1. CASH FORECASTING IN TURKEY
REPUBLIC of TURKEY
MINISTRY of TREASURY & FINANCE

2. Contents Cash Forecasting and Treasury Cash Plan 1 Forecasting Inflows2
Forecasting Outlows 3 4
Institutional Capacity & Reporting 5
Challenges & The Way Forward

3. Cash FORECASTING & TREASURY CASH PLAN1

4. Forecasting as a Process
Inputs
Process
Outputs
Forecasting
Approach and Methodology
Info Sources
Forecasting Outputs
Input Data
Beneficiaries
Internal&external stakeholders (data providers)
Granularity of the input data
Periodicity of the data provision
Internal&external stakeholders (beneficiaries of the forecasting product)
Granularity of the forecasting outputs
Periodicity of the forecast production
Top-down vs. bottom-up forecasting approach
Forecasting infrastructure, tools & techniques

5. Forecasting Frame in Turkey-I
Forecasting Period
Time
Forecasting Horizon
Approach
Annual
End October-Previous Year
2+12 months (daily numbers)
Top-down&bottom -up mixed
Monthly
End of Each Month
Primarily- 90 days
Secondarily- rest of the year
Mostly bottom-up
Daily
Every day-twice
Primarily-rest of the month
External Stakeholders
Internal Stakeholders
Spending Agencies
MoT&F-DGs of Budget&Revenue Policy
Privatization Administration
SDIF
Other 01 02
Debt Management Unit
Treasury Middle Office
Treasury Back Office
Shareholder Executive
Other
IT Infrastructure
Daily Information Sharing
Treasury Information System
Cash Request System
Public Electronic Payment System
Public Treasurership Information System
Ms Excel 03 04
Treasury’s Top Management
DMU&Middle Office
Central Bank of Turkey

6. Forecasting Frame in Turkey-II (Revenue)
Treasury Budget Monitoring Dept.
Special Budget
DG of Revenue Policy
Regulatory Bodies
Overall Revenue Projections
Updated Revenue Projections
Surplus Projections
Treasury Receivables Dept.
Resolution
Revenue Projections
Receivable Collection Projections
SDIF
Cash Management
Department
Tax Payment Projections
Privatization Projections
Large Taxpayers
(BOTAS, TUPRAS)
Privatization
Admin.
Dividend, Treasury Levy Projections
Shareholder Executive

7. Forecasting Frame in Turkey-III (Expenditures)
Spending Agencies
Ministry of Treasury&Finance
Budget Release Information
E-Budget System
Treasury Spending Units
Approved Budget Releases
Consolidated Budget Release Proposals
SOE payment projections etc.
Consolidated Cash Requests
Approved Budget Releases
Budget Projections
Strategy Development Departments
Spending Units
Accounting Units
Budget Proposals/Projections
Cash Request System
Payment Program
Cash Requests
Approved Cash Program
Treasury Budget Monitoring Dept.
Cash Management Department
Treasury Accounting Units
DG of Budget
(Former MoF)
Approved Payment Documents
Payment Documents
Payment Orders
Public Electronic Payment System
Treasury Internet Banking System
Expenditure Management System
Public Electronic Payment System
Accounting System

8. Treasury Cash Plan

9. 2
ForecastIng Inflows

10. Forecasting Tax Revenues1 2
Granularity
Info Sources
Special Consumption Tax-I
Special Consumption Tax-II-III-IV
VAT/Income Tax
Corporate Tax
Other Taxes
Budget-Annual Projections
DG of Revenue Regulations-Current Outlook&Projections
Treasury Budget Monitoring Dept.-Revised Projections
Methodology
Using budgetary figures&growth assumptions-arranging one-off receipts
Tax calendar&time series analysis for daily forecasts
Continuous update based on revised projections 3

11. Tax Revenue Patterns

12. Forecasting Non-Tax Revenues1 2
Granularity
Info Sources
SOE&Public Bank Dividends
Treasury Levy
GSM Revenues
Receipts from Regulatory Bodies
Etc. (Highly granular)
Shareholder Executive
Regulatory Bodies
Revenue-Collecting Agencies
Methodology
Mostly bottom-up projections
Periodic information flow from revenue-collecting agencies 3

13. Forecasting Non-Tax Revenues-Example

14. Forecasting Financing Items1 2
Granularity
Info Sources
Foreign&Domestic Debt
Privatization Revenues
SDIF Transfers
Land Sales
Treasury Receivables
DMU-Borrowing Program
Treasury Back Office-Receivable Collections
Revenue Collecting Agencies
Privatization Admin.
SDIF
Methodology
Fully bottom-up projections
Monthly information flow from PA and SDIF
Weekly information flow from Treasury Offices 3

15. 3
FORECASTING OUTFLOWS

16. Forecasting Primary Expenditures1 2
Granularity
Info Sources
Payroll&Obligatory&Discretionary Payments
Agency–based classification
Detailed classification for SOE payments, SSF transfers, agriculture supports etc.
Spending Agencies-CRS
Shareholder Executive-SOE Payments
SSF
Treasury Spending Units
Methodology
Mostly bottom-up projections
Monthly information through CRS
Weekly revision through CRS
Monthly meetings with top-spending agencies
Daily projections from SSF 3

17. Cash Request System-I CRS Since 2011
an internet portal for collecting cash requests, online and real time
CRS
eliminates paper based documentation
the data of cash requests are saved to Treasury database
different reports can be produced upon needs

18. Cash Request System-II
cash request information of 200 public institutions
regional accounting units, central accounting offices and special budget accounting offices.
CRS
feedback for the next month’s cash transfers
weekly revision during the month
classification based on main expenditure items

19. Cash Request System-III
A sanction mechanism envisaged in the legislation for lack of submission applied as a penalty fine to the responsible personnel
Treasury has the right to modify cash requests regarding the spending performance of the requesting institutions
CRS
Previous track record of the institutions in terms of forecasting
is considered subjectively while evaluating their interim revision requests
No direct link between CRS and the payment system
The link between the data produced from two systems is established
manually during the daily programming process

20. Forecasting Debt Repayments&Interest Payments1 2
Granularity
Info Sources
Domestic&Foreign Payments
Treasury Back Office
DMU-Buy-back Operations
Methodology
Fully bottom-up projections
Weekly updates from Treasury offices
Day-to-day coordination with DMU 3

21. INSTITUTIONAL CAPACITY & FORECASTING PERFORMANCE4

22. Institutional Capacity
DG of Public Finance
Cash&Debt Management, Risk Management, Treasury Guarantees&Receivables Management, Back Office&Treasury Accounting, etc.
Cash Management Department
3 Treasury Experts&Civil Servants
Preparing Regulatory Framework
for the Management of All Public
Financial Resorces
Monitoring&Reporting Public
Financial Resources on a Daily Basis
Providing official Treasury remarks
for any legislation related to
public financial resources
Coordination with State Mint &
Approval of coin printing programs
Cash Programming & Transactions Division
Public Treasurership Division
6 Treasury Experts &Associates
An expertise model based on main cash program categories
Cash Forecasting & Programming
Management of Treasury Reserves
Execution of New TSA Project
Commission&Fee Payments for Treasury Transactions
Short-term Money Market Operations
Coordination with Debt&Liquidity Management
Other

23. Monitoring & Reporting Cash Forecasting Performance-I
Deviations from daily cash program are reported daily to the top management and deviations from monthly program are examined at the regular meetings with DG and Undersecretary.
Cash management KPIs are part of 5-year Strategic Plan and annual performance programs of Treasury since 2009/2010.
Initially set as a single KPI based on deviations from the projected cash surpluses/deficits on a monthly basis.
Since 2014, two separate indicators defined as the average monthly deviation in the total revenues (cash inflows) and expenses (cash outflows) of which the results are reported monthly.
Additional KPIs for measuring the performance in terms on deviations from the daily cash balance projections will be added starting from 2019.
CMD is subject to Turkish Court of Acccounts’s audits and accountable for these KPIs

24. Monitoring & Reporting Cash Forecasting Performance-II
Due to relatively less controllability issue the benchmark for the revenue side ise higher.
Benchmark values (the minimum acceptable performance) have been set more stringent year by year.
Poor performance in terms of revenue forecasting was mainly due to unexpected overperformance in the tax revenue & legislation for restructuring of tax payables.

25. CHALLENGES & THE WAY FORWARD5

26. Challenges 1
The dominance of Ms Excel in the whole forecasting and reporting process.
Lack of systematic daily data provision from Tax Administration regarding daily tax revenue realizations and projections 2
Lack of full compatibility between daily payment data & budget data in terms of economic classification 3

27. The Way Forward 1
Programming & Reporting Modules of the New TSA IT System will provide an integrated forecasting media
Integration between Tax Automation System and Treasury Information Systems (as part of the new IFMIS Project) 2
Arrangement in the Payment System in order to enable the provision of payment data fully compatible with the budget (as part of the new IFMIS Project) 3

28. Thank You!