Debt Management Performance Assessment

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Debt Management Performance Assessment Methodology: 2021 Edition

2021-11-25, World Bank

The Debt Management Performance Assessment (DeMPA) is the World Bank’s diagnostic tool for assessing performance using a comprehensive set of indicators that span the full range of government debt management (DM) functions. Launched in 2007, revised in 2015, the indicators have become an internationally recognized standard in the government DM field and can be applied in all developing countries. The DeMPA offers a sound diagnostic framework that allows a country’s DM processes and institutions to be evaluated against sound international practice, identifying core strengths and weaknesses, and thereby helping strengthen capacity and institutions so that countries can manage their government debt effectively and sustainably. It will assist countries that want to undertake debt management reforms, helping to monitor progress with achieving government DM objectives consistent with international sound practice. The DeMPA is modeled on the Public Expenditure and Financial Accountability (PEFA) indicators, however, it uses a more comprehensive set of indicators, spanning the full range of government debt management (DM) functions, to provide a detailed assessment of government DM. The DeMPA methodology consists of two parts: i) a description of the methodology and ii) an evaluation tool that summarizes key questions that should be assessed in the context of a DeMPA evaluation.

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Debt Management Performance Assessment: Kingdom of Lesotho

2018-07, World Bank

At the request of the Minister of Finance of Lesotho, a joint World Bank -Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI) mission visited Maseru, between July 2 to 6, 2018, to undertake a Debt Management Performance Assessment (DeMPA).The objective of the mission was to evaluate current performance against the DeMPA methodology, and to assess progress since 2012, when the first DeMPA was performed.The results of the evaluation, spanning the full range of debt management (DeM) functions, show limited progress. Compared to the previous DeMPA, the current assessment revealed only one upgrade related to the registry and management system for domestic debt of the CBL. Yet, additional actions to improve debt management in Lesotho are currently under discussion (i.e., approval of a new policy framework and public debt law), or have already started such as the publication of a debt statistical bulletin, undertaking of a Medium-Term Debt Strategy (MTDS) analytical exercise as the foundation for a Debt Management Strategy, and introduction of a Cash Management Unit.The assessment also revealed several downgrades associated to weaknesses in debt reporting to parliament, lack of regular information sharing between MoF - CBL and with market participants, as well as lack of secure storage and backup for the debt recording and management system of the MoF. Additional areas of improvement relate to, among others: i) fragmented legal framework; ii) lack of a loan guarantees’ framework; iii) preparation and approval of a formal Debt Management Strategy; iv) weak quality controls for data publication; v) quality of cash flow forecasts; vi) lack of policies and procedures for DeM operations; and, vii) completeness and timeliness of debt records.

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Debt Management Performance Assessment: Zimbabwe

2015-12, World Bank

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.

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Debt Management Reform Plan : Madagascar

2014-02, World Bank

The reform plan pillars outlined in this report build on the findings of the 2013 World Bank Debt Management Performance Assessment (DeMPA) for Madagascar and the discussions held during this mission with the central government representatives. Recent presidential elections and envisaged inauguration of the new government provides an enabling environment for engaging into broad economic and institutional reforms. Improvement of the governance practices and continuation of the public finance management reforms are among priorities stipulated in the President's reform agenda. It is important to mention that during the last two years MoFB's Treasury undertook a number of initiatives to improve government debt management. The Public Debt Directorate (DDP) was reorganized in 2012 and additional staff was hired during the last calendar year. Improvement of existing legal framework was initiated by the DDP in close cooperation with legal advisers of the Treasury. The main areas of reforms identified include: (i) improvement of the legal framework, (ii) formulation of a debt management strategy, (iii) improvement of central government borrowing policies, and (iv) operational risk management.

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Maldives Debt Management Reform Plan

2019-03-01, World Bank

The first Debt Management Performance Assessment (DeMPA) for Maldives was conducted in 2009, and a second DeMPA was completed in March 2019. The authorities have taken important steps to improve debt management since the first assessment, but many challenges remain. The government has implemented a series of reforms to public financial and debt management, including changes to the legal and institutional framework. Key measures include a complete overhaul of Treasury operations, the implementation of the Integrated Financial Management Information System (IFMIS) across all government entities in the capital, Malé, the establishment of a Treasury Single Account, and the development of cash-flow forecasting procedures. The coverage of the Commonwealth Secretariat Debt Recording and Management System (CSDRMS) has also been expanded, and the CS-DRMS is now used as a central database for almost all debt obligations, except Islamic finance instruments. The results of the 2019 DeMPA shed light on these improvements and indicate areas for further action.

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Debt Management Performance Assessment: Guinea

2018-05, World Bank

The DeMPA methodology provides a comprehensive set of indicators spanning the full range of DeM functions and used for in-depth analysis of the quality of government debt management functions and institutions. The results of the DeMPA evaluation help the central government authority to take stock of the current DeM situation, assess quality of undertaken reforms and design medium term reforms’ plan. The Guinean economy is recovering well from two recent major shocks: the Ebola epidemic in 2014-2015 and a decline in commodity prices after 2015. After slowing in 2014–2015 to an average of 3.6 percent, growth reached 10.4 percent in 2016, supported by a recovery in mining, good agricultural performance, and more reliable electricity supply. The mining sector accounted for more than half the growth rate, supported by the expansion of bauxite and alumina production and increased demand. The growth momentum is expected to continue with real growth reaching 5.8 percent in 2018 and averaging approximately 5 ½ percent over the medium term, driven by strong performance in mining, construction, and scaled-up investments in infrastructure. Risks to these projections are balanced, with downside potential from socio-political tensions, delays in projects and reform implementation, and upside potential from faster-than-expected mining production capacity coming on stream.

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Debt Management Performance Assessment: Côte d’Ivoire

2015-06, World Bank

At the request of the Government of Cote d’Ivoire, a World Bank mission visited Abidjan on June 11 to 19, 2015, to conduct a second debt management assessment, following the first assessment done in June 2009. This mission provided an opportunity to assess the progress made with debt management since 2009, and to evaluate current performance against the new debt management performance assessment (DeMPA) methodology revised in May 2015, relative to the methodology used in June 2009. To provide an understanding of the comparison and tracking of progress noted, an annex to the report indicates the level of improvement or deterioration in the government’s debt management performance. 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 monetary and fiscal policies; (iii) borrowing and related financing activities; (iv) cash flow forecasting and cash balance management; and (v) operational risk management and the recording and monitoring of loan guarantees. 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.

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Debt Management Performance Assessment: Dominica

2018-08, World Bank

The World Bank and the Eastern Caribbean Central Bank (ECCB) undertook a comprehensive assessment of the debt management (DeM) functions of the Government of Dominica (GoD) from June 18 to 22, 2018.The main outcomes of the debt management performance assessment are as follows: The assessment indicates that legal framework includes clear authorization for the Minister of Finance to borrow and issue loan guarantees on behalf of the Government. However, authorization to issue bonds in the regional market is not clearly defined.legal framework is fragmented and does not include borrowing purposes. The Debt Management Unit (DMU) is the principal guarantee entity but the borrowing operations involve more entities and are not well coordinated.Reasonably reliable debt service forecasts are produced by the DMU, but in-house debt sustainability analysis (DSA) is not undertaken. A staff in Macroeconomic Unit within the MoF has received training in the use of DSA framework and plans to undertake the exercise in-house in the coming fiscal year.Cash flows are forecasted on a monthly basis, but not submitted to the ECCB for liquidity management purposes. The Government has access to a well-developed Regional Government Securities Market (RGSM), but the potential has not been fully reaped, since Treasury bills (T-bills) are also issued locally with less advanced techniques, implying significant exposure to operational risks.Monthly detailed cash flow forecasts are prepared by the Accountant General´s Office (AGO) which could be used to guide upcoming budget allocation and short-term T-bill issuance for cash management purposes.The DMU is maintaining complete government debt and guarantees’ records which are updated quickly due to well-developed contacts with creditors and projects.The DMU has developed a draft procedures manual but it does not cover all DeM procedures and it has not been finalized. The DMU staff capacity is not sufficient and the work is not organized with adequate segregation of duties.

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Debt Management Performance Assessment: Kosovo

2017-12, World Bank

At the request of the Government of Kosovo (GoK), a World Bank (WB) mission visited Kosovo during September 26 to October 04, 2017 to conduct a debt management performance assessment (DeMPA). The objectives of the mission were (i) to assess the strengths and areas of development; (ii) to discuss the authorities’ immediate needs for TA and follow-up reform plan activities. This report assesses the debt management performance of the government to manage central government debt by applying the 2015 DeMPA methodology. This is the second evaluation of the government debt performances for the country. The first DeMPA assessment was conducted in 2012. Kosovo also benefitted from a Medium-Term Debt Management Strategy mission in February 2017. The mission worked with government officials from Cash and Debt Management Department (CDMD) of the Treasury, an agency of Ministry of Finance (MoF), as the main counter party. Meetings were also held with the Central Bank of Kosovo (CBK), National Audit Office (NAO), Kosovo Pension Savings Fund (KPSF), and three primary dealer banks, as well as with various units of the MoF, including human resources, legal office and internal audit. The mission agenda and the list of officials met during the mission are included in Annex 1. The main findings of this assessment along the five main areas of the DeMPA methodology are summarized below. Overall, there have been noteworthy improvements in various areas of debt management, including strategy development, domestic borrowing, debt reporting and recording. Challenges mainly arise from staffing constraints, which induce a high level of operational risk.

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Debt Management Performance Assessment: Haiti

2014-04-01, World Bank

In response to a request from the Government of Republic of Haiti, a World Bank mission team undertook a debt management performance assessment (DeMPA) mission to Port-au-Prince, Haiti between March 13 and 21, 2014. The mission comprised Zeinab Partow (Senior Economist, PRMED Team Leader, World Bank), Karen Bihr (Project Manager, UNCTAD, Implementing Partner), Mame Pierre Kamara (Consultant), Patrick van der Wansem (Consultant), Mamonjiarisoa Volatantely Randrianjanaka (World Bank and Ministry of Finance of Madagascar) and Evans Jadotte (Economist, LCSPE, World Bank). This report includes the results of the assessment. The mission met with officials at the Ministry of Economy and Finance, the Central Bank of Haiti, the Ministry of Planning and External Cooperation, the Supreme Audit Institution, the Prime Minister’s Office, as well as with financial sector entities. The team wishes to sincerely thank the authorities for their collaboration and support of the mission team, for the rich and substantive discussions that took place, and for their hospitality.