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Abha Prasad - One of the best experts on this subject based on the ideXlab platform.
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Debt Management Facility (DMF) news (issue 27)
2017Co-Authors: Paloma Anos Casero, Abha PrasadAbstract:This issue of the Debt Management Facility (DMF) newsletter includes the following topics: (i) DMF forum 2017, Vienna, Austria May 22—23; (ii) DMF activities over Jan-March 2017; (iii) DMF training activities, Jan-March 2017; (iv) DMN webinar series; (v) DMPP-February intake; (vi) DMF note; (vii) other recent activities and events; (viii) recent publications; (ix) World Bank public sector Debt statistics database; and (x) forthcoming mission and training activities.
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Debt Management Facility (DMF) news (issue 26)
2017Co-Authors: Mark Roland Thomas, Abha Prasad, Elliot RiordanAbstract:This issue of the Debt Management Facility (DMF) newsletter includes the following topics: (i) mark your calendars : DMF forum 2017; (ii) agence UMOA-Titres (AUT) joins DMF as a new IP; (iii) DMF activities for the period Oct. to Dec. 2016; (iv) technical assistance missions; (v) DMF training activities; (vi) other DMF activities; (vii) Debt Management practitioners’ program update; (viii) DMN webinar; (ix) international Debt statistics 2017 edition; (x) non-DMF activities; (xi) Pakistan : advancing subnational Debt Management; (x) Afghanistan : moving forward with efforts to strengthen public Debt Management; (xi) World Bank treasury Debt Management events; and (xii) forthcoming mission and training activities.
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Debt Management Facility (DMF) news
2014Co-Authors: Ivana Ticha, Abha PrasadAbstract:This issue of the Debt Management Facility (DMF) newsletter includes the following topics: looking back on the DMF; the creditworthy poor?; launch of Debt Management performance assessment (DeMPA) course; Debt sustainability course; and DMF activities.
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Small states -- performance in public Debt Management
2013Co-Authors: Abha Prasad, Malvina PollockAbstract:This paper analyzes the status of public Debt Management performance in 17 small states through the findings of the Debt Management Performance Assessment reports. Empirical evidence indicates that the higher the quality of a country's policies and institutions, the better is its capacity to carry Debt and withstand exogenous shocks. Borrowing for productive purposes can be an important element in boosting growth of gross domestic product but, conversely, excessive borrowing or poorly structured Debt in terms of maturity, currency, or interest rate composition can quickly offset the positive impact, deter new foreign and domestic investment, compromise reform programs, depress growth of gross domestic product, exacerbate the challenge of meeting Debt service obligations, and may induce or propagate economic crises. Arguments in favor of sound Debt Management are especially compelling for small states that must mitigate the particular risks to which their economies are exposed. Against this backdrop, the paper identifies aspects of Debt Management where small states do relatively well and those where they perform poorly, relative to other developing countries, and examines the underlying factors at play. It elaborates on some of the successful measures taken by small states to enhance Debt Management performance and considers how these may be applied more broadly in other small states. The paper offers a number of practical suggestions to strengthen Debt Management performance.
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Sm States - Performance in Public Debt Management - Small states -- performance in public Debt Management
Policy Research Working Papers, 2013Co-Authors: Abha Prasad, Malvina PollockAbstract:This paper analyzes the status of public Debt Management performance in 17 small states through the findings of the Debt Management Performance Assessment reports. Empirical evidence indicates that the higher the quality of a country's policies and institutions, the better is its capacity to carry Debt and withstand exogenous shocks. Borrowing for productive purposes can be an important element in boosting growth of gross domestic product but, conversely, excessive borrowing or poorly structured Debt in terms of maturity, currency, or interest rate composition can quickly offset the positive impact, deter new foreign and domestic investment, compromise reform programs, depress growth of gross domestic product, exacerbate the challenge of meeting Debt service obligations, and may induce or propagate economic crises. Arguments in favor of sound Debt Management are especially compelling for small states that must mitigate the particular risks to which their economies are exposed. Against this backdrop, the paper identifies aspects of Debt Management where small states do relatively well and those where they perform poorly, relative to other developing countries, and examines the underlying factors at play. It elaborates on some of the successful measures taken by small states to enhance Debt Management performance and considers how these may be applied more broadly in other small states. The paper offers a number of practical suggestions to strengthen Debt Management performance.
Andrew Scott - One of the best experts on this subject based on the ideXlab platform.
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In Search of a Theory of Debt Management
2008Co-Authors: Elisa Faraglia, Albert Marcet, Andrew ScottAbstract:A growing literature integrates theories of Debt Management into models of optimal fiscal policy. One promising theory argues that the composition of government Debt should be chosen so that fluctuations in the market value of Debt offset changes in expected future deficits. This complete market approach to Debt Management is valid even when the government only issues non-contingent bonds. A number of authors conclude from this approach that governments should issue long term Debt and invest in short term assets. We argue that the conclusions of this approach are too fragile to serve as a basis for policy recommendations. This is because bonds at different maturities have highly correlated returns, causing the determination of the optimal portfolio to be ill-conditioned. To make this point concrete we examine the implications of this approach to Debt Management in various models, both analytically and using numerical methods calibrated to the US economy. We find the complete market approach recommends asset positions which are huge multiples of GDP. Introducing persistent shocks or capital accumulation only worsens this problem. Increasing the volatility of interest rates through habits partly reduces the size of these positions but at the cost of introducing extreme volatility in asset holdings. Across these simulations we find no presumption that governments should issue long term Debt-policy recommendations can be easily reversed through small perturbations in the specification of shocks or small variations in the maturity of bonds issued. We further extend the literature by removing the assumption that governments every period costlessly repurchase all outstanding Debt. This exacerbates the size of the required positions, worsens their volatility and in some cases produces instability in Debt holdings. We conclude that it is very difficult to insulate fiscal policy from shocks by using the complete markets approach to Debt Management. Given the limited variability of the yield curve using maturities is a poor way to substitute for state contingent Debt. The result is the positions recommended by this approach conflict with a number of features that we believe are important in making bond markets incomplete e.g. allowing for transaction costs, liquidity effects, etc. Until these features are all fully incorporated we remain in search of a theory of Debt Management capable of providing robust policy insights.
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Fiscal Insurance and Debt Management in OECD Economies
The Economic Journal, 2008Co-Authors: Elisa Faraglia, Albert Marcet, Andrew ScottAbstract:Assuming the role of Debt Management is to provide hedging against fiscal shocks we consider: (i) what indicators can be used to assess the performance of Debt Management? (ii) how well historical Debt Management policies have performed (iii) how performance is affected by variations in Debt issuance, using OECD data between 1970 and 2000. We propose performance indicators for Debt Management, which we evaluate using Monte Carlo analysis. Those based on the relative persistence of Debt perform best. There is only limited evidence that Debt Management has helped insulate policy against unexpected fiscal shocks. The degree of fiscal insurance achieved is not well connected to cross-country variations in Debt issuance patterns.
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Fiscal Insurance and Debt Management in OECD Economies
2007Co-Authors: Elisa Faraglia, Albert Marcet, Andrew ScottAbstract:Assuming the role of Debt Management is to provide hedging against fiscal shocks we consider three questions: i) what indicators can be used to assess the performance of Debt Management? ii) how well have historical Debt Management policies performed? and iii) how is that performance affected by variations in Debt issuance? We consider these questions using OECD data on the market value of government Debt between 1970 and 2000. Motivated by both the optimal taxation literature and broad considerations of Debt stability we propose a range of performance indicators for Debt Management. We evaluate these using Monte Carlo analysis and find that those based on the relative persistence of Debt perform best. Calculating these measures for OECD data provides only limited evidence that Debt Management has helped insulate policy against unexpected fiscal shocks. We also find that the degree of fiscal insurance achieved is not well connected to cross country variations in Debt issuance patterns. Given the limited volatility observed in the yield curve the relatively small dispersion of Debt Management practices across countries makes little difference to the realised degree of fiscal insurance.
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Debt Management Under Complete Markets
2006Co-Authors: Elisa Faraglia, Albert Marcet, Andrew ScottAbstract:In an influential paper Angeletos (2002) argues that, even in the absence of state contingent Debt, governments can achieve a complete market outcome through issuing bonds of different maturities. The key insight is that fluctuations in the yield curve are exploited through holding or selling bonds of different maturities. This framework can therefore be used to provide insights into optimal Debt Management. Angeletos further claims that even if the conditions for this result (namely that there exist more maturities than there are states of nature) do not hold exactly governments can still use Debt Management to get close to the first best. Nosbusch (2006) provides some simulation based support for this claim. In this paper we review the ability of this complete market approach to provide a plausible model of Debt Management. In the first section we outline some properties of OECD Debt Management since 1970. We find that the composition of government Debt shows substantial stability over time; governments issue positive amounts of Debt instruments and that these are always a relatively small proportion of GDP. We then consider, both analytically and numerically, the implications of models of Debt Management where maturity structure is used to achieve complete market outcomes. In particular, we extend the existing literature in two significiant directions - by adding capital accumulation and ruling out the assumption that governments buyback all their Debt every period and then restructure. Buera and Nicolini (2004) have already documented how in a basic model the complete market approach to Debt Management requires governments to hold Debt positions which are huge positive and negative multiples of total output. We show how introducing capital accumulation and forcing authorities to hold Debt to maturity exacerbates this problem even further. It also creates additional problems which reveal that the implications of the model for Debt Management are wildly at odds with the observed practive of OECD countries. Not only does the model recommend extreme positions but optimal positions show great sensitivity to small changes in the model and recommended portfolio shares are not a smooth function of maturity. Further allowing for capital accumulation also overturns the strong predictions of these models to issue long term Debt and buy short term bonds. We conclude by offering some insights as to why the complete market approach to Debt Management has such strong counterfactual predictions and suggest areas of future research to provide a more plausible model of Debt Management.
Susan Newberry - One of the best experts on this subject based on the ideXlab platform.
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Public sector reforms and sovereign Debt Management: Capital market development as strategy?
Critical Perspectives on Accounting, 2015Co-Authors: Susan NewberryAbstract:The reform of sovereign Debt Management has largely escaped attention in the accounting literature on public sector financial Management reforms. The application of business thinking to the public sector has meant conceptualising the sovereign Debt Management function as a corporate-style controller function, applying to sovereign Debt Management the asset and liability Management techniques developed in the banking sector. Accruals-based appropriations and outcomes-focused strategy statements weaken a legislature's power of control over the executive government and divert attention from the control of public finance, which increasingly appears to be delegated to the executive government. Wider application of the asset and liability Management techniques adopted for sovereign Debt Management seems to support an emergent capital market development strategy, facilitated by increasing government participation in capital markets. The New Zealand government's financial statements help to illustrate these developments and show the extent of government participation in capital market activities involving large amounts of public money and leveraging of public assets. Financial control and accountability is not achieved by relying on strategy statements, objectives and ex post review.
Martin Melecky - One of the best experts on this subject based on the ideXlab platform.
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Formulation of Public Debt Management Strategies: An Empirical Study of Possible Drivers
2012Co-Authors: Martin MeleckyAbstract:A well-designed public Debt Management strategy can help countries reduce their borrowing cost, contain financial risks and develop their domestic markets. Using survey data on Debt Management strategies, this paper studies whether the probability that a country has a formal Debt Management strategy, publishes the strategy document, and uses quantitative benchmarks to formulate its Debt Management strategy is affected by democratic accountability, institutional quality, past Debt crises/defaults, official development assistance, and participation in Debt Management programs. We find that countries located in Latin America and the Caribbean are less likely to have developed a Debt Management strategy and, if they have, are less likely to publish it. In contrast, countries located in the Middle East and North Africa are less likely to use quantitative benchmarks in the formulation of their Debt Management strategies. A country is more likely to have developed a Debt Management strategy if it has the experience of a past Debt crisis, but not of repeated Debt crises. Institutional quality and democratic accountability could significantly contribute to the emergence of more transparent and accountable Debt Management strategies in developing countries. IFIs’ technical assistance on public Debt Management could be enhanced by IFIs conducting their own, prior diagnostic reviews.
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The Effect of Institutions, Geography, Development Assistance and Debt Crises on Public-Debt Management
2009Co-Authors: Martin MeleckyAbstract:Using survey data on Debt Management strategies, this paper studies whether the probability that a country has a Debt Management strategy, publishes its Debt strategy, and uses a benchmark-based strategy is affected by democratic accountability, institutional quality, past Debt crises/defaults, IFIs development assistance, and participation in Debt Management programs. We find that countries located in Latin America and Caribbean are less likely to have developed a Debt Management strategy and, if they have, they are less likely to publish it. In contrast, countries located in Middle East and North Africa are less likely to use quantitative benchmarks in formulation of their Debt Management strategy. A country is more likely to have developed a Debt Management strategy if it has an experience of a past Debt crisis, but not of repeated Debt crises. Institutional quality and democratic accountability could significantly contribute to emergence of more transparent and accountable Debt Management strategies in developing countries. IFIs' technical assistance on public Debt Management could be enhanced by IFIs conducting their own, prior diagnostic reviews.
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A cross-country analysis of public Debt Management strategies - A cross-country analysis of public Debt Management strategies
Policy Research Working Papers, 2007Co-Authors: Martin MeleckyAbstract:This paper analyzes results of a survey on Debt Management strategies conducted by the Banking and Debt Management Department of the World Bank. The analysis focuses on (1) whether a public Debt Management strategy exists in a given country, (2) whether it is made public, and (3) in which form it is imparted. The paper analyzes the distribution of the latter characteristics over different regions, income groups, and levels of inDebtedness using graphical analysis. Using regression analysis, it investigates the extent to which basic economic factors can explain the characteristics of public Debt Management strategies across countries.
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A cross-country analysis of public Debt Management strategies
2007Co-Authors: Martin MeleckyAbstract:This paper analyzes results of a survey on Debt Management strategies conducted by the Banking and Debt Management Department of the World Bank. The analysis focuses on (1) whether a public Debt Management strategy exists in a given country, (2) whether it is made public, and (3) in which form it is imparted. The paper analyzes the distribution of the latter characteristics over different regions, income groups, and levels of inDebtedness using graphical analysis. Using regression analysis, it investigates the extent to which basic economic factors can explain the characteristics of public Debt Management strategies across countries.
Emre Balibek - One of the best experts on this subject based on the ideXlab platform.
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Medium-Term Debt Management Strategy: Analytical Tool Manual
2019Co-Authors: Emre Balibek, Tobias Haque, Diego Rivetti, Miriam TameneAbstract:This report provides guidance on using the Analytical Tool of the Medium-Term Debt Management Strategy (MTDS). The MTDS framework consists of a methodology, published as the ‘Guidance Note for Developing a Medium-Term Debt Management Strategy’, and an associated analytical tool (AT) that can be used to assess the cost-risk trade-offs of alternative strategies to help identify the preferred strategy. The MTDS framework supported by the AT quantitative analysis helps to determine the financing strategy. The chosen Debt Management strategy sets out the financing composition path to meet the Debt Management objective(s). The profile of future interest payments and the amortizations of new Debt are driven by the Debt Management strategy. The MTDS AT is based on annual cash flow. Although this assumption is enough for analyzing alternative Debt Management strategies, in some cases, particularly for countries that are heavily dependent on short-term securities with maturities of less than a year, it would be helpful to work with cash flows with higher frequency.
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Zimbabwe - Debt Management Performance Assessment (DeMPA)
2016Co-Authors: Emre BalibekAbstract:The mission met with government officials from the Ministry of Finance and Economic Development (MoFED), comprising the departments responsible for Debt Management (DeM), i.e. the Public Debt Management Office (PDMO), executing the middle and back office functions, and the Departments of International Cooperation, and Financial and Capital Markets, which function as the front offices for foreign and domestic Debt. The team also met with other relevant government agencies, and a private bank to complete the assessment. A meeting was arranged with the development partners in the country to inform them of the government’s request for a DeMPA and the key dimensions to be assessed during the exercise; and to gain insights from their experiences. The meeting schedule is given in annex one. This mission falls mainly within the scope of the assistance provided by the World Bank and its partners to improve Debt Management capacity in developing countries. To this end, the DeMPA tool is based on a methodological approach that facilitates evaluation of performance using different indicators that bring together all Debt Management functions. These indicators cover the following areas of activity: (i) governance and strategy development; (ii) coordination with macroeconomic policies; (iii) borrowing and related financing activities; (iv) cash flow forecasting and cash balance Management; and (v) Debt recording and operational risk Management. The DeMPA assesses the strengths and weaknesses of each country’s Debt Management without making recommendations or assumptions as to the potential effects of reforms under way.
