1. Australian Office of Financial Management Michael Allen March 2001

2. Introduction Commonwealth financing task AOFMs role AOFM funding activities

3. Commonwealth Government Financing Task

4. 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.

5. Commonwealth Government Debt

6. 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

7. OECD Net Debt

8. Commonwealth State Corporate CGL Market Outstandings

9. Role of the Australian Office of Financial Management

10. AOFM AOFM established 1 July 1999 Debt management responsibility Prudent Sovereign Debt manager

11. 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

12. 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

13. AOFM Policy constraints Market liquidity Risk free pricing benchmark Commercial constraints

14. Debt Management Responsibility Debt issuance Risk management Cash management General Government interest calculations Market communication

15. Funding Strategy Objectives Prudent Benchmark Portfolio Flexible strategies Investor demand Liquidity premium Market efficiency

16. AOFM Funding Activities

17. Debt Maturity Profile Note: Excludes Treasury Notes

18. Change in Funding Source

19. T-Note Funding

20. Other Funding Index Linked –fixed issuance dates –$300m 2000/2001 issuance Floating Rates Bonds –No new issuance

21. Bond Market Funding Focus on liquidity Target long dated maturities Regular tender program $3 - $4 bn 2000/2001 issuance

22. Bond Market Maturity Profile

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