History of cash management
In the past, the management of the State’s treasury has been marked by:
- The predominance of the principle of the uniqueness of the body ;
- The practice of cash movements between accountants ;
- The use of statutory advances from the central bank.
On a practical level, the multiplicity of cash registers has on the one hand materialized in addition to the cash registers by:
- A multitude of bank accounts opened at BEAC and CCP;
- A failure to centralize all the State’s cash in a single account ;
- The emergence of surplus/deficit fund cleavages.
In order to avoid any paralysis. The existence of a single fund has been imposed, for expenses that can be paid into any accounting item in the Treasury without restriction on the same basis as revenue. But, this principle has been subject to relative limits:
- At the rise of fraud of all kinds;
- The existence of regions with multi-year outstanding balances compared to some with cash surpluses;
- The absence of a central structure responsible for regulating the spatial distribution of availability within the network, taking into account total available cash and the needs expressed by the various accountants.
This procedure, which allowed accountants in excess of cash to supply the loss-making accounting items, appeared to be an inefficient means of managing the State’s cash position because of its inability to provide equitable irrigation for the entire network.
The practice of advances was enshrined in Article 19B of BEAC’s Statutes, to enable States to cope with the insufficiency of revenue to support State budgetary expenditure. The ceiling on the annual advances granted to each State should not exceed 20% of the domestic budgetary revenue recovered during the previous financial year. Many criticisms have been made against this system which:
- Does not allow the Treasury to set up a forward-looking, prudential and active management of the State’s cash position, conducive to the take-off of money and financial markets, real alternative sources of financing for the economy ;
- Strikes Treasury availabilities from very high financial charges ;
- Inflationary in nature.
For example, the statutory advances granted to the Treasury at an average interest rate of 5.25% in 2005, 2006 and 2007 are broken down as follows in billions of CFA francs.
|Years||Statutory advances received by the Treasury||Refunds made by the Treasury||Interest paid to BEAC by the Treasury|
|2006||1 199,051||1 032,997||9,080|
It was therefore urgent to switch to a new system, itself characterized by all the developments that have taken place since 1997, the date of the reform of public accounting in our country, and to adopt new tools for public treasury management.