Government Debt and Risk Management Program, Phase II
This World Bank Treasury-implemented program aims to increase the capacity of Debt Management Offices in selected partner countries with regard to policy development and implementation of debt management plans, deepening of domestic debt markets, and putting in place sustainable debt management that adequately takes into account cost and risk.
The management of public debt significantly affects public finances. Under economic uncertainties globally, Middle Income Countries (MICs) face specific and new challenges in managing their public debt in a prudent and cost-effective way. The international experience moreover shows that the burden on government finances from the unforeseen impact of fiscal risks such as contingent liabilities from sovereign guarantees and others can be significant.
The GDRM program contributes to sound macroeconomic and fiscal management and reduces vulnerability to financial shocks. The program contributes to the SECO strategic outcome promoting effective institutions and services.
It covers a comprehensive package of technical assistance that span across the core functions of Debt Management Offices covering both upstream (policy level) and downstream (implementation) areas of support.
1. INSTITUTIONAL STRENGTHENING
Governance: fulfillment of debt management mandate in a sustainable manner with strengthened governance arrangements.
Policy coordination: efficient coordination between debt management, fiscal policy, budget processes, cash management and monetary policy.
Internal processes, systems, and staff expertise allow for an efficient management of public debt and related risks.
2. TECHNICAL CAPACITY BUILDING
Debt management strategy and risk management: the government is able to achieve the desired level of risk at an acceptable cost by preparing, publishing, and implementing a public debt management strategy, based on a sound analysis of cost and risk.
Government domestic borrowing programs help the development of local debt markets.
Risk from contingent liabilities is quantified and managed.
Management of sovereign assets and liabilities in an integrated way.
Recommendations on legal or regulatory revisions.
Support to production of a medium-term debt management strategy by the debt management office.
Advice and capacity building on the management of contingent liabilities and other fiscal risks.
Input to the preparation of annual borrowing plans in line with the selected debt management strategy and use of derivatives where relevant to meet strategic benchmarks.
Support to efforts to move in the direction of a comprehensive framework and policies to manage sovereign assets and liabilities.
Workshops and GDRM Group meetings on emerging themes.
Peer-learning events among 2-3 countries working on the same issue and with similar context and challenges.
Change Management workshops to support the institutional TA targeting the policy makers and the upper level management in the Ministries of Finance.
Results from previous phases:
An external evaluation of the program’s first phase (2012-2017) has yielded the following conclusions:
• The program has been effective in contributing to the development of models and tools to enable partner countries to enhance the quality of their debt management strategies, to move to the integration of debt and cash management, to begin to measure and monitor the risks of contingent liabilities, and to enhance domestic financing activities including publishing annual borrowing plans and auction calendars.
• Sustainability is being achieved to a reasonable level in partner countries because of the institutionalization of debt management either in a debt management office or unit within the Ministry of Finance (or equivalent), although the level varies across partner countries.
• A key factor for success was the structured programmatic approach at country level with agreed work plans and log-frames.
|Directorate/federal office responsible||
|Budget||Current phase Swiss budget CHF 8’265’000 Swiss disbursement to date CHF 0 Budget inclusive project partner CHF 6’400’000|
|Project phases||Phase 2 01.08.2017 - 31.12.2023 (Current phase) Phase 1 03.07.2010 - 31.12.2015 (Active)|