consideration is market situation (current level of yields, demand) and its

volatility and uncertainty. The broader explanation is in item no 7.


Answer: Yes




Answer:

The level of cash buffer is mainly a result of the issuance policy. The aim of this policy is to borrow in

stable/favourable market conditions, according to objective of debt management objective i.e. minimisation of

the long term debt servicing costs subject to constraints of some risks connected with debt. It is economically

efficient because:

- direct cost (cost of carry) is not significant,

- the higher level of funding has positive impact on the debt pricing and yields in another auctions

(indirect effect).

As a result, in our opinion, such policy brings positive financial consequences and ensures safety and flexibility

in financing borrowing requirements as well as makes budget immune to the market volatility and uncertainty.

Chile


Answer: No


Answer:

Cash balances have always proved more than sufficient

Cash balances have always proved more than sufficient in the Chilean case. It is because the Sovereign Wealth

funds have provided a large amount of assets in the case of a big liquidity shortfall. Additionally, because in the

recent years during the budget execution there is a significant surplus derived from local placements together

with no necessity to finance too much deficit.


Answer: Yes

The main short-term sources of liquidity are the seasonal amounts derived from local placements, and the assets

maintained in the sovereign wealth fund. There would be also other sources available, such as repos with

commercial banks.


Answer:

In our perspective for the moment the adoption of a cash buffer target is not necessary, because the country has

a big amount of assets in sovereign wealth funds and a low gross debt position (12.8% of GDP as of December

14). In addition, during the year normally it is observed a surplus derived from local placements together with

no necessity to finance too much deficit.

Kenya


Answer: No


Answer:

Chronic cash shortfalls make it unviable to build/maintain a buffer


Answer: Yes

Borrowing from the central bank


Answer: N/A

Nigeria


Answer: No


Answer:

Approved purposes of borrowing do not allow the build-up of a buffer


Answer: Yes

Borrowing from the central bank

Other: A new short-term borrowing instrument, the FGN Cashflow Adjustment Note, designed to meet short –

term funding gaps


Answer: N/A

Colombia


Answer: No


Answer:

Cash balances have always proved more than sufficient.

Other: The forecast of cash balances are planned to attend debt liabilities with at least 1 month prior.


Answer: Yes


Other: Borrowing from Funds under management of the Treasury


Answer: N/A

V. Annex 2 - List of Survey Contributors

Country Name Institution Email

Brazil Luiz Fernando Alves Brazilian Treasury [email protected]

Turkey Emrah Yasarturk Undersecretariat of Treasury N/A

Morocco Soumaya Sabounji Ministry of Economy and Finance [email protected]

Uruguay Victoria Buscio Ministry of Economy and Finance [email protected]

Hungary András Réz Government Debt Management

Agency (AKK)

[email protected]

Peru Renzo Jimenez

Sotelo

Ministry of Finance [email protected]

Poland Marika Lach Ministry of Finance [email protected]

Chile Patricio Sepúlveda Ministry of Finance [email protected]

Kenya Livingstone Bumbe Ministry of Finance [email protected]

Nigeria N/A Debt Management Office, The

Presidency

N/A

Colombia Ana Carolina Diaz Ministry of Finance [email protected]

Documents

The Target Cash Buffer - World Bankpubdocs.worldbank.org/pubdocs/publicdoc/2015/9/361801442253296095/...The Target Cash Buffer ... under the Government Bond Market Peer Group Dialogue