Government cash management can be defined as “having the right amount of money in the right place and time to meet the government’s obligations in the most cost-effective way”. Despite the clarity of this definition and the multiple references in the IMF-WB Guidelines, the exact perimeter of government cash management is not always consensual: “from the perspective of budget policy or management, it is an internal government function - ensuring that cash flows to where it is needed without wastage or idling. But to debt managers and central banks it is about the impact and management of the government’s cash flows in the financial sector.

Against this background, country experience provides a list of valuable lessons and recommendations for effective government cash management, that includes the following:

• Pooling government revenues in a Treasury single account facilitates cash management by ensuring a concentration of funds.
• Accurate, timely and realistic forecasts of cash inflows and outflows needs to be developed encompassing all (large) payments and aligning expenditure planning with actual cash spending.
• Close coordination between debt and cash management is a crucial but challenging requirement as their objectives can be very different.
• Trade-offs need to be clearly evaluated and assumed on minimizing the amount of idle cash and maximizing its return while ensuring timely payment of government’s commitments.
• Coordination with the central bank is also essential to avoid adverse implications on monetary policy.

In many OECD countries, there has been a move towards integrating debt and cash management but the choice of any particular institutional arrangement needs to take into account the specificities and history of each economy. In all cases, coordination, transparency and smooth exchange of information are indispensable.