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PUBLIC DEBT MANAGEMENT SYSTEM IN GOVT. ACCOUNTING PHENOMENA

March 22nd, 2009 No comments
debt
Kh. Atiar Rahman asked:


Public Debt Management is a routine of substantiating as good as implementing a process for handling a government’s debt in sequence to lift a compulsory volume of funding, lane a price as good as risk objectives, as good as to assemble any alternative open debt supervision goals for which a supervision has put criteria for building as good as progressing an fit as good as glass marketplace for inhabitant securities. Hence,

 

The Legal horizon should explain a supervision to steal as good as to emanate brand brand new debt, deposition as good as commence sell on seductiveness of a Government. The organizational horizon should be good specified where mandates as good as purposes have been good articulated. Sovereign debt supervision might camber a country’s debt supervision classification or a elemental depository. Debt supervision inform should be finished publicly which would examination preceding year’s activities as good as yield summary of borrowing skeleton formed on bill protuberance.

 

The Public Accounts comprises of 3 groups Debt, Deposits as good as Reserves as good as Remittances. The ‘Debt’ Comprises taking as good as payments in apply oneself of which supervision incurs a guilt to pay off a income perceived or has a explain to redeem a volume paid together with repayments of a former as good as recoveries of a latter. State General Provident Fund, National Savings Certificate as good as Postal Savings Certificates etc. have been available in this division. The ‘Deposit as good as Reserves’ comprises profits as good as remuneration for which a Government acts as a banker. The government, as a banker, deals with polite deposit, personal deposition as good as renovation haven comment etc. The ‘Remittances’ multiplication comprises all adjusting heads for instance, remittances to as good as from Bangladesh Bank as good as PWD, Defence, Forest, T as good as T as good as Postal etc. Remittances to Bangladesh idea abroad have been additionally enclosed in this division. The form of accounting used by a Government of Bangladesh is formed on a money basement of accounting; which is, recording a stipulate at a time when money is paid or received. Cash basement of Accounting is a normal basement of govt accounting. There have been utterly dual opposite sets of published accounts in Bangladesh- a Annual Finance Accounts as good as a Annual Appropriation Accounts as good as Annual Finance Accounts: The Finance Accounts simulate sum annual profits as good as output of a supervision together with germane financial statements.

Furthermore, a money change of a supervision is additionally publicized in this matter where credentials of a Annual Finance Accounts is vested with a C&AG according to Article 4 of a Comptroller as good as Auditor General (Additional Functions) Act, 1974. Appropriation Accounts: The allowance is a proportionate inform observation extensive head-wise/code-wise idealisation budgetary placement as good as accurate losses of opposite ministries as good as their subordinate offices with sum of variances (if any). According to Article 128 of a Constitution as good as Rule 4 of a Comptroller as good as Auditor General (Additional functions) Act 1974, credentials of a Appropriation Accounts by a endangered Accounts Offices, it is reviewed by a Directorates of Civil Audit as good as PT&T according to endangered portions as good as thereafter approved by a C&AG with compulsory observations.

The first accounts have been hold in haven where a sell take place. There have been dual branches of first accounts, a single kept by a govt. accounting departments; as good as a alternative kept by a self-drawing departments good known as departmentalized accounts departments, similar to Public Works Department, Telephone Board Postal Department, timberland Department etc. To keep coherence as good as for a preference of executive functions, govt. has set up accounting offices underneath a carry out of CGA. CGDF as good as ADGFR. Office of a CGA covers all ministries as good as departments solely Defence as good as Railway. The lowest tire of accounting section proposal a Controller General of Accounts (CGA) is a Upazilla Accounts Office. Next section is a District Accounts Office, which is located at a District Headquarters. For a comment purpose, there have been additionally twenty informal Accounts Offices at a larger district headquarters, which connect a accounts perceived from a District as good as Upazilla Accounts Officers for leading delivery to a Controller General of Accounts. The Chief Accounts Offices of a particular Ministries keep accounts of a presidency. There have been twenty-one Accounts Offices for a ministries as good as groups of a govt. They work underneath a Administrative carry out of a C&AG as good as CGA as good as underneath a organic carry out of a cabinet member of a endangered Ministry/Division. All these Accounts Offices as good as their activities comforts a CGA bureau to hope for a Monthly Accounts, a Finance Accounts as good as Appropriation Accounts. Considering a special inlet of functions as good as activities of a Defense Service as good as a Railway. Govt. has determined distant departments for their accounting functions, namely a CGDF as good as a ADGFR respectively. Accounting units of these Departments additionally hope for as good as say their monthly accounts, which foster a CGDF as good as a ADGFR to hope for a Monthly Accounts, a Finance Accounts as good as a Appropriation Accounts.

The accounting complement for a departments, which run a Departmentalized judgment such as Railway, Defence, Postal, T&T, Works, Forest etc, is a bit opposite from judgment such as Railway, Defense, Postal, T&T, Works, Forest etc. is a bit opposite from a ubiquitous supervision accounting system. However, solely Railway all alternative departments do not have apart bank account. The Railway has apart bank comment with a Bangladesh Bank as good as which shows apart by a carry out called ”Remittance”"- an adjusting carry out in a supervision comment as good as deposition it their income by regulating this carry out too. The Bangladesh Bank (BB) acts a landowner to a supervision nonetheless there exists eminence in in between Consolidated Fund as good as Public Account, in outcome money change of a Government is a single as good as which lies with a Bangladesh Bank. The Accounting Offices emanate coupon in foster of a parties/person’s as good as thereafter a cheques have been eventually drawn from a (now Central Reconciliation Unit) front settlement as good as outward a presidency where there have been no branches of BB Sonali Bank acts as a Banker to a Government Cheques released by a Accounting Offices as good as drawn on a Sonali Bank thereafter have been sent behind to a endangered Accounting Offices for reconciliation. The Thana, District as good as Chief Accounts Officers jot down any as good as each stipulate of a supervision as a first accounts where it is applicable. Initial accounts have been available underneath a germane carry out of accounts where a stipulate is taken place where Upazilla as good as District Accounts Offices send accounts as common by a 10th of a following month. The DCA Offices subsequently systematise a minute accounting inform underneath a particular carry out of accounts as good as propel it to a CGA by a 20th of which month. On a alternative side, self-drawing Departments broadcast their accounts to a CAO of their particular ministries. Along with those, a CAO Office prepares first accounts of a presidency, systematise as good as connect a accounts inside of a reach of a ministry’s bounds as good as thereafter send a accounts to a CGA by 20th of a following month. They additionally send a accounts to their particular Principal Accounting Officer/Secretary of Ministry or Division. CGA Prepares combined accounts formed on a accounting interpretation granted by a CAO as good as DCA’s. Similar procession is followed in a accounting units of a Defense Finance as good as Railway so distant as upsurge of accounts is concerned. In apply oneself of credentials of a Finance Accounts as good as a Appropriation Accounts of a Defence Ministry as good as a Railway Department, a CGDF as good as a ADGFR respectively fool around a pass role. The monthly Accounts rebuilt as good as confirmed by a Accounts Officers of a supervision have been a basement of Finance Accounts as good as a Appropriation Accounts. The following criteria have been a cause which is value noting.



Well-articulated responsibilities for staff, pure monitoring, carry out policies as good as stating arrangements required.

Precise as good as extensive supervision inform complement with correct safeguards.

Staff be theme to a formula of carry out as good as dispute of seductiveness discipline re supervision of personal financial affairs.



Debt Management approach:

Risk can be assuage by transforming debt make up opposite costs which is took off for borrowing decisions at marked down risks. Debt managers should cruise financial as good as alternative risks evil to supervision money flows where delicately comment as good as handling risk compared with unfamiliar promissory note as good as marked down tenure floating rate debt is practical critical with due regard. Debt Management Strategy should be Cost in effect where money supervision policies needs to encounter with a tall grade of faith financial obligations as they tumble due. A horizon enabling debt managers to conduct a trade-off in in between approaching costs as good as risk in supervision debt portfolio should be set onward in consistence with genuine hold up situation. Impact of fortuitous liabilities on Government financial as good as liquidity on all sides cannot be abandoned whilst creation preference in apply oneself of selecting borrowing criteria.

Risks in emperor debt management

 

Market risks engage changes in seductiveness rate, sell rate as good as commodity prices as good as their stroke on supervision debt servicing. Longer tenure bound rate needs to be preferred. In this connection, rollover risk is an additional cause to revoke risk in a margin of Debt Management System: The risk which debt might have to be rolled over at an scarcely tall cost, as good as in impassioned cases, cannot be rolled over. Operational Risk: A Transaction error, disaster of inner carry out or systems, confidence breaches healthy disasters inspiring commercial operation activity.



Risks in emperor debt supervision

Liquidity risk: It involves a incident when volumes of glass resources lessen fast in face of amazing money upsurge requisite or worry in raising money thru borrowing on marked down notice. Credit Risk: It refers to non-performance by borrowers on loans or alternative financial resources e.g. fortuitous liabilities, derivative stipulate entered in to by debt manager.

Develop Efficient Govt. Securities Market





To minimize price as good as risk debt managers should essay to rise fit bonds market. To essay to grasp a extended financier bottom for both made at home as good as unfamiliar requisite with investors being treated with colour equitably.

The first marketplace should be pure as good as predicted with market-based debt issuance. Government should foster a volatile as good as there should have criteria for



 

Debt contra Deficit which

 

deficit is a upsurge of brand brand new debt incurred when a Government spends some-more than it raises as taxes.

 



Ex: When US supervision ran a necessity of $ 100 billion in 1995, it adds to batch of supervision debt, though when it enjoyed a over-abundance of $ 200 billion in 1999, it marked down a batch by which amount.



Objectives of Debt supervision



To safeguard which supervision financing needs as good as a remuneration obligations have been met.

To secure supervision debt at a lowest probable price over middle as good as prolonged range.

It should be unchanging with advantageous grade of risk

Coordination with Monetary as good as Fiscal Policies





Debt Managers, mercantile process advisors as good as executive bankers should share an bargain on a objectives of debt management, mercantile as good as financial policies. They should additionally know Government’s stream as good as destiny liquidity requirements. Debt managers should communicate mercantile authorities their views on a costs as good as risk compared with supervision financing charge as good as debt levels. Divergent objectives reputable where Debt-managers concentration on cost/risk trade-off of debt whilst financial process destined towards achieving price-stability as good as acceleration issues. In this connection, Debt supervision as good as financial process be authorised to perform in their own realms with a single not inspiring a core objectives of a other. Furthermore, a idea of price minimization theme to advantageous turn of risk should not be noticed as a charge to revoke seductiveness rate. Coordination with Monetary as good as Fiscal Policies

 

Debt Managers, mercantile process advisors as good as executive bankers should share an bargain on a objectives of debt management, mercantile as good as financial policies. They should additionally know Government’s stream as good as destiny liquidity charge where Debt managers should communicate mercantile authorities their views on a costs as good as risk compared with supervision financing charge as good as debt levels.



Divergent objectives reputable as good as in this respect, debt-managers concentration on cost/risk trade-off of debt whilst financial process destined towards achieving price-stability as good as acceleration issues.

Debt supervision as good as financial process be authorised to perform in their own realms with a single not inspiring a core objectives of a other.

The idea of price minimization theme to advantageous turn of risk should not be noticed as a charge to revoke seductiveness rate.



Borrowing Authority:

An IMF consult shows that:



In all of a countries surveyed, a authorised supervision to steal rests with a parliament

In many of a countries, legislation has been enacted sanctioning a Ministry of Finance to steal on seductiveness of a government.

In a little others, which energy has been substituted to a Cabinet, as good as in a single box (India) straightly to a state bank.



Debt Management Responsibility in Bangladesh: Regarding debt supervision system, there exists lots of shortcoming to emanate as good as debt supervision marketplace by borrowing as good as substantiating supports as good as in a nutshell, these have been as follows:









The Rules of Business empowers Finance Division to steal as good as boyant marketplace loans. Bangladesh Bank Order 1972 envisages which BB acts as an representative to a Government, between others, for supervision of a open debt, they fool around active purpose in this respect.

FSAP Report of IMF endorsed which a terms, demeanour as good as conditions of borrowing comment should rest with Finance Division.

The Report envisaged which Debt Management Office might be determined in Finance Division. That a Office should inform to Finance Secretary. The Office is obliged for all open debt together with NSCs as good as outmost debt as well. Currently, NSCs debt have been managed by IRD whilst outmost debt have been managed by ERD, whilst borrowing from a promissory note complement is managed by Bangladesh Bank with peripheral. Current Practice in Debt Management

Domestic debt supervision is achieved by BB really mostly not reflecting a needs of Government’s mercantile policy. The design of debt supervision as good as financial supervision seems to get blurred. Because of miss of impasse FD depends on a creditor (BB) for debt batch as good as borrowing inform during a year.



 

Government accounting complement subsequent a authorisation from a Constitution of Bangladesh as good as as such a Constitution empowered a Comptroller as good as Auditor General to lay down a forms as good as manners of a supervision accounting. The Comptroller as good as Auditor General (Additional Functions) Act, 1974 reserved a C&AG with a responsibilities of upkeep a accounts of a Republic. These responsibilities of a Appropriation Accounts. Office of a Controller General of Accounts (CGA), Controller General Defense Finance (CGDF), Additional Director General Finance of Railway (ADGFR) as good as a Bangladesh Bank have been a categorical source of accounting inform for a government. Controller General of Accounts (CGA) plays a many critical purpose in a supervision accounting function. CGA is obliged for gripping a accounts of a profits as good as output which have been finished a govt. departments alternative than a departmentalized accounting Departments as good as a Defense as good as Railway Department. CGDF maintains a accounts of a armed Forces as good as a departments underneath a Ministry of Defense. ADGFR is obliged for gripping a accounts of Bangladesh Railway. Bangladesh Bank furnishes a inform as good as total to a govt. accounting departments per unfamiliar loans as good as aids supposing by a International Development Partners to Bangladesh.



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