Deposits include cash held in public accounts by Treasuries on behalf of other government units (e

Deposits include cash held in public accounts by Treasuries on behalf of other government units (e

2.174. Cash flows from investments in financial assets for liquidity management purposes refers to cash receipts from liquidation or repayment of investments in financial assets for liquidity management purposes less cash payments for such investments. Investment for liquidity management purposes means making funds available to others with no policy intent and with the aim of earning a commercial rate of return.

Interest repayments in cash are classified as cash flows from operating activities

2.175. Cash flows from financing activities refers to cash receipts from borrowing by public sector units less cash repayments or redemption of such borrowing in the past. Borrowing includes the receipt of advances from other government units and receipt of deposits. Also included are borrowing from the International Bank for Reconstruction and Development, borrowing under credit arrangements with foreign governments and authorities, and the issue of stocks and bonds abroad.

2.176. Borrowing also includes receipt of deposits. g. public non-financial corporations) that operate through a trust account held in the public accounts. Deposits lodged by public non-financial corporations and other public sector units with Central Borrowing Authorities are included, as are deposits lodged by private sector entities with public financial corporations.

2.177. This item does not include the increase in liability or borrowing related to the initial entry into a finance lease or similar arrangement since, at that point, no cash flows have actually occurred. When cash flows associated with a finance lease or similar arrangement do occur they are reflected in the cash flow statement for that period. Reduction in liability from subsequent lease repayments is split into a principal and an interest component. Repayments of lease principal are included here.

Borrowing is the creation of liabilities through, for example, sale of bonds and bills in the capital market, raising loans through direct agreements with lenders or issuing shares and other equities (public corporations only)

2.178. The discussion in this section refers to the classification of balance sheet items and includes discussion, where appropriate, of transactions and other economic flows that relate to the balance sheet items and are recorded in the statement of stocks and flows.

2.179. As previously noted, assets are defined as instruments or entities over which ownership rights are enforced by institutional units and from which economic benefits may be derived by holding them, or using them, over a period of time.

2.180. Financial assets are assets that are in the form of financial claims on other economic units. In the system, financial assets are classified to the following instrument categories:

  • Cash and deposits – this instrument includes: (i) notes and coins on hand; (ii) cheques held but not yet deposited; (iii) cash and deposits in both Australian currency and foreign currency, which are recoverable or transferable on demand and are held at all banks, non-bank financiers and other deposit taking institutions; (iv) deposits placed in the Short Term Money ple grants received from the Commonwealth and deposited overnight); and (v) units issued by cash management trusts and withdrawable share capital of building societies. The item excludes bank certificates of deposit and fixed deposits held with banks.
  • Investments, loans and placements – this instrument includes: (i) non-negotiable, non-transferable loans, other than advances; (ii) credit foncier loans; (iii) deferred payment schemes (re-purchase agreements); (iv) securities such as promissory notes; (v) bills of exchange; (vi) certificates of deposit; (vii) fixed term deposits; (viii) treasury notes and bonds; (ix) redeemable preference shares; (x) debentures; (xi) long term notes; and (xii) net value of swaps and other derivatives that are in a net asset position.