MANAGEMENT CONSULTANTS

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S

TORKEY

&

C

O

MANAGEMENT CONSULTANTS

PUBLIC DEBT MANAGEMENT

B

USINESS

P

ROCESSES

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ORKFLOWS

[S

AMPLE

T

EMPLATE

]

A

CKNOWLEDGEMENT

:

These sample procedures are available for public use. It would be appreciated that if they are used in whole or in part that there is an acknowledgement that they were developed by Ian Storkey, Director of Storkey & Co Limited.

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C

ONTENTS

Section/Activity

Processes

Page

No.

1 Introduction 4

2 Background 6

Public Debt Management Institutional Arrangements 6 Roles and Responsibilities of a Debt Management Office 6

Typical Loan Cycle 7

Structure for Documenting Processes/Workflows 8 Debt Management Operations Business Processes/Workflows 9 Business Process Maps 10 3 Debt Management Operations Business Processes/Workflows 11

Activity 1 Planning 11

Processes 1.1 Debt Strategy 11 1.2 Borrowing Plan 14 1.3 Debt Service Forecasting 16

Activity 2 External Loans 18

Processes 2.1 Contracting 19 2.2 Mobilisation 22 2.3 Servicing 28

Activity 3 Domestic Loans 30

Processes 3.1 Contracting 31 3.2 Mobilisation 34 3.3 Servicing 36

Activity 4 External Securities 39

Processes 4.1 Planning 39 4.2 Issuance 41 4.3 Servicing 44

Activity 5 Domestic Securities 47

Processes 5.1 Planning – Cash Flow and Tenders 48 5.2 Settlement of Issue 52 5.3 Servicing 54 5.4 Retail Securities 56 Activity 6 Reorganisation 59 Processes 6.1 Loans 59 6.2 Securities 63 6.3 Swaps 67 Activity 7 Analysis 71

Processes 7.1 Debt Sustainability Analysis 71 7.2 Cost-Risk Analysis 73 7.3 Cash Flow Planning 74 7.4 Debt Service Monitoring 76

Activity 8 Reporting 77

Processes 8.1 Government Reporting 77 8.2 World Bank Debtor Reporting System 78 8.3 Accounting General Ledger 79 8.4 Monitoring and Compliance 80 8.5 Debt Statistical Bulletin 82

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Section/Activity

Processes

Page

No.

8.6 Quarterly/Monthly Debt Reports 83 8.7 Form 18-K 85 Activity 9 Guarantees 86 Processes 9.1 Contracting 86 9.2 Servicing 90 Activity 10 Onlending 91 Processes 10.1 Contracting 91 10.2 Mobilisation 94 10.3 Servicing 96 4 Annex Business Process Maps 98

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1. I

NTRODUCTION

Debt managers in many countries have difficulty in documenting the business processes for public debt management and often need guidance in terms of a template that can be used as a procedures manual. This template attempts to capture the actual business processes that are followed in a mix of advanced economies, Emerging Market Economies (EMEs) and developing countries covering both external (including contracting; disbursement; debt service and debt

restructuring) and domestic debt.

To develop a comprehensive generic model that captures best practices, the following countries or regions were examined in 2009 using a combination of desktop studies and field visits:

Desktop Studies

• Eastern and Southern Africa: covering the Procedures Manual published by the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI)

• India: covering central government external debt managed by Aid Accounts and Audit Division (AAAD) of the Ministry of Finance as documented in a draft procedures manual

• Indonesia: covering central government domestic debt managed by the Directorate General of Debt Management/Direktorat Jenderal Pengelolaan Utang (DJPU) of the Ministry of Finance as documented in draft standard operating procedures

• New Zealand: covering central government debt managed by the New Zealand Debt Management Office (NZDMO) of the New Zealand Treasury as documented from prior knowledge and discussions with officials from NZDMO Field Visits

• Brazil: covering central government debt managed by the National Treasury Secretariat (STN) of the Ministry of Finance

• Hungary: covering central government debt managed by the Government Debt Management Agency Pte Ltd (ÁKK)

• Nigeria: covering central government debt managed by the Debt Management Office (DMO)

In addition, the business processes/workflows adhere to the principles of sound practice in public debt management that have been published in:

• Advances in Risk Management for Government Debt by the OECD (2005) • Debt Management and Government Securities Markets in the 21st Century by

the OECD (2002)

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• Developing Government Bond Markets: A Handbook by the World Bank and IMF (2001)

• Developing the Domestic Government Debt Market: From Diagnostics to Reform Implementation by the World Bank (2007)

• Government Debt Management: New Trends and Challenges by Central Banking Publications (2006)

• Guidelines for Public Debt Management by the IMF and World Bank (2003) • Managing Public Debt: From Diagnostics to Reform Implementation by the

World Bank (2007)

• Manual on Effective Debt Management by the United Nations ESCAP (2006) • Sound Practice in Government Debt Management by Graeme Wheeler (2004) • Strengthening Debt Management Practices: Lessons from Country Experiences

and Issues Going Forward by the World Bank and IMF (2007)

Given the diversity of operational practices, institutional arrangements, and organisational and/or personnel structures for public debt management, the challenge was to develop a generic model that best captures this diversity. Therefore, in all processes/workflows the context has been set out so it is clear to understand the operational environment for that process/workflow.

The following provides comprehensive public debt management documentation and flowcharts to clearly describe business processes, information flows,

authorisation processes, functions and responsibilities within the different debt management institutions (covering front office, middle office and back office operations) as well as between the debt management institutions and external entities such as the Accountant General’s Office, Central Bank and Ministry of Finance.

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2. B

ACKGROUND

2.1 P

UBLIC

D

EBT

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ANAGEMENT

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NSTITUTIONAL

A

RRANGEMENTS

Institutional arrangements for public debt management can range from a structure that is highly centralised in a debt management office (DMO) or equivalent to a decentralised structure with a number of entities across government responsible for public debt management operations. For example, a separate division of the Ministry of Finance could be responsible for external loan negotiations, the

Accountant-General’s Office responsible for debt service payment authorities, and the Central Bank may provide banking services, act as registrar for government securities, and undertake Treasury bill and bond auctions in the domestic market for government securities. Also, there could be a separate agency that is responsible for managing retail debt instruments such as savings bonds or equivalent and separate divisions of the Ministry of Finance responsible for project monitoring including administration of government onlending, and issuance/monitoring of government loan guarantees.

Oversight of the DMO will normally be provided by an Advisory Board or Public Debt Committee or Council, which will meet either monthly or quarterly. An Advisory Board does not have responsibility for setting debt management policies and approving financing transactions as these will rest with the Minister of Finance. The Advisory Board will provide oversight to ensure that the DMO is adhering to

international sound practice for public debt management and for the efficient operation of the DMO. As the Public Debt Committee or Council is likely to have the Minister of Finance as Chair or a member, it will be responsible for setting debt

management policy and approving financing transactions.

While the documentation of business processes/workflows is based on a DMO structure for ease and standardisation, the functions managed by the different entities can be substituted into the relevant public debt management operations. Moreover, the structure within a DMO can vary depending on the functions

assigned to each division or section. While the DMO structure refers to operations that are the responsibility of the front office, middle office and back office, in practice there could be multiple entities under each of these classifications.

The operational environment for each process/workflow will set out the institutional arrangements and organisational structure that has been documented and it may be necessary to modify these arrangements and structures to reflect the public debt management operations that are in place.

2.2 R

OLES AND

R

ESPONSIBILITIES OF A

D

EBT

M

ANAGEMENT

O

FFICE

The methodology used has developed a comprehensive business model for public debt management, which describes information flows, authorisation processes, functions and responsibilities within the different debt management institutions (covering front office, middle office and back office operations) as well as between the debt management institutions and external entities such as the Accountant General’s Office, Central Bank and Ministry of Finance. It also incorporates the

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principles of sound practice in public debt management that has been published by the IMF and World Bank, Central Banking Publications, OECD and others. The business model has been structured around the following public debt management activities and structures:

2.3 T

YPICAL

L

OAN

C

YCLE

The life cycle of a loan as documented in the Debt Management Performance Assessment (DeMPA) tool has four phases:

• Planning: Legislation, managerial structure and policy setting, government debt strategy, and coordination mechanisms with macroeconomic policies are in place for the government to borrow and transact

• Contracting: Negotiating and contracting is undertaken within authorities, limits and in accordance with the debt strategy covering domestic borrowing, external borrowing (multilateral, bilateral and commercial/market), issuing loan guarantees, government onlending, and derivatives where applicable

• Servicing: Systems and procedures to record, monitor, settle, and account for all debt and debt-related transactions in a secure and controlled environment • Reporting: External, internal and audit reporting to ensure transparency and

accountability for debt management policy and operations

The DeMPA tool is a useful methodology to ensure that the life cycle of a loan and other public debt management operations are fully covered in the business model and flowcharts.

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2.4 S

TRUCTURE FOR

D

OCUMENTING

P

ROCESSES

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ORKFLOWS

Most of the DMOs in developing countries and emerging market economies have institutional structures and debt management operations that follow a product approach rather than an activity approach. This means that loans are often managed and processed by a unit that is separate from a unit responsible for securities, which are also managed and processed separately from other debt management operations such as government onlending and guarantees. As a result the documentation of business processes/workflows has been structured to match this approach. Therefore, the report is structured according to the following Debt Management Operations activities:

1. Planning 1.1 Debt Strategy 1.2 Borrowing Plan

1.3 Debt Service Forecasting 2. External Loans 2.1 Contracting 2.2 Mobilisation 2.3 Servicing 3 Domestic Loans 3.1 Contracting 3.2 Mobilisation 3.3 Servicing 4. External Securities 4.1 Planning 4.2 Issuance 4.3 Servicing 5. Domestic Securities

5.1 Planning – Cash Flow and Tender Program 5.2 Settlement of Issue 5.3 Servicing 5.4 Retail Securities 6. Reorganisation 6.1 Loans 6.2 Securities 6.3 Swaps

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7. Analysis

7.1 Debt Sustainability Analysis 7.2 Cost-Risk Analysis

7.3 Cash Flow Planning 7.4 Debt Service Monitoring 8. Reporting

8.1 Government Reporting

8.2 World Bank Debtor Reporting System 8.3 Accounting General Ledger

8.4 Monitoring and Compliance 8.5 Debt Statistical Bulletin

8.6 Quarterly/Monthly Debt Reports 8.7 Form 18-K 9. Guarantees 9.1 Contracting 9.2 Servicing 10. Onlending 9.1 Contracting 9.2 Mobilisation 9.3 Servicing

2.5 D

EBT

M

ANAGEMENT

O

PERATIONS

B

USINESS

P

ROCESSES

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ORKFLOWS

The documentation of business processes/workflows draws on three elements: 1. International sound practice business model for public debt management. 2. Life cycle of a loan as defined by the Debt Management Performance

Assessment (DeMPA) tool.

3. Business processes followed in a mix of advanced economies, EMEs and developing countries.

Flowcharts have been developed to illustrate information flows based on the

comprehensive business model for public debt management (prepared in Microsoft Visio using international standard flowchart templates) that cover:

• inputs and outputs

• action level by position, function (front, middle or back office) and process owner

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In addition, the operational environment or context for each process/workflow is provided in order that the assumptions used to capture operational practices, institutional arrangements, and organisational and/or personnel structures for public debt management can be identified. Activities performed by entities outside the DMO are shaded (in green).

The report will be used by ComSec to re-engineer CS-DRMS to closely mirror debt management business processes/workflows as documented in Section 3 below.

2.6 B

USINESS

P

ROCESS

M

APS

The process maps for all activities are provided in Annex 1. These have been

developed in Microsoft Visio using standard business workflow models. Where there are links to further process/workflows, these are clearly identified. The process maps show the key control points in each process, and are shaded to show activities and controls that outside the direct operations of the DMO.

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3. D

EBT

M

ANAGEMENT

O

PERATIONS

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USINESS

P

ROCESSES

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ORKFLOWS

A

CTIVITY

1:

P

LANNING

Prior to contracting loans and issuance of securities, the DMO undertakes several debt planning activities. These include the preparation or update of a Medium Term Debt Strategy (MTDS), an annual borrowing plan including a domestic bond

issuance program or calendar, and debt service forecast for incorporation in the Budget, Medium Term Fiscal and Expenditure Framework (MTFF/MTEF) and/or annual appropriation from Parliament or National Assembly.

A

CTIVITY

1.1 D

EBT

S

TRATEGY

General Description

The DMO prepares or updates a Medium Term Debt Strategy (MTDS) at the start of each fiscal year that is set within the context of the government’s fiscal policy and budget framework. The strategy development process will involve key stakeholders across government and include consultation with the Central Bank for consistency with monetary policy. The strategy is reviewed by the Public Debt Committee and ultimately approved at the political level (for example, by the Cabinet/Council of Ministers). The MTDS will be published either within the budget as a separate

chapter or as a stand-alone publication, which will be posted to the DMO website. The responsibility for the development of the MTDS will be with the middle office. The MTDS will include the following:

• objectives and guidelines for government debt management

• financing requirement of the government for the fiscal year including domestic and foreign currency borrowing requirements

• description of the market risks being managed (currency, interest-rate, and refinancing/rollover risks) and the historical context for the debt portfolio

• description of the future environment for debt management, including fiscal and debt projections, assumptions about interest and exchange rates, and constraints on portfolio choice—including those relating to market development and the implementation of monetary policy

• description of the analysis undertaken to support the MTDS clarifying the assumptions used and limitations of the analysis

• recommended strategy and its rationale, including either:

• specified targets and ranges for key risk indicators of the portfolio and the financing program over the projected horizon or

• guidelines to indicate the direction in which certain key indicators are expressed to evolve

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Business Process/Workflow

Preparation or Update of Medium Term Debt Strategy Environment/Context:

As part of the government’s fiscal policy and budget framework, the DMO is required to prepare or update a Medium Term Debt Strategy (MTDS) at the start of each fiscal year. This is normally a requirement of Public Debt or Public Finance legislation and requires that the MTDS is approved at the political level (Cabinet/ Council of Ministers) and submitted to Parliament/National Assembly. The MTDS will be submitted as a stand-alone document or included in the Budget and/or Medium Term Fiscal Strategy published annually by the government. The MTDS is prepared by the DMO in consultation with the Ministry of Finance, Central Bank, Ministry of Planning, Treasury and Accountant-General’s Office (if these agencies exist) and made available to the public.

Ministry of Finance or Treasury

Provide medium-term primary

balance and cashflow projections to the DMO.

Provide medium-term economic and financial projections and/or scenarios to the DMO. Outputs: Projections: - primary balance - monthly cashflows - interest rates - exchange rates - inflation - GDP Scenarios: - baseline - optimistic - pessimistic/stress Project Implementing Unit

Provide project utilisation and expected schedule of loan

disbursements, and pipeline for new project loans.

Outputs:

Forecast disbursements

Front Office Provide details of proposed new financing plan for the medium term (i.e., next 3 fiscal years):

• External financing: - multilateral - bilateral - commercial - market • Domestic financing: - Treasury bills - Treasury bonds - retail instruments

- commercial banks and Central Bank Inputs: Govt financing requirement Forecast disbursements Outputs:

Draft borrowing plan with list of planned new borrowing

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Middle Office

Desk Officer Consult with key stakeholders across government: Ministry of Finance, Central Bank, Ministry of Planning, Treasury and Accountant-General’s Office.

Undertake cost-risk analysis of public debt portfolio including new/future financing:

• using model(s) developed by the DMO (examples include Cost-at-Risk, Budget-at-Risk, Debt Service-at-Risk, Cashflow-at-Risk, Value-at-Risk)

• calculating basic risk measures (currency mix, duration,

modified duration,

fixed/floating interest rate ratio, average time to refixing, redemption profile, average time to maturity, residual maturity, 1-year residual maturity, external debt to foreign exchange reserves ratio) and debt sustainability indicators.

Prepare draft MTDS.

Inputs: Existing debt

Draft borrowing plan Fiscal projections Economic & financial projections/scenarios Forecast disbursements Outputs: Risk indicators Cost-risk analysis Scenario analysis Debt structure Portfolio benchmarks Portfolio limits Draft MTDS Head of Middle

Office Check and sign-off draft MTDS. Inputs: Draft MTDS Outputs:

Signed-off draft MTDS Head of DMO Authorise draft MTDS. Inputs:

Signed-off draft MTDS Outputs:

Authorised draft MTDS Public Debt

Committee Review draft MTDS and recommend acceptance. Submit recommended MTDS to Cabinet/Council of Ministers for approval. Inputs: Authorised draft MTDS Outputs: Recommended MTDS Cabinet/ Council of Ministers

Review recommended MTDS and

approve. Inputs: Recommended MTDS Outputs:

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Approved MTDS Middle Office

Desk Officer Arrange for MTDS to be translated (if necessary). Publish MTDS and post to DMO website (in pdf format).

Inputs:

Approved MTDS Outputs:

Translated MTDS Published MTDS

A

CTIVITY

1.2 B

ORROWING

P

LAN

An annual borrowing or financing/mobilisation plan is formulated as part of the MTDS. The financing plan will set out guidelines for external and domestic borrowing including a domestic issuance program and/or auction calendar. The borrowing plan is produced by DMO in consultation with relevant stakeholders and submitted to the Public Debt Committee and/or Cabinet/Council of Ministers for approval. The borrowing plan and auction calendar will be published and updated during the fiscal year on a quarterly or monthly basis, and is the responsibility of the front office. Business Process/Workflow

Preparation and Update of Borrowing Plan Environment/Context:

The DMO will meet the government’s financing requirements through external financing (multilateral, bilateral, commercial, and market) and domestic financing (Treasury bills, Treasury bonds, retail instruments and commercial borrowing from banks and/or Central Bank). The MTDS will set out an indicative financing strategy that will be subject to market conditions and project activities. The front office is responsible for monitoring market conditions and financing alternatives which are used to make decisions including the timing and structure of the domestic Treasury bill and bond tender programs. The DMO will submit the borrowing plan and auction calendar to the Public Debt Committee or Cabinet/ Council of Ministers for approval. The front office will make available to all market participants the borrowing plan and auction calendar.

balance and cashflow projections to the DMO. Outputs: Projections: - primary balance - monthly cashflows Project Implementing Agency

Outputs:

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Desk Officer and cashflow projections together with DMO and other financing transactions to determine

government financing requirement. Prepare draft borrowing plan and auction calendar for the time horizon required (annual, quarterly and/or monthly) covering: External financing: - multilateral - bilateral - commercial - market Domestic financing: - Treasury bills - Treasury bonds - retail instruments

- commercial banks and Central Bank Projections: - primary balance - monthly cashflows - disbursements Government financing requirement Outputs:

Draft borrowing plan: Auction calendar: - Treasury bill tenders - Treasury bond tenders

Head of Front

Office Check and sign-off draft borrowing plan and auction calendar. Inputs: Draft borrowing plan and auction calendar Outputs:

Signed-off borrowing plan and auction calendar

Head of DMO Authorise borrowing plan and

auction calendar. Inputs: Signed-off borrowing plan and auction calendar

Outputs:

Authorised borrowing plan and auction calendar Public Debt Committee or Cabinet/ Council of Ministers

Review borrowing plan and auction

calendar and approve. Inputs: Borrowing plan and auction calendar Outputs:

Approved borrowing plan and auction calendar

Middle Office Arrange for borrowing plan and

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Desk Officer necessary). plan and auction calendar

Outputs:

Translated borrowing plan and auction calendar

Front Office

Desk Officer Publish borrowing plan and auction calendar and post to DMO website (pdf format).

Inputs:

Approved/translated borrowing plan and auction calendar Outputs:

Published borrowing plan and auction calendar

A

CTIVITY

1.3 D

EBT

S

ERVICE

F

ORECASTING

The DMO prepares a forecast of debt service costs for the fiscal year(s) including a schedule of debt service payments at the commencement of each fiscal year and updates periodically as required (i.e., supplementary budget, and semi-annually, quarterly or monthly updates). These forecasts will cover not only the current fiscal year but also the next two fiscal years if the government prepares a 3-year budget or medium term fiscal and expenditure framework. Forecasting of debt service payments on existing debt is normally undertaken by the back office, with economic and financial parameters provided by the Treasury or Ministry of Finance, new

financing or borrowing provided by the front office, and project loan disbursements provided by project implementing units. The forecasts will be validated by the middle office that will also monitor debt service actual versus forecast throughout the fiscal year. The debt service forecasts will be signed off by the head of the DMO and submitted to the Treasury/Ministry of Finance.

Business Process/Workflow

Debt Service Forecast Preparation or Update Environment/Context:

As part of the government’s budget, the DMO is required to prepare debt service forecasts and a schedule of debt service payments at the start of each fiscal year. These will be based on the economic and fiscal parameters as set out in the budget and in accordance with the MTDS. The DMO will liaise closely with each project implementing office to obtain information on project utilisation, expected disbursements, and the pipeline for new project loans. An update will be

prepared during the fiscal year for the supplementary budget and on request throughout the year by Treasury or Ministry of Finance

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balance and cashflow projections to the DMO.

Provide medium-term economic and financial projections and/or scenarios to the DMO. Outputs: Projections: - primary balance - monthly cashflows - interest rates - exchange rates - inflation - GDP - baseline scenario - worst case scenario Project

Implementing Agency

Outputs:

Back Office

Desk Officer Input exchange rate & interest rate projections and forecast disbursements into the debt

recording system.

Prepare debt service forecasts for existing debt using the forecasting tools or reports in the debt recording system.

Inputs:

Exchange rate and interest rate projections Forecast disbursements Existing debt data Outputs:

Debt service forecasts for existing debt Head of Back

Office

Check and sign-off debt service forecasts for existing debt.

Inputs:

Debt service forecasts for existing debt Outputs:

Debt service forecasts for existing debt checked

Front Office Provide details of proposed new borrowing plan for the medium term (i.e., next 3 fiscal years):

External financing: - multilateral - bilateral - commercial - market Domestic financing: - Treasury bills - Treasury bonds - retail instruments

- commercial banks and Central Bank

Inputs:

Govt financing requirement Outputs:

Draft borrowing plan with list of planned new borrowing

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Middle Office

Desk Officer Prepare debt service forecasts for new borrowing and incorporate forecasts of existing debt:

• annual forecast by currency and instrument

• monthly forecast by currency and instrument

• sensitivity to interest rates and exchange rates, and worst case scenario

Inputs:

Debt service forecasts for existing debt Draft financing plan Fiscal projections Economic & financial projections

scenarios Outputs:

Debt service forecasts Head of Middle

Office Check and sign-off debt service forecasts. Inputs: Debt service forecasts Outputs:

Debt service forecasts checked

Head of DMO Authorise debt service forecasts. Inputs:

Debt service forecasts Outputs:

Debt service forecasts authorised

Middle Office

Desk Officer Submit debt service forecasts to Ministry of Finance or Treasury for inclusion in the annual budget.

Inputs:

Debt service forecasts authorised

Outputs:

Debt service forecasts submitted to Ministry of Finance or Treasury

A

CTIVITY

2:

E

XTERNAL

L

OANS

External debt is primarily made up of loans raised from multilateral and bilateral lending agencies and commercial loans such as bank loans, supplier’s credits and officially supported export credits. Most of the loans are used for project financing according to the government’s infrastructure and development program. The loans result from initial discussions with the line ministry responsible for the project. These loans are normally contracted with the government, although some loans may be contracted directly with the government agency or SOE. In the case of loans contracted with the government, the loan proceeds can be disbursed to the project or on lent to a government agency or SOE responsible for the project that will be contracted and documented in an onlending agreement. A project monitoring or implementation unit will be established to manage the project

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partners, funding agencies, line ministries, government agencies and Ministry of Finance will participate in an extensive process of pre-consultations to agree the structure and specifications of the project, funding sources, grant and loan

components, and project financing terms, and conditions that will apply to ensure effectiveness of the loan to be submitted to the government for consideration.

A

CTIVITY

2.1 E

XTERNAL

L

OAN

C

ONTRACTING

External loan negotiations are led by the Ministry of Finance in collaboration with the DMO and other agencies if necessary (line ministries, Ministry of Justice or Attorney-General, Central Bank, etc). The DMO obtains a mandate from the government (Public Debt Committee or Minister of Finance) to negotiate the loan. The mandate will specify a set range for the key terms of the loan. The Ministry of Finance/DMO negotiate the terms and conditions of the loan, a legal opinion on the loan

agreement is obtained from the government’s legal team and from legal counsel and the loan agreement is signed by the Minister of Finance. The front office of the DMO will prepare a term sheet with the loan details and forward this together with the signed loan agreement to the back office for recording and processing the loan.

Business Process/Workflow External Loan Contracting Environment/Context:

The government will approve an infrastructure and development program including a list of projects that the government plans over the 3-5 year planning period. This program will list new projects that have been formulated by

implementing partners, funding agencies, line ministries, government agencies and Ministry of Finance through an extensive process of consultation to agree on project specifications and conditions. The DMO will participate in negotiations with the funding agency to agree the loan terms and conditions and where necessary prepare an onlending agreement for the government agency or SOE (this process is documented under Activity 10: Onlending below).

Implementing Partners Funding Agencies Line Ministries, Government Agencies, Ministry of Finance

Extensive pre-consultations to agree the structure and specifications of the project, funding sources, grant and loan components, project financing terms, and conditions to apply for effectiveness of the loan.

Inputs:

Pre-consultation Outputs:

Loan proposal

Front Office

Desk Officer Review the funding agency loan proposal submitted by Ministry of Finance, line ministry or other

Inputs:

Loan proposal Outputs:

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government agency.

Prepare draft loan mandate report with indicative loan terms and conditions to send to Public Debt Committee or Minister of Finance for approval.

Draft loan mandate report

Head of Front

Office Sign-off draft loan mandate report. Inputs: Draft loan mandate report

Outputs:

Signed-off draft loan mandate report Head of DMO Authorise loan mandate report.

Submit to Public Debt Committee or Minister of Finance for approval.

Inputs:

Signed-off draft loan mandate report Outputs: Authorised loan mandate report Public Debt Committee or Minister of Finance

Approve loan mandate report. Inputs:

Loan mandate report Outputs:

Approved loan mandate report Head of Front

Office & Front Office Desk Officer

Participate in negotiations with the funding agency along with Ministry of Finance, line ministry and other

government agencies.

Negotiate terms and conditions of the loan.

Inputs:

Approved loan mandate report Outputs:

Negotiated loan terms and conditions

Middle Office Legal Officer or Representative

Negotiate and finalise legal documentation throughout the negotiation process.

Obtain legal opinion on the loan from legal counsel to ensure that

covenants and other conditions are met.

Prepare loan agent’s warrant/power of attorney (if Minister of Finance cannot sign)

Inputs:

Negotiated loan terms and conditions

Outputs:

Legal documentation Legal opinion

Loan agent’s warrant/ power of attorney

Front Office

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Legal opinion

Loan agent’s warrant/ power of attorney Outputs:

Draft loan agreement Loan agent’s warrant/ power of attorney Head of Front

Office

Sign-off loan agreement. Inputs:

Draft loan agreement Loan agent’s warrant/ power of attorney Outputs:

Signed-off loan agreement

Loan agent’s warrant/ power of attorney Head of DMO Authorise loan agreement.

Submit to Minister of Finance for signing.

Inputs:

Signed-off loan agreement

Authorised loan agreement

Loan agent’s warrant/ power of attorney Minister of

Finance or Loan Agent

Sign loan agreement or sign loan agent’s warrant/power of attorney with the authority to sign on behalf of the Minister of Finance.

Loan Agent to sign on behalf of the Minister of Finance

Inputs:

Loan agreement Loan agent’s warrant/ power of attorney Outputs:

Signed loan agreement Front Office

Desk Officer

Prepare draft term sheet and press statement.

Inputs:

Signed loan agreement Outputs:

Draft term sheet Draft press statement Head of Front

Office Approve term sheet and press statement. Send copy of press statement to Minister of Finance’s office for release.

Inputs:

Draft term sheet Draft press statement Outputs:

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Press statement released

Front Office

Desk Officer Send term sheet and copy of the loan agreement to back office for input to debt recording system and processing.

Send copy of the loan agreement to the Accountant-General’s Office, Central Bank and project

implementing agency (PIA).

Inputs: Term sheet

Signed loan agreement Outputs:

Signed loan agreement and term sheet sent to back office

Signed loan agreement sent to Accountant-General’s Office, Central Bank and PIA Project

Implementing Agency

Ensure that the conditions precedent and effectiveness of the loan are met.

Inputs:

Signed loan agreement

A

CTIVITY

2.2 E

XTERNAL

L

OAN

M

OBILISATION

Once the contracting of loans has been concluded, the DMO will need to process all debt transactions including disbursements. Because different types of loans from multilateral and bilateral lending agencies can be disbursed in various ways, the task of compiling disbursement data can be complex. For instance, in the case of

project loans, disbursement can take the form of advances to the borrowing entity, direct payment by the lender to suppliers of goods and services, or on the

reimbursement basis after the borrower has already paid the suppliers. The timing of the disbursement under these methods is different. Under the advances approach, it is the periodic payments by the lender to the borrowing government that

constitutes disbursement; under the direct payment approach, it is the moment when the lender pays the supplier; and under the reimbursement approach, it is when reimbursements are made to the borrowing government. The DMO must keep track of these transactions and reconcile its records at regular intervals with

information maintained by the project implementing agencies.

Once a multilateral or bilateral loan agreement has been signed, the funds to be provided from the funding agency are set out in the disbursement profile during the disbursement period. This process of flow of funds from the funding agencies to the beneficiaries is known as “disbursement”. All funding agencies have different requirements to be fulfilled for arranging withdrawal of proceeds. Disbursement of project loans can take the form of:

• Advances: advances to the borrowing entity—disbursements are to be recorded when the lender advances funds to the borrower.

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• Direct Payment: direct payment by the lender to suppliers of goods and services—disbursements are to be recorded when the lender pays the supplier. • Reimbursement: on a reimbursement basis after the borrower has already paid

the suppliers—disbursements are to be recorded when the lender makes reimbursements to the borrower

In some cases, the DMO is the authorised agency that is responsible for arranging disbursements from the funding agencies following the prescribed policies and procedures in the respective loan agreements. This will involve the DMO processing the Claim submitted by the Project Implementing Agency, checking it for

compliance with the loan agreement, and submission of the claim to the relevant funding agency. Also, all disbursements from the funding agencies to the

beneficiaries will be routed through the DMO.

The DMO needs to determine the date and amount of all disbursements. The back office gathers this information through receipt of disbursement notices from the Project Implementing Agency and/or the funding agency, or by accessing creditor websites (World Bank, African Development Bank, Asian Development Bank etc), contacting creditors directly, and/or contacting line Ministries. The Back Office Desk Officer will gather the information on the actual transactions and enter the data into the debt recording system.

Business Process/Workflow Loan Entry

Environment/Context:

Following the signing of the loan agreement, the DMO back office will be

responsible for inputting the loan details into the debt recording system. The loan details will be set out in the loan agreement and the term sheet prepared by the front office. The loan will be entered by a desk officer and checked by a

supervisor. Back Office

Desk Officer Obtain term sheet and loan agreement from front office.

Input loan details into debt recording system following data entry

procedure manual. Inputs: Term sheet Loan agreement Outputs: Updated debt recording system Back Office

Supervisor Check loan data entered into debt recording system from term sheet and loan agreement.

Inputs: Term sheet Loan agreement Updated debt recording system Outputs:

Check of updated debt recording system

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Disbursement Advances Environment/Context:

The DMO will record disbursements when the lender advances funds to the borrowing entity. The back office gathers this information through receipt of disbursement notices from the Project Implementing Agency and/or the funding agency, or by accessing creditor websites (World Bank, African Development Bank, Asian Development Bank etc), contacting creditors directly, and/or contacting line Ministries.

Back Office

Desk Officer Receive loan disbursement advice from Project Implementing Agency and/or the funding agency, or by accessing creditor websites.

Check disbursement for compliance with the loan agreement and funding agency policies and procedures. Input details of the disbursement into debt recording system.

Prepare disbursement notice either generated from the debt recording system or manually setting out the receipt currency, amount, date and bank account. Inputs: Loan disbursement advice Outputs: Updated debt recording system Disbursement notice Back Office

Supervisor Check disbursement data entered into debt recording system against the loan disbursement advice. Check disbursement notice.

Inputs:

Loan disbursement advice

Disbursement notice Outputs:

Disbursement notice Head of Back

Office

Approve disbursement notice and send to the Accountant-General.

Inputs: Disbursement notice Outputs: Approved disbursement notice

Accountant-General Ensure disbursements have been paid to the borrowing entity. Input disbursement details to the government financial reporting

Inputs:

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system (IFMIS). financial reporting system

Disbursement Direct Payments Environment/Context:

The DMO will record disbursements when the lender pays the supplier of goods and services. The back office gathers this information through receipt of

disbursement notices from the Project Implementing Agency and/or the funding agency, or by accessing creditor websites (World Bank, African Development Bank, Asian Development Bank etc), contacting creditors directly, and/or contacting line Ministries.

Back Office Desk Officer

Receive loan disbursement advice from Project Implementing Agency and/or the funding agency, or by accessing creditor websites.

Check disbursement for compliance with the loan agreement and funding agency policies and procedures. Input details of the disbursement into debt recording system.

Inputs:

Office Approve disbursement notice and send to the Accountant-General. Inputs: Disbursement notice Outputs:

Approved disbursement notice

Accountant-General Ensure disbursements have been paid to the supplier of goods and services. Input disbursement details to the

Inputs:

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government financial reporting

system (IFMIS). Updated government financial reporting system

Disbursement Reimbursements Environment/Context:

The DMO will record disbursements when the lender makes reimbursements to the borrower for payments already made to suppliers. The DMO may be required to prepare withdrawal or replenishment applications to send to the funding agency. The back office will check and process the application and gather the

disbursement information through receipt of disbursement notices from the Project Implementing Agency and/or the funding agency, or by accessing creditor

websites (World Bank, African Development Bank, Asian Development Bank etc), contacting creditors directly, and/or contacting line Ministries.

Back Office

Desk Officer Receive loan withdrawal or replenishment application from Project Implementing Agency. Check application for compliance with the loan agreement and funding agency policies and procedures. Prepare Withdrawal/Replenishment Application for submission to the relevant funding agency.

Inputs: Loan withdrawal or replenishment application Outputs: Withdrawal/ Replenishment Application Back Office

Supervisor Check Withdrawal/Replenishment Application to be submitted to the relevant funding agency.

Inputs: Withdrawal/ Replenishment Application Outputs: Withdrawal/ Replenishment Application notice Head of Back Office Approve Withdrawal/Replenishment Application to be submitted to the relevant funding agency.

Inputs: Withdrawal/ Replenishment Application Outputs: Approved Withdrawal/ Replenishment Application Back Office

Desk Officer Send Withdrawal/Replenishment Application to the relevant funding Inputs: Approved Withdrawal/ Replenishment

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agency. Application Outputs: Withdrawal/ Replenishment Application sent to funding agency Funding

agency Process Withdrawal/Replenishment Application. Make disbursement to the

designated government bank account. Inputs: Withdrawal/ Replenishment Application Outputs: Disbursement Back Office

Desk Officer Receive loan disbursement advice from Project Implementing Agency and/or the funding agency, or by accessing creditor websites. Check disbursement against Withdrawal/Replenishment

Application and note any variance. Input details of the disbursement into debt recording system.

Inputs:

Office Approve disbursement notice and send to the Accountant-General. Inputs: Disbursement notice Outputs:

Approved disbursement notice

Accountant-General Ensure disbursements have been credited to the designated government bank account.

Inputs:

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Input disbursement details to the government financial reporting system (IFMIS).

Updated government financial reporting system

A

CTIVITY

2.3 E

XTERNAL

L

OAN

S

ERVICING

Debt servicing activities cover the payment of principal, interest and expenses associated with all external loan obligations of the government. The payment process is initiated by back office which is responsible for the servicing of government debt obligations. Where an Integrated Financial Management Information System (IFMIS) is in place, this will be used by all government ministries and agencies, including the DMO, as the main tool for registering, monitoring and controlling their respective budget and financial execution transactions including all debt servicing activities. The Accountant-General is responsible for the execution of public debt payments, which are processed by the Central Bank through the

relevant government bank accounts using the S.W.I.F.T. payment system.

Payment advices are received from the funding agency and checked by the back office. If there is any discrepancy with debt information in the debt recording system, the desk officer will contact the funding agency or fiscal agent to reconcile the difference. A payment advice is prepared and either input/validated in IFMIS (if the DMO has direct access) or checked/authorised and sent to the Accountant-General for further processing. The Accountant-Accountant-General will send the payment authority to the Central Bank in order that the payment can be made in the relevant currency and the local currency equivalent debited to the government account at the Central Bank. If the government purchases the foreign currency through a commercial bank, payment will be made in local currency to the commercial bank that will instructed to make payment in foreign currency to the designated bank account of the funding agency.

Business Process/Workflow Payment Advice

The DMO will be responsible for receiving the payment notice from the funding agency or fiscal agent and checking this against the debt recording system. Payment advices will be prepared by the back office for submission to the Accountant-General who is responsible for preparing a payment order or authority to be issued to the Central Bank for making payment.

Back Office

Desk Officer Receive Payment Notice from the funding agency. Check Payment Notice against data in debt recording system.

Prepare Payment Advice or enter

Inputs:

Payment notice Outputs:

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payment into IFMIS. Back Office

Supervisor/ Head of Back Office

Check Payment Advice or payment

set up in IFMIS. Inputs: Payment advice Outputs:

Payment advice Head of DMO Approve Payment Advice or

payment set up in IFMIS.

Inputs: Payment advice Outputs: Approved payment advice Back Office Desk Officer

Send Payment Advice to Accountant-General for further processing (IFMIS will alert

Accountant-General of payment advice pending). Inputs: Approved payment advice Outputs: Approved payment advice sent to Accountant-General for further processing

Payment Authority – Accountant-General Environment/Context:

The Accountant-General is responsible for preparing a payment authority or instruction to be issued to the Central Bank for making payment.

Desk Officer Receive Payment Advice from DMO. Check Payment Advice against Budget approvals and internal controls.

Prepare Payment Authority for the Central Bank.

Inputs:

Payment advice Outputs:

Payment authority

Supervisor Check Payment Authority. Inputs:

Payment authority Outputs:

Check payment authority

Accountant-General Authorise Payment Authority. Inputs: Payment authority Outputs:

Authorised payment authority

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Desk Officer Send Payment Authority to the

Central Bank. Inputs: Authorised payment authority

Outputs:

Authorised payment authority sent to Central Bank

Payment Processing – Central Bank Environment/Context:

The Central Bank is responsible for making payment to the funding agency or fiscal agent. There may be a standing order whereby the Central Bank can debit the designated government bank account and make payment in the settlement currency out of the foreign exchange reserves to the designated bank account. In some cases, there may be a foreign exchange transaction to cover the sale of local currency and purchase of the foreign currency.

Receive Payment Authority from Accountant-General.

Set up payment in S.W.I.F.T.

Inputs:

S.W.I.F.T. transfer set up Back Office

Supervisor Check payment in S.W.I.F.T. Inputs: S.W.I.F.T. transfer set up Outputs:

S.W.I.F.T. transfer checked

Head of Back

Office Authorise payment in S.W.I.F.T. Inputs: S.W.I.F.T. transfer set up Outputs:

S.W.I.F.T. transfer

authorised & processed Back Office

Desk Officer Send confirmation to the DMO Back Office of payment details. Inputs: S.W.I.F.T. transfer processed Outputs:

Confirmation to DMO

A

CTIVITY

3:

D

OMESTIC

L

OANS

The government may borrow from domestic sources using loans or credit facilities arranged with a commercial bank and/or with the Central Bank under a ways and

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means advance and/or overdraft. The initial role of DMO will be to participate in negotiations normally led by the Ministry of Finance on the terms and conditions for each loan or credit facility and conclude the necessary legal documentation. The Central Bank ways and means advances and/or overdraft will be used by the Accountant-General to meet shortfalls in revenue or for short-term financing of expenditure commitments. Similar credit facilities may be arranged with a commercial bank.

Loans or credit agreements contracted with commercial banks will be drawn and repaid according to the loan terms and conditions. Once the documentation is in place, the DMO will record all debt transactions and initiate payments of principal and interest required under the loan or credit agreement. The front office will prepare a terms sheet for each loan and credit facility. The back office will be responsible for input of the loans and credit facilities into the debt recording system and for settlement and payment processing.

A

CTIVITY

3.1 D

OMESTIC

L

OAN

C

ONTRACTING

Domestic loan and facility negotiations are led by the Ministry of Finance in

collaboration with the DMO and other agencies if necessary (line ministries, Ministry of Justice or Attorney-General, Central Bank, etc). The DMO obtains a mandate from the government (Public Debt Committee or Minister of Finance) to negotiate the loan or facility. The mandate will specify a set range for the key terms of the loan. The Ministry of Finance/DMO negotiate the terms and conditions of the loan or facility, a legal opinion on the loan agreement is obtained from the government’s legal team and from legal counsel and the loan agreement is signed by the Minister of Finance. The front office of the DMO will prepare a term sheet with the loan or facility details and forward this together with the signed loan agreement to the back office for recording and processing the loan or facility.

Business Process/Workflow Domestic Loan Contracting Environment/Context:

The government arranges a loan or credit facility with a commercial bank and/or from the Central Bank (ways and means advance and/or overdraft). The DMO will participate in negotiations with the commercial bank or Central Bank to agree the loan or credit facility terms and conditions.

Commercial Bank or Central Bank, Ministry of Finance

Pre-consultations to agree the terms and conditions of the loan or credit facility.

Inputs:

Pre-consultation Outputs:

Loan or credit facility proposal

Front Office

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Finance.

Prepare draft loan or credit facility mandate report with loan or credit facility terms and conditions to send to Public Debt Committee or Minister of Finance for approval.

proposal Outputs:

Draft loan or credit facility mandate report

Head of Front

Office Sign-off draft loan or credit facility mandate report. Inputs: Draft loan or credit facility mandate report Outputs:

Signed-off draft loan or credit facility mandate report

Head of DMO Authorise loan or credit facility mandate report.

Submit to Public Debt Committee or Minister of Finance for approval.

Inputs:

Signed-off draft loan or credit facility mandate report

Outputs:

Authorised loan or credit facility mandate report

Public Debt Committee or Minister of Finance

Approve loan or credit facility

mandate report. Inputs: Loan or credit facility mandate report Outputs:

Approved loan or credit facility mandate report Head of Front

Office & Front Office Desk Officer

Participate in negotiations with the commercial bank or Central Bank along with Ministry of Finance. Negotiate terms and conditions of the loan or credit facility.

Inputs:

Approved loan or credit facility mandate report Outputs:

Negotiated loan or credit facility terms and conditions

Middle Office Legal Officer or Representative

Negotiate and finalise legal documentation throughout the negotiation process.

Obtain legal opinion on the loan or credit facility from legal counsel to ensure that covenants and other conditions are met.

Prepare loan agent’s warrant/power

Inputs:

Negotiated loan or credit facility terms and conditions

Outputs:

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of attorney (if Minister of Finance

cannot sign) power of attorney Front Office

Desk Officer Finalise loan or credit facility terms and conditions and conclude the loan or credit facility agreement.

Inputs:

Draft loan or credit facility agreement Loan agent’s warrant/ power of attorney Head of Front

Office Sign-off loan or credit facility agreement. Inputs: Draft loan or credit facility agreement Loan agent’s warrant/ power of attorney Outputs:

Signed-off loan or credit facility agreement Loan agent’s warrant/ power of attorney Head of DMO Authorise loan or credit facility

agreement.

Submit to Minister of Finance for signing.

Inputs:

Signed-off loan or credit facility agreement Loan agent’s warrant/ power of attorney Outputs:

Authorised loan or credit facility agreement

Loan agent’s warrant/ power of attorney Minister of

Finance or Loan Agent

Sign loan or credit facility agreement or sign loan agent’s warrant/power of attorney with the authority to sign on behalf of the Minister of Finance. Loan Agent to sign on behalf of the Minister of Finance

Inputs:

Loan or credit facility agreement

Signed loan or credit facility agreement Front Office

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facility agreement Outputs:

Draft term sheet Draft press statement Head of Front

Office Approve term sheet and press statement. Send copy of press statement to Minister of Finance’s office for release.

Inputs:

Draft term sheet Draft press statement Outputs:

Term sheet Press statement released

Front Office

Desk Officer Send term sheet and copy of the loan or credit facility agreement to back office for input to debt

recording system and processing. Send copy of the loan or credit facility agreement to the

Accountant-General’s Office, Central Bank and project implementing agency (PIA).

Signed loan or credit facility agreement Outputs:

Signed loan or credit facility agreement and term sheet sent to back office

Signed loan or credit facility agreement sent to

Accountant-General’s Office, Central Bank and PIA

A

CTIVITY

3.2 D

OMESTIC

L

OAN

M

OBILISATION

Once the contracting of a loan or credit facility has been concluded, the DMO will need to record the loan or credit facility and any initial debt transactions to ensure that confirmation and settlement activities are completed. These activities will include the processing of each drawdown from the loan and/or credit facility. For the ways and means advances with the Central Bank, there will normally be

standing order with the Central Bank to credit/debit the designated government bank account upon authorisation from the Accountant-General. The DMO will record the credits and debits for tracking debt service costs and the outstanding balance of the ways and means advance and overdraft if such an arrangement is also in place to incorporate in the total domestic debt outstanding.

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Business Process/Workflow Loan or Credit Facility Entry Environment/Context:

Following the signing of the loan or credit facility agreement, the DMO back office will be responsible for inputting the loan details into the debt recording system. The loan or credit facility details will be set out in the loan or credit facility agreement and the term sheet prepared by the front office. The loan or credit facility will be entered by a desk officer and checked by a supervisor.

Obtain term sheet and loan or credit facility agreement from front office. Input loan or credit facility details into debt recording system following data entry procedure manual.

Outputs: Updated debt recording system Back Office

Supervisor Check loan or credit facility data entered into debt recording system from term sheet and loan agreement.

Updated debt recording system Outputs:

Drawdown or Advance Environment/Context:

The DMO will record a drawdown or advance from the loan or credit facility. The back office gathers this information through receipt of drawdown or advance notices from the commercial bank and/or Central Bank, or from the Accountant-General.

Receive drawdown or advance advice from commercial bank,

Central Bank or Accountant-General. Check drawdown or advance for compliance with the loan or credit facility agreement.

Input details of the drawdown or advance into debt recording system. Prepare drawdown or advance

Inputs: Drawdown or advance advice Outputs: Updated debt recording system Drawdown or advance notice

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notice either generated from the debt recording system or manually setting out the receipt currency, amount, date and bank account. Back Office

Supervisor Check drawdown or advance data entered into debt recording system against the loan drawdown or advance advice.

Check drawdown or advance notice. Inputs: Drawdown or advance advice Drawdown or advance notice Outputs:

Office

Approve drawdown or advance notice and send to the Accountant-General. Inputs: Drawdown or advance notice Outputs: Approved disbursement notice

Accountant-General Ensure drawdown or advance has been paid to the correct bank account.

Input drawdown or advance details to the government financial reporting system (IFMIS). Inputs: Drawdown or advance notice Outputs: Updated government financial reporting system

A

CTIVITY

3.3 D

OMESTIC

L

OAN

S

ERVICING

Debt servicing activities cover the payment of principal, interest and expenses associated with all domestic loan and credit facility obligations of the government. The payment process is initiated by back office which is responsible for the servicing of government debt obligations. Where an Integrated Financial Management Information System (IFMIS) is in place, this will be used by all government ministries and agencies, including the DMO, as the main tool for registering, monitoring and controlling their respective budget and financial execution transactions including all debt servicing activities. The Accountant-General is responsible for the execution of public debt payments, which are processed by the Central Bank through the

relevant government bank accounts using internal transfers to/from the Central Bank and the S.W.I.F.T. payment system for payments to/from the commercial bank(s). Payment advices are received from the Central Bank or commercial bank and checked by the back office. If there is any discrepancy with debt information in the

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debt recording system, the desk officer will contact the Central Bank or commercial bank to reconcile the difference. A payment demand is prepared and either input/ validated in IFMIS (if the DMO has direct access) or checked/authorised and sent to the Accountant-General for further processing. The Accountant-General will send the payment instruction to the Central Bank in order that an internal transfer can be made from the government account at the Central Bank or payment made to the designated account at the commercial bank.

Business Process/Workflow Payment Advice

The DMO will be responsible for receiving the payment notice from the Central Bank of commercial bank and checking this against the debt recording system. Payment advices will be prepared by the back office for submission to the Accountant-General who is responsible for preparing a payment order or authority to be issued to the Central Bank for making payment.

Back Office

Desk Officer Receive Payment Notice from Central Bank or commercial bank. Check Payment Notice against data in debt recording system.

Prepare Payment Advice or enter payment into IFMIS.

Inputs: Payment notice Outputs: Payment advice Back Office Supervisor/ Head of Back Office

Check Payment Advice or payment

set up in IFMIS. Inputs: Payment advice Outputs:

Payment advice Head of DMO Approve Payment Advice or

payment set up in IFMIS. Inputs: Payment advice Outputs:

Approved payment advice

Back Office

Desk Officer Send Payment Advice to Accountant-General for further processing (IFMIS will alert

Accountant-General of payment advice pending). Inputs: Approved payment advice Outputs: Approved payment advice sent to Accountant-General for further processing

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Payment Authority – Accountant-General Environment/Context:

The Accountant-General is responsible for preparing a payment authority or instruction to be issued to the Central Bank for making payment.

Desk Officer Receive Payment Advice from DMO. Check Payment Advice against Budget approvals and internal controls.

Prepare Payment Authority for the Central Bank.

Inputs:

Payment advice Outputs:

Payment authority

Supervisor Check Payment Authority. Inputs:

Check payment authority

Accountant-General Authorise Payment Authority. Inputs: Payment authority Outputs:

Authorised payment authority

Desk Officer Send Payment Authority to the

Central Bank. Inputs: Authorised payment authority

Outputs:

Authorised payment authority sent to Central Bank

Payment Processing – Central Bank Environment/Context:

The Central Bank is responsible for making payment to the Registry. There may be a standing order whereby the Central Bank can debit the designated

government bank account and credit the bank account of the registry. Back Office

Desk Officer Receive Payment Authority from Accountant-General. Set up transfer from government account to the Registry.

Inputs:

Bank transfer set up Back Office