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CASH AND DEBT MANAGEMENT PRACTICES IN TREASURY SERVICE OF
GEORGIA
Erekle Gvaladze2012
CASH AND DEBT MANAGEMENT PRACTICES
1997
• The Ministry of Finance of Georgia started issuing Government Securities.
2005
• Issuing of Government Securities was stopped due to the high weighted average interest rates recorded at auctions.
2009
• As the financial markets developed, the Ministry of Finance of Georgia renewed issuing of Government Securities.
Cash and Debt Management Practices
CASH AND DEBT MANAGEMENT PRACTICES
2009-2010• Short-term Treasury
Bills (with 6 and 12 month maturity periods)
2010• The first 2 year
coupon Treasury Bonds were issued
2011• 5 year Treasury
Bonds were issued
2012• It is planned to issue
10 year Treasury Bonds
Cash and Debt Management Practices
The main objectives of issuing government securities are:• Development of the country’s financial market;• Ensuring the budget system liquidity.
CASH AND DEBT MANAGEMENT PRACTICES
08/2009
08/2009
09/2009
09/2009
09/2009
10/2009
10/2009
11/2009
11/2009
12/2009
12/2009
02/2010
03/2010
03/2010
04/2010
05/2010
06/2010
07/2010
08/2010
09/2010
10/2010
11/2010
12/2010
03/2011
03/2011
0.0
10,000,000.0
20,000,000.0
30,000,000.0
40,000,000.0
50,000,000.0
60,000,000.0
0%
2%
4%
6%
8%
10%
12%
14%
EMISSION, DEMAND AND WEIGHTED AVERAGE INTEREST RATE OF TREASURY BILLS WITH 6 MONTH MATURITY PERIOD (2009-2011)
Issuance Total Demand Weighted Average Interest Rate
Cash and Debt Management Practices
CASH AND DEBT MANAGEMENT PRACTICES
09/2009
10/2009
11/2009
12/2009
01/2010
03/2010
04/2010
05/2010
06/2010
07/2010
09/2010
11/2010
01/2011
02/2011
03/2011
04/2011
05/2011
06/2011
07/2011
10/2011
0.0
10,000,000.0
20,000,000.0
30,000,000.0
40,000,000.0
50,000,000.0
60,000,000.0
0%
2%
4%
6%
8%
10%
12%
14%
16%
EMISSION, DEMAND AND WEIGHTED AVERAGE INTEREST RATE OF TREASURY BILLS WITH 12 MONTH MATURITY PERIOD (2009-2011)
Issuance Total Demand Weighted Average Interest Rate
Cash and Debt Management Practices
CASH AND DEBT MANAGEMENT PRACTICES
02/2010
05/2010
07/2010
08/2010
09/2010
10/2010
11/2010
12/2010
02/2011
04/2011
05/2011
06/2011
07/2011
08/2011
08/2011
09/2011
11/2011
12/2011
04/2011
06/2011
07/2011
08/2011
09/2011
0.0
10,000,000.0
20,000,000.0
30,000,000.0
40,000,000.0
50,000,000.0
60,000,000.0
70,000,000.0
80,000,000.0
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
EMISSION, DEMAND AND WEIGHTED AVERAGE INTEREST RATE OF TREASURY BONDS WITH 2 AND 5 YEAR MATURITY PERIOD (2010-2011)
Issuance Total Demand Weighted Average Interest Rate
Cash and Debt Management Practices
CASH AND DEBT MANAGEMENT PRACTICES
08/2009
08/2009
09/2009
10/2009
10/2009
11/2009
12/2009
12/2009
01/2010
02/2010
03/2010
03/2010
04/2010
05/2010
05/2010
06/2010
07/2010
07/2010
08/2010
09/2010
09/2010
10/2010
11/2010
12/2010
12/2010
01/2011
02/2011
02/2011
03/2011
04/2011
04/2011
05/2011
06/2011
06/2011
07/2011
08/2011
08/2011
09/2011
10/2011
11/2011
11/2011
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
WEIGHTED AVERAGE INTEREST RATES OF TREASURY BILLS AND BONDS (2009-2011)
6 Month Treasury Bills 12 Month Treasury Bills 2 Year Treasury Bonds 5 Year Treasury Bonds
Cash and Debt Management Practices
CASH AND DEBT MANAGEMENT PRACTICES
• Maturity period of the portfolio is increased stage by stage.
• The following factors demonstrate growing demand for securities issued by the Ministry of Finance of Georgia:• Increased number of applications at auctions;• Participation of non-banking investors in the
recent auctions.
Cash and Debt Management Practices
CASH AND DEBT MANAGEMENT PRACTICES
6 MONTH TREASURY BILLS34%
12 MONTH TREASURY BILLS42%
2 YEAR TREASURY
BONDS22%
5 YEAR TREASURY BONDS2%
SHARE OF THE GOVERNMENT SECURITIES WITH DIFFERENT MATURITY IN THE TOTAL EMISSION (2009-2011)
Cash and Debt Management Practices
CASH AND DEBT MANAGEMENT PRACTICES
12 MONTH TREASURY
BILLS41%
2 YEAR TREASURY
BONDS53%
5 YEAR TREASURY BONDS6%
SHARE OF THE GOVERNMENT SECURITIES WITH DIFFERENT MATURITY IN OUTSTANDING OBLIGATIONS (AS OF THE END OF 2011)
Cash and Debt Management Practices
CASH AND DEBT MANAGEMENT PRACTICES
• In 2008, Georgia issued Eurobonds for the international market for the first time:
Eurobonds of USD 500 million par value; 5 year maturity period; Coupon rate - 7.5%.
Cash and Debt Management Practices
CASH AND DEBT MANAGEMENT PRACTICES
• In 2011, in order to increase the maturity period of the portfolio and for refinancing purposes, Georgia issued:
Eurobonds of USD 500 million par value; 10 year maturity period; Coupon rate - 6.875%.
Cash and Debt Management Practices
CASH AND DEBT MANAGEMENT PRACTICES
• Besides the government securities, the domestic debt also includes the following two categories:
– The debt of the Government of Georgia to the National Bank of Georgia
– So called „Historical Debts“• Obligations created as a result of the disintegration of the former
Soviet Union;• Other obligations.
Cash and Debt Management Practices
CASH AND DEBT MANAGEMENT PRACTICES
• Cash management tools used by Treasury Service:
Development of monthly cash disbursement plans;
Allocation of available cash resources in different financial instruments.
Cash and Debt Management Practices
CASH AND DEBT MANAGEMENT PRACTICES
• Treasury Service is reviewing the possibility of
reducing the foreign debt share through mobilization
of domestic resources, by issuing government
securities denominated in GEL.
• For this purpose, similar experience of different
countries is being studied and it is planned to invite
foreign experts.
Cash and Debt Management Practices
CASH AND DEBT MANAGEMENT PRACTICES
Cash and Debt Management Practices
Thank You!
www.mof.gewww.treasury.gov.ge
Erekle GvaladzeFebruary 2012
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