Cash Management - a Critical Part of Public Finance Management and its Implications in Light of Covid-19 Pandemic

Abstract

The following article discusses the importance of effective cash management for private as well as public sector organizations. The study pays special attention to the management of government cash flow, which represents an integral part of strong public finance management. Going forward, the topic is particularly critical for countries with underdeveloped financial market, as far as efficient government cash management means to have treasuries as active market participants, affecting positively on money market development. Authors summarize existing experience worldwide on how to approach cash management reform and present the ways to forecast cash flow, identify idle resources and invest them in financial instruments. In addition to the theoretical summary, the paper presents practical suggestions on how to manage cash flow in the face of the current Covid-19 crisis. In particular, the study focuses on the challenges posed by the pandemic, as well as the efficient ways to address them, ensuring public money reaches the right place at the right time. Consequently, the findings of the paper might have practical value for a number of stakeholders, especially for developing countries, which are in the early stages of government cash management reform and don’t have well established debt markets.