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(e) Liquidity risk management

Liquidity risk refers to the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.

Liquidity risk is managed on an individual entity basis generally by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows.

The following table details the Government's remaining contractual maturity for its financial liabilities. The table was compiled based on:

  • the undiscounted cash flows of financial liabilities based on the earliest date on which the Government can be required to pay, and
  • both interest and principal cash flows.
(e) Liquidity risk management
Note Carrying
value 		Contractual
cash
 flows 		<1 year 1-2 years 2-5 years 5-10 years > 10 years
As at 30 June 2012   $m $m $m $m $m $m $m
Issued currency 4,457 4,457 4,457 -  -  -  - 
Accounts payable 23 8,255 8,235 8,018 50 38 68 61
Borrowings: 24              
   Government stock 52,895 68,050 13,231 2,419 16,324 33,176 2,900
   Treasury bills 8,954 9,039 9,039 -  -  -  - 
   Government retail stock 229 235 176 29 30 -  - 
   Settlement deposits with Reserve Bank 5,917 5,917 5,917 -  -  -  - 
   Finance lease liabilities 1,515 1,704 199 188 578 739 - 
   Other borrowings 28,217 30,073 18,674 2,490 5,105 2,926 878
Total non-derivative liabilities 110,439 127,710 59,711 5,176 22,075 36,909 3,839
Derivatives in loss settled net   3,797 764 338 1,240 710 745
Derivatives in loss              
settled gross              
 - inflow   48,206 31,774 3,954 9,095 2,424 959
 - outflow   44,253 30,419 3,159 7,887 2,062 726

Other cashflows

             
Loan commitments   1,628 1,628 -  -  -  - 

In addition to the above financial liabilities, the Crown has entered into various financial guarantees totalling $422 million (2011: $210 million) which expose the Crown to liquidity risk. These guarantees are classified as contingent liabilities and are set out in note 32. For all these guarantees, the earliest period which the Crown would be required to pay if the guarantees are called upon is less than one year.

(e) Liquidity risk management (continued)
As at 30 June 2011 Note Carrying
value 		Contractual
cash
 flows 		<1 year 1-2 years 2-5 years 5-10 years > 10 years
  $m $m $m $m $m $m $m
Issued currency 4,254 4,254 4,254 -  -  -  - 
Accounts payable 23 7,337 7,345 7,160 54 34 57 40
Borrowings: 24  
   Government stock 46,018 59,839 9,415 12,016 13,168 24,782 458
   Treasury bills 7,028 7,095 7,095 -  -  -  - 
   Government retail stock 261 267 204 61 2 -  - 
   Settlement deposits with Reserve Bank 6,276 6,276 6,276 -  -  -  - 
   Finance lease liabilities 1,176 1,313 136 151 430 596 - 
   Other borrowings 26,719 28,485 19,173 1,177 4,792 2,449 894
Total non-derivative liabilities 99,069 114,874 53,713 13,459 18,426 27,884 1,392
Derivatives in loss
  settled net 3,444 646 219 680 1,001 898
Derivatives in loss
  settled gross
 - inflow 52,297 33,262 4,620 8,988 5,214 213
 - outflow 47,625 31,652 3,859 7,325 4,581 208

Other cashflows

Loan commitments 1,106 1,106 -  -  -  - 

The Government has access to financing facilities, of which the total unused amount at 30 June 2012 was $993 million (2011: $1,441 million). The Government expects to meet its obligations from operating cash flows, from the results of bond tenders, and proceeds of maturing financial assets.

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