The Government Approved the Liquidity Management Concept for 2020-2023.    

On November 4, 2020, the Cabinet of Ministers of Ukraine approved the Liquidity Management Concept for 2020-2023 developed by the Ministry of Finance. The Concept envisages the introduction of a modern model of liquidity management within the implementation of the Government Action Program*.

The purpose of the Concept is to introduce an effective mechanism for liquidity management of the Single Treasury Account (STA) and foreign currency accounts of the Treasury, which provides for the timely fulfillment of Treasury clients' obligations at the lowest possible cost, bolstered by improving cash flow forecasting.

The consolidation of funds on the STA and foreign currency accounts of the Treasury provides the possibility of prompt receipt of the information on the status and movement of funds in the public administration sector. However, further measures are needed to increase the funds' management efficiency of the Treasury accounts, namely:

- to approve the methodology of forecasting the movement of funds on the STA, to increase the forecasting horizon up to 6 months;

- to strengthen the coordination among all interested parties, automate the exchange of necessary data;

- to create a system for collecting short-term forecasts of expenditures from spending  units (payment calendar);

- to introduce an information system supporting the decision-making process on liquidity management, which will automate the cash flows forecasting process and calculation of the minimum required balance on the STA, the amount of temporarily available STA funds that make sense to be placed on the market. Improving the accuracy and horizon of forecasting will make it possible to reduce the amount of funds remaining of the STA, to minimize cases of temporary lack of funds for uninterrupted financing of budget expenditures and other output flows.

 In terms of improving liquidity management tools, the Concept primarily provides for:

- implementation of procedures for active operations with public debt, in particular, REPO operations as well as operations for early repayment  and exchange of government bonds;

- creation of additional opportunities for uninterrupted execution of payment orders of Treasury clients (getting an overdraft, managing the minimum balance of the STA and working capital of the state budget general fund).      

The relevant order of the Government also approved the Action Plan for the implementation of the Concept, developed by the Ministry of Finance.

* The order of the Cabinet of Ministers of Ukraine No 471 dated June 12, 2020 "On approval of the Program of Activities of the Cabinet of Ministers of Ukraine" (paragraph 6.1. Long-term priorities of the Government)

 Concept of liquidity management for 2020-2023