Philippines: Strengthening Treasury Operations and Capital Market Reform

Sovereign Project | 48140-001

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Project Name Strengthening Treasury Operations and Capital Market Reform
Project Number 48140-001
Country Philippines
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8718-PHI: Strengthening Treasury Operations and Capital Market Reform
Japan Fund for Poverty Reduction US$ 500,000.00
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Regional integration
Drivers of Change Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector Finance - Finance sector development
Gender Equity and Mainstreaming No gender elements
Description
Project Rationale and Linkage to Country/Regional Strategy
Impact More cost effective utilization of BTr's fiscal resources.
Project Outcome
Description of Outcome Efficiency of the primary and secondary government debt markets enhanced.
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

BTr's debt and cash management functions enhanced.

Primary dealer system strengthened.

Development of capital market enhanced.

Status of Implementation Progress (Outputs, Activities, and Issues) The TA Letter of Agreement was signed and became effective on 12 March 2015. Recruitment of the National Investment and Debt Management Specialist under output 1 of the TA is on-going.
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services

OUTLINE TERMS OF REFERENCE FOR CONSULTANTS

1. National investment and debt management specialist (individual, intermittent,

5 person-months). The objective of the engagement is to improve the technical capacity of staff of the Bureau of the Treasury (BTr) across its various operations units including dealing, processing, and asset management. The expert will work with BTr s government debt resident adviser and assist BTr in implementing its updated organization structure as well as launching BTr s newly developed investment and risk management functions. The expert will likewise strengthen BTr s dealers by increasing their technical capacity through on-the-job training. The expert will improve BTr s trading room infrastructure by, among others, standardizing counterparty settlement instructions and establishing delivery-verses-payment (DVP) for offshore bonds. Finally, the expert will support BTr s efforts to expand the investor base and number of dealing participants, and will establish a permanent market and stakeholder feedback mechanism to provide for constant enhancement.

2. The consultant will have at least 15 years of experience as a treasurer or asset manager with a national treasury or an international bank. The duration of this consultancy will be a total of 134 working days (five months) on an intermittent basis starting in November 2014 and finishing by November 2015. The expert will report to the national treasurer and other relevant officials as well as the Asian Development Bank (ADB) project officer.

3. National debt and risk management specialist (individual, intermittent,

9 person-months). The objective of this engagement is to strengthen BTr s middle office risk management processes. Upon completion of the engagement, BTr s staff will be able to identify, quantify, manage and control all risk exposures arising from the investment functions of the BTr.

4. The expert will work with BTr s national and international resident advisers and assist BTr in institutionalizing its risk management policies and procedures to support the investment framework. Work will include the design and implementation of an organizational setup, policies and procedures, and the responsibilities of the risk management function within the asset management division. The expert will design the organization structure and formulate the statement of responsibilities and performance standards for the risk management unit. In addition, the expert will (i) develop an operational and investment risk profile; (ii) formulate a detailed risk management program covering all facets of risk exposures including, but not limited to market, liquidity, and operating risks; and (iii) develop models and standards for setting liquidity, market, counter-party, and dealing risk limits. The expert will also design a management information system to monitor, oversee, and report all risk issues up to the investment committee. Finally, the expert will provide a training program for asset management personnel to cover the basics of risk management and risk principles.

5. The consultant will have at least 15 years of experience as a treasurer or asset manager with an international bank or the local operations of an international bank. The duration of this consultancy will be a total of 198 working days (nine months) on an intermittent basis starting in November 2014 and finishing by November 2015. The expert will report to the national treasurer and other relevant officials as well as the ADB project officer.

6. International government debt auction specialist (individual or a firm, 22 person-days continuous). Currently, BTr utilizes the Automated Debt Auction Processing System (ADAPS) to support its primary government debt auctions. BTr has requested a review of this system to ascertain its relevance and functionality as compared to international norms and standards. The expert will review the ADAPS system and provide a diagnostic regarding the ability of the system to meet BTr s operating needs. If required, the consultant will provide recommendations for upgrades to or replacement of the system to ensure consistency with the overall upgrade of BTr s operations.

7. The expert will have at least 15 years of experience in a senior position at a national treasury with a focus on primary issuance and treasury auction systems; and at least 5 years of relevant consulting experience, mostly in Southeast Asia. The duration of this consultancy will be a total of 22 working days on a continuous basis starting in January 2015. The expert will report to the national treasurer and other relevant officials as well as the ADB project officer.

8. International securities clearing, settlement, and custody expert (individual or a firm, 22 person-days continuous) BTr utilizes a Registry of Scriptless Securities (ROSS) and has requested a review of this system to ascertain its relevance and functionality as compared to international norms and standards. The expert will review the ROSS and provide a diagnostic regarding the suitability of the system, in terms of appropriateness and cost, to meet the needs of BTr operations. Consideration will be given to the proposed expanded role of primary dealers and their privileges and responsibilities, including the possible use of ROSS to support an inter-dealer repo market. If required, the consultant will provide recommendations for upgrades or replacement of the system to ensure consistency with BTr s operations.

9. The expert will have at least 15 years of experience in a senior position at a national treasury with a focus on primary issuance and securities registries; and at least 5 years of relevant consulting experience, mostly gained in Southeast Asia. The duration of this consultancy will be a total of 22 working days on a continuous basis starting in January 2014. The expert will report to the national treasurer and other relevant officials as well as the ADB project officer.

10. International treasury information technology specialist (individual or a firm,

22 person-days continuous). The objective of this engagement is to improve BTr s underlying management information systems. The expert will work with BTr s national and international advisors to review and evaluate BTr s current treasury information management systems and to perform a needs assessment. The expert will provide recommendations for improvement including, if necessary, the identification of a suitable vendor supplied treasury management system.

11. The expert shall have at least 15 years of experience in a senior position at a national treasury with a focus on IT and information management. In addition, the expert will have at least 5 years of relevant consulting experience a majority of which was gained in SE Asia. The duration of this consultancy will be a total of 22 working days (one month) on a continuous basis starting in November 2014. The expert will report to the national treasurer and other relevant officials as well as the ADB project officer.

12. International capital markets specialist (up to four experts, individually or through a firm, 40 person-days intermittent). The objective of this engagement is to provide capacity development to BTr, and market stakeholders, to support the introduction of new treasury processes. The expert(s) will work with BTr and its national and international advisors to identify capacity development needs associated with BTr s emerging reform agenda with a specific emphasis on understanding financial markets and financial processes. This capacity development is expected to generate knowledge products that can be used to build stakeholder consensus for the proposed reforms. Initial discussions identified the following areas of interest: a contrast between multiple- and single-price auctions, development of benchmark securities and yield curves, conduct of switch auctions, repo markets, and primary dealer liquidity facilities.

13. The expert(s) will deliver knowledge products to the national treasurer as described above, along with a written knowledge dissemination plan and stakeholder feedback mechanism. The knowledge products will include a thorough definition and description of the process, the advantages the process brings to BTr and end investors, the experience of other countries, and any related risks. The dissemination plan will include capacity development or consensus-building workshops as requested by BTr, as well as a feedback mechanism to assess the usefulness of the outreach.

14. The expert(s) will have at least 15 years of experience working with a global bank as a debt market expert and/or practitioner with a specialty in the assigned topic. The duration of this consultancy will be a total of 40 working days on an intermittent or continuous basis starting in June 2014. The expert(s) will report to the national treasurer and other relevant officials, and the ADB project officer.

15. International or national legal expert for repurchase agreements (firm, output based contract).The BTr has initiated a program to improve its cash management. In conjunction with this project, BTr will implement complimentary reforms to deepen and diversify the capital market including the introduction of a domestic repo market.

16. The objective of this technical assistance is to build on completed diagnostics and ongoing stakeholder consultations to introduce a domestic repurchase agreement that conforms to international conventions and standards. The expert will provide support to BTR s efforts to introduce the global master repurchase agreement (GMRA) to the Philippine capital market by continuing stakeholder consultations and providing technical advice. The consultancy will be an output-based contract with the deliverables to be identifi

Responsible ADB Officer Stephen Schuster
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SERD
Executing Agencies
Bureau of the TreasuryPalacio del Gobernador_Bldg.,
Intramuros, Manila
Philippines
Timetable
Concept Clearance 16 May 2014
Fact Finding 14 Feb 2014 to 14 Feb 2014
MRM -
Approval 17 Sep 2014
Last Review Mission -
Last PDS Update 31 Mar 2015

TA 8718-PHI

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
17 Sep 2014 12 Mar 2015 12 Mar 2015 30 Oct 2016 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 500,000.00 100,000.00 0.00 0.00 0.00 600,000.00 17 Sep 2014 54,265.01

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