1. PEMPAL Treasury Community of Practice Workshop Thematic Group on Cash Management Report from small group discussions Group 2 Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Russia, Ukraine 17 March 2016

2. 1. Challenges in targeting cash balance and creating a cash buffer Only 1 country in the group applies the mechanism of targeting cash balance / buffer (Russian Federation); the mechanism has been running, no problems The other countries have not yet felt an urgent need in creating such a tool, the environment has not yet developed, although situations are different and the issue could be considered for the future – In some countries, there is a stable cash surplus - Azerbaijan, Kazakhstan – In several countries there are reserve funds that can be used to bridge cash gaps, as well as a possibility to attract funds from the Central Bank – In the countries, where there are no such sources, they have to resort to cash rationing in difficult periods – Short-term cash gap financing instruments are still not so well developed in the majority of countries (in most cases, the horizon of treasury bonds makes up 3 months and more, short-term bills are not developed; Russia is an exception - REPO and other instruments) – No trained human resources to carry out active cash management transactions

3. 2. Challenges faced by countries in extending TSA coverage and approaches CountryFunds outside TSA AzerbaijanInvestment projects financed by donors BelarusLocal budget funds, special funds of public institutions, investment projects financed by donors Kyrgyzstan Social fund, medical fund, investment projects financed by donors KazakhstanPension fund, self-financing public institutions RussiaBudgets of the Russian Federation constituents, municipalities, foreign exchange assets UkraineForeign exchange assets The most common exceptions from TSA are extra-budgetary funds (social, pension, medical) and investment projects financed by donors

4. 2. Challenges faced by countries in extending TSA coverage and approaches (2) The autonomous status of special funds, local authorities allowing them to manage their own resources, including investments Possible solutions: – a political decision at the highest level (in Russia, the Pension Fund was transferred to TSA by a Presidential Decree) - incentive through interest rates (to provide compensation for possible loss of revenue from independent depositing) - assurance of quality, sound and continuing service, risk minimization