Managing cash flows and balances at the Single Treasury Account RUSSIAN TREASURY Managing cash flows and balances at the Single Treasury Account March 2016

RUSSIAN TREASURY Section I Single Treasury Account operations; planning and forecasting funds at the Single Treasury Account 3-9 Section II Managing liquidity at the Single Treasury Account in the Russian Federation 10-16

STA BESP Key cash management elements Active and passive operations Section I STA operations; planning and forecasting funds at STA Key cash management elements STA – aggregate accounts for federal budget funds; Cash – concentration – system for provision and consolidation of funds; BESP – Banking Electronic Speed Payment System, providing for cash concentration; Liquidity planning and STA balances targeting – key element in STA cash flow management; Active and passive operations – operations for unconditional performance of budget commitments and management of idle funds; “Documentary” operations – mechanism for treasury support of contracts, allocation of subsidies, investments and contributions («treasury letters of credit»); Limiting expenditures – setting limits for financing. Cash - concentration BESP STA Liquidity planning and STA balances targeting Active and passive operations “Documentary” operations Limiting expenditures

85 Federal Treasury Departments Single Treasury Account Operations TOFT 2 TOFT 84 TOFT 1 . . . TOFT 85 85 Federal Treasury Departments Single Treasury Account Consolidation of regional account balances (cash-concentration) Daily support to regional accounts (t+1) transfers Sovereign Wealth Funds

Procedures for planning and forecasting federal budget implementation FT Exchange of state secret data is performed outside the information system CCBF, CAF, CCAF IOD of FT develops Federal budget implementation information and sends it to forecast development participants Receipt of federal budget implementation information to develop forecast data Upload of data of forecasting parties to COFT software for analysis Development of forecast data and submission to the FT Cash budget COFT development for federal budget implementation and submission to Russia’s Finance Ministry Uniform Information System of Russian Finance Ministry 597 various forms: 182 forms for revenue; 210 forms for expense; 6 forms for FB deficit financing sources; 91 explanatory notes for revenue; 105 explanatory notes for expense; 3 explanatory notes for FB deficit financing sources; Phase 1 Phase 2 Expense forecasting under PF of the RF FM Phase 3 STA status information generated

Change dynamics for budget and off-budget fund balances for 2015 (RUR bn) Total budget funds Off-budget funds

…... Single Treasury Account Single Treasury Account functions in new conditions Sovereign Wealth Funds Single Treasury Account Consolidation of balances (entries) without “physical” aggregation Targeting balances, defining ∑ for placement/raising transfers …... банковский счет №30101 (DFT 1) treasury account счет Bank account № 30101 (DFT 1) банковский счет №30101 (DFT 2) treasury account Bank account № 30101 (DFT 2) банковский счет 30101 (DFT 85) treasury account Bank account № 30101 (DFT 85) Correspondent account system Treasury account Treasury account Treasury account Treasury account Treasury account Treasury account Cash budget planning and forecasting Лицевой счет Customer account Customer account Лицевой счет Лицевой счет Customer account Customer account Customer account Лицевой счет Лицевой счет Customer account Лицевой счет Лицевой счет Customer account Customer account Лицевой счет Customer account Лицевой счет Customer account Customer account Лицевой счет Лицевой счет Customer account

Key activities to set up conditions for development of cash movement forecast for STA Pilot regions (2014) 7 regions Rollout Phase 1 (QI 2015) 23 regions Rollout Phase 2 (QII 2015) 30 regions Rollout Phase З (QIII 2015) 24 regions Cascaded training of financial authorities and review of treasury technologies Transfer of information by regional financial authorities to TOFT Generation of Forecasts for cash movement across accounts TOFT information transfer to COFT Generation of pilot cash movement forecast for STA Expansion of forecasting scope

STA operations Development of cash budget forecasts Pre-requisites for efficient STA liquidity management STA operations -Placement of idle STA funds; - Attracting funds to STA (potentially) Development of cash budget forecasts Continuous operation of the Single Treasury Account High-quality forecasts (short-, medium-, long-term) Extensive set of management tools

DEVELOPMENT PROSPECTS Section II STA liquidity management in the Russian Federation Liquidity Management Tools for Federal Budget Single Account Forward REPO April 2015 Budget loans to municipalities Currency swap January 2015 Overnight REPO transactions November 2014 FX deposits for 5 to 245 days DEVELOPMENT PROSPECTS Budget loans up to 50 days February 2014 Budget loans to Russian regions April 2008 Russian rouble deposits for 5 to 245 days Short-term loans

Aggregate statistics for STA idle funds management in 2008 - 2015. Total funds placed - RUR 52 162,16bn. Total revenues – RUR 236,87bn Total revenues - RUR 75,11bn 2015 revenue plan (deposits, repo, loans) Above plan performance

Placement of funds to bank deposits Revenue RUR 12 923,6 bn RUR 68,5 bn Contracts Credit Institutions Federal Treasury Limits Selection parameters Bids Selection results Exchange

REPO buy(sell) operations for securities Placement Revenue RUR15517,5 bn RUR6,5 bn Trading Mechanism (Exchange, OTC) Federal Treasury Credit institutions transactions transactions Reporting Short deal algorithm Credit institutions Russian Treasury Russian FM CBR Security sell bids Bid book Hurdle rate Buy bid Deal execution

Budget loans to RF regions and municipalities in 2015 Lending conditions The right to raise loans is provided by budget law (resolution) of a constituent region of the RF (municipality) The limit is 1/12 of budget revenue , established by budget law (resolution) of a constituent region of the RF (municipality) for current financial year The interest rate is established by the federal budget law (at 0,1% p.a.) The maximum loan tenor is 30 days (loan payback deadline - November 25 of current year) As of 01.01.2016 Parameter Amount (RUR mn) 2015 Loans: To RF regions Municipalities 916 776,1 869 607,6 47 168,5 Revenues: From RF regions 69,9 66,2 3,7 Over 2015 funds were provided to: 58 RF regions; 80 municipalities

2015 STA liquidity management results (RUR mn) Liquidity Management Results for Federal Budget Single Account 2015 STA liquidity management results (RUR mn) RUR bank deposit revenues FX placement revenues REPO revenues Budget loan revenues 6 8 1 4 , 3 3 7 8 , 6 5 1 3 , 9 6 9 , Total, 2015 Cash balances: deposits - RUR 1,2tn Funds balances: REPO- RUR 300,0bn 7 5 1 ,

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