Australian Government, the Australian Office of Financial Management

Australian Office of Financial Management

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Michael Allen
March 2001

Australian Office of Financial Management

Introduction

  • Commonwealth financing task
  • AOFM's role
  • AOFM funding activity

Introduction

Commonwealth Government Financing Task

Commonwealth Government Financing Task

Headline Cash Balance*

* Following recent changes in the Australian National Accounts Standards, the underlying and headline cash balance estimates in the chart from 1998-99 onwards include payments by the Commonwealth in respect of accumulated PTE superannuation liabilities.

Headline Cash Balance

Commonwealth Government Debt

Commonwealth Government Debt

Fiscal Context

  • Government set out in Budget
    • a managed reduction in CGS
    • not to the full extent of projected reduction in net debt
    • maintain liquidity in benchmark lines
  • Formal market updates

Fiscal Context

OECD Net Debt

OECD Net Debt

CGL Market Outstandings

CGL Market Outstandings

Role of the Australian Office of Financial Management

Role of the Australian Office of Financial Management

AOFM

  • AOFM established 1 July 1999
  • Debt management responsibility
  • Prudent Sovereign Debt manager

AOFM

AOFM

  • Australia among the leaders in the OECD in pursuing a complementary focus on reform of public sector financial management
    • Charter of Budget Honesty
    • Accrual budgeting, reporting and accounting

AOFM

AOFM

  • sovereign debt management is a business exposed to a variety of financial risks
    • fiduciary responsibility to taxpayers
  • critical distinctions between sovereign and corporate sector

AOFM

AOFM

  • Policy constraints
  • Market liquidity
  • Risk free pricing benchmark
  • Commercial constraints

AOFM

Debt Management Responsibility

  • Debt issuance
  • Risk management
  • Cash management
  • General Government interest calculations
  • Market communication

Debt Management Responsibility

Funding Strategy Objectives

  • Prudent
  • Benchmark Portfolio
  • Flexible strategies
  • Investor demand
  • Liquidity premium
  • Market efficiency

Funding Strategy Objectives

AOFM Funding Activities

AOFM Funding Activities

Debt Maturity Profile

Note: Excludes Treasury Notes

Debt Maturity Profile

Change in Funding Source

Change in Funding Source

T-Note Funding

T-Note Funding

Other Funding

  • Index Linked
    • fixed issuance dates
    • $300m 2000/2001 issuance
  • Floating Rates Bonds
    • No new issuance

Other Funding

Bond Market Funding

  • Focus on liquidity
  • Target long dated maturities
  • Regular tender program
  • $3 - $4 bn 2000/2001 issuance

Bond Market Funding

Bond Market Maturity Profile

Bond Market Maturity Profile

Conclusion

  • Reduced Commonwealth financing task
  • Potential for further decline in relative liquidity
  • AOFM to provide regular updates

Conclusion

You are currently viewing a version of the Australian Office of Financial Management website as archived in March 2014. For current information, please visit aofm.gov.au.