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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Treasury's role in promoting efficient cash management: evidence from South Africa
Author:Maphiri, D.ISNI
Year:2001
Periodical:South African Journal of Economics
Volume:69
Issue:3
Pages:385-404
Language:English
Geographic term:South Africa
Subjects:public finance
monetary policy
External link:https://onlinelibrary.wiley.com/doi/10.1111/j.1813-6982.2001.tb00019.x/pdf
Abstract:Cash management by the Treasury has received very little attention in South Africa, although objective cash management is very important as any shortfall in expenditure should result in recourse to the market and any surplus funds should be invested to yield maximum revenue from interest earned. This paper is concerned with only two of the decision variables for cash management, cash balance and marketable securities. The paper shows that the Treasury has improved its management skills. Excess funds are now invested with commercial banks at positive interest rates and many activities once the province of the South African Reserve Bank (SARB) have been taken over by the Treasury. The interest earned is greater than the dividends the government would receive from the SARB. Therefore it should contribute to repaying some of the debt interest costs accumulated, offsetting the level of taxes. Now daily forecasts of cash requirements have been introduced. Behaviour of prices in the market fairly reflects what is happening in other countries and is compatible with the operation of the National Payment System. Results suggest that bills maturing at or close to the end of the month have higher prices than those maturing at other times. This has implications for cash management and the lowering of the costs of borrowing. Bibiliogr.
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