Capital gain

The advantages of the STA

The Single Treasury Account provides complete and timely information on the State’s liquid assets; all things which make available a daily updated situation of balances.

In addition, transit times for treasury receipts and disbursements within the banking sector are minimized. This is the result of a reduction in the burden of borrowing intended to finance public expenditure and a higher return on investments, that is to say an increase in public liquidity.

The STA also prevents the State from borrowing in the financial markets to meet its daily cash flow needs. It improves the control of budgetary allocations and allows the Ministry of Finance to fully control the allocation of funds. With a better knowledge of the totality of liquid assets, the STA improves operational control of budget execution. As a result, the State can plan and implement budget execution more efficiently, transparently and reliably.

This prevents situations of uncertainty concerning the capacity of the treasury to finance planned expenditures from emerging and leading certain budgetary entities to adopt inefficient behaviours such as overestimating their liquidity needs, underestimating expenses or carrying out expenditure through extra-budgetary procedures.

With the STA, the State ensures more efficient management of the treasury. As a result, regular monitoring of government cash balances is facilitated, thus allowing a superior and qualitative analysis of the cash position. Bank commissions and other transaction costs are also reduced thanks to the reduction in the number of bank accounts. By the way, the operating costs of the said accounts including those related to the reconciliation of entries as well as the amount of commissions paid to banks are also eroding.

The State, through the Single Treasury Account, has more efficiency in payment mechanisms and also improves the reconciliation of bank entries and the quality of budgetary data. The STA also allows efficient reconciliation between public accounts and cash statements prepared by banks. This reduces the risk of error in this procedure, while improving the quality of budgetary accounts and their restitution on time.

As a factor in decreasing cash flow volatility, its implementation lowers the amount of reserve/precautionary liquidity needed to meet unforeseen budgetary constraints.