Treasury banking interest rate forecasting model

Ministry of Finance

An estimation model used in determining the total expected interest costs due to treasury banking. The results are published in the budget table in the national debt budget.

Last change on 27th of December 2024, at 14:00 (CET) | Publication Standard 1.0

• Publication category: Other algorithms
• Impact assessment: Field not filled in.
• Status: In use

General information

Theme

Public finance

Begin date

2010

Contact information

[e-mail]

Responsible use

Goal and impact

The forecasting model calculates the expected interest costs of treasury banking. The results are published in the budget table in the national debt budget.

Treasury banking means that institutions performing a statutory or public task (agencies, social funds, legal entities with a statutory or public task, and decentralised authorities) hold their public liquid assets with the Ministry of Finance. Under conditions, some participating institutions can also borrow. The model does not use personal data. The data used by the model are the expected change in funds held, the expected amount of loans granted within treasury banking and the expected interest rates, as published by the CPB.

The outcome may be part of political decision-making in the budget process.

Considerations

The model calculates the expected interest costs due to treasury banking. This gives the advantage that interest costs are more predictable than not using the model. This data is included in the Treasury budget.

There are no disadvantages to deploying the model. It is deployed only as a source of information and no automatic decision-making takes place.

Human intervention

No automatic decision-making takes place. Interest charges are calculated and the result is included in the budget. The data can be used in political decision-making in the state budget process.

Risk management

The risks of use are low. The model does not use personal data. The calculated data are verified within the Ministry of Finance in the regular budget process. The estimate of interest expenses is adjusted several times a year based on the interest expenses realised in the meantime and newer expectations of balances held and loans to be granted. The final realised interest expenses and the deviation from expected interest expenses are published annually in the annual report of the Ministry of Finance.

Legal basis

The legal basis for preparing the budget is regulated by the Comptabiliteitswet 2016 (CW). Specifically for interest expenses, this is regulated in Article 2(10)(e) CW.

Links to legal bases

Comptabiliteitswet 2016: https://wetten.overheid.nl/BWBR0039429/2023-09-26

Elaboration on impact assessments

No processing of personal data

Operations

Data

To make a forecast of interest expenses, the interest expenses already fixed for the coming years are used. In addition, the expectation regarding the funds held, the loans to be granted and the expected interest rates published by the CPB are used. No personal data are used.

Technical design

On the one hand, the model uses interest expenses that are fixed for long periods in the financial records. On the other hand, the model calculates interest expenses based on the expected change in funds held by participants, the expectation of loans to be made and the expectation of interest rates. In fact, the calculation is nothing more than price x quantity, with the expected price (the interest rate) determined by the CPB and the expected quantity estimated internally by the Ministry of Finance. The interest cost estimate is adjusted several times a year using the interest cost realised in the meantime and newer expectations of balances held and loans to be granted.