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Improving public debt management

Many Governments seek to further strengthen their capacity to appropriately manage public debt and ensure borrowing in the interest of maintaining sustainable debt levels. The Monterrey Consensus recognized that technical assistance for external debt management and debt tracking can play an important role and should be strengthened, and the Addis Agenda encouraged continuation of such efforts. 

Effective debt management remains an intrinsic part of sound public financial management and overall good governance. Although considerable progress has been made in recent years in strengthening countries’ capacity to manage public debt, debt management remains a challenge for many developing countries—both for central administrations as well as subnational governments—for which continued international technical support is required, and given. As interest grows in the potential of subnational finance to contribute to the SDGs, capacity development support in public debt management will become even more important.

Technical assistance in public debt management can usefully be classified as either “upstream,” which refers to debt analysis or assessment, or “downstream,” which consists of implementation support.

Upstream debt management

Upstream debt management comprises activities related to debt sustainability analysis; debt management performance diagnosis; debt management strategy formulation and the design of reform plans; or local currency government securities market development. Support in these areas is principally provided by the IMF and the World Bank.

Different tools are available to boost debt management capacity. They include the Debt Management and Performance Assessment provided by the World Bank, the Medium-Term Debt Management Strategy tool provided by the IMF and the World Bank, and recording and reporting systems, such as the Commonwealth Secretariat Debt Recording and Management System and the Debt Management and Financial Analysis System of UNCTAD. Institutions, including the IMF, keep these tools under review and adapt them to changing needs.

Downstream debt management

Downstream debt management technical assistance relates to support in the implementation of policy recommendations, debt data recording and validation, debt operations, and debt reporting and statistics. Organizations involved in providing technical assistance increasingly cooperate to ensure a holistic approach. UNCTAD, through its DMFAS Programme, and the Commonwealth Secretariat (COMSEC), continue to provide support to countries using their respective debt management systems, working in cooperation with other international technical assistance providers such as the World Bank and the IMF, and regional providers.  

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UNCTAD and the Commonwealth Secretariat continue to be the major providers of downstream technical assistance in public debt management. In 2017, they supported over 100 countries in total. A key objective is to ensure the availability of the reliable and timely debt data that is essential for prudent risk analysis and the elaboration of government strategies aimed at ensuring sustainable debt levels. The IMF and the World Bank, with the generous financial support of several bilateral donors, have provided a range of public debt management technical assistance and training activities to over 25 developing countries during the past fiscal year (July 2016-June 2017). The IMF Statistics Department also provides technical assistance on the compilation of government debt statistics.

The need for Governments to take a comprehensive approach to their nation’s debt and asset management has also underlined the importance of improving debt management by subnational units of government, and by other elements of the public sector. Anecdotal evidence suggests that many subnationals are confronted with significant challenges in managing their public debt portfolios, although a number of subnationals have made substantial progress in improving debt management, in some cases with the support of international technical assistance. Coordinated assistance from both central Governments and the international community is needed to build the required level of capacity at the subnational level. The successful cooperation of UNCTAD and the Government of Argentina in establishing a capacity-building programme for its provinces is an example of such cooperation. In addition, the management of the assets and liabilities of state-owned enterprises, and of the Government’s contingent liabilities can be of first-order importance in containing overall costs and risks.