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Citi Perspectives for the Public Sector
|
2015 – 2016
39
How Ministries of
Foreign Affairs are
Improving Financial
Management Practices
In today’s complex world, diplomacy is increasingly the
key to world stability. Ministries of Foreign Affairs (MFAs)
and their diplomatic missions around the globe face a
multitude of policy challenges. On top of that, they have
the unenviable task of managing cash and administrative
responsibilities in a world that is demanding greater
accountability and transparency. Now, more than ever,
MFAs are under rising pressures to reduce administrative
costs and increase operating efficiencies since every
dollar spent in these areas is diverted from mission-critical
foreign policy priorities. Citi’s global Public Sector is striving
to provide alternatives for MFAs, helping to develop highly
effective solutions that can assist in these critical areas.
Driven by government-wide transparency and efficiency demands, MFAs face the daily burden
of improving their financial management practices across a complex maze of globally disparate
embassy operations. There is little doubt that MFAs need to place greater focus on liquidity,
foreign exchange (FX) and transaction cost optimization in order to maximize budget resources.
The old ways of doing business are simply no longer effective. The decentralized treasury model
that relies on local bank services procurement, manual transaction initiation, and paper-based
account reporting are legacy processes ripe for improvement. These processes are responsible for
inefficiencies and poor internal controls in payment transfers to overseas embassies and missions,
which drive up operational overhead. They also expose MFAs to the FX risks both in protecting their
operating levels over the year and of uncompetitive FX conversion rates being levied for cross-
border payments. Finally, these obsolete processes create burdens in the timely delivery of funds to
embassies across the world that must ensure local payment obligations are met.
Jim Millette
Global Head of Foreign
Mission Banking, Citi
MFAs face the
daily burden
of improving
their financial
management
practices
across a
complex maze
of globally
disparate
embassy
operations.