Publication: Sovereign Debt Management in Crisis in Europe and Central Asia: A Toolkit for Policy Maker
Loading...
Files in English
223 downloads
Published
2013-05
ISSN
Date
2016-04-21
Author(s)
Editor(s)
Abstract
The global financial crisis of 2008-2009 required most sovereign debt managers to adapt to rapidly changing market circumstances, by changing the mix of borrowing instruments and adopting techniques that minimize the impact of severe market dislocations and increased risk aversion. These actions, allied to prudent macroeconomic and debt management policies implemented by government in the years preceding the crises, were critical in helping countries meet their financing needs without undue strain on the financial markets. This toolkit draws on the approaches taken by a range of countries and provides sovereign debt policy makers with a rich set of potential actions to address crisis periods. A practical illustration on the use of some of these actions is conducted by analyzing the measures taken by Romania, Serbia and Turkey as a response to the recent crises. Authors draw lessons from these experiences and examine what other measures included in the toolkit could have been used to boost the crisis response impact in these economies, respecting country-specific contexts.
Link to Data Set
Citation
“World Bank. 2013. Sovereign Debt Management in Crisis in Europe and Central Asia: A Toolkit for Policy Maker. © World Bank. http://hdl.handle.net/10986/24117 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Financial Sector Assessment Program - Albania : Public Debt Management(World Bank, Washington, DC, 2014-02)Government debt continues to expand, reaching over all 872 billion, approximately 62 percent of gross domestic product (GDP), as of end-September 2013. Domestic debt grew sharply in the first half of 2013, emanating largely from poor tax revenue performance, together with the accumulation of a large stock of unpaid bills and arrears. External debt creditors comprise multilaterals, bilateral creditors, and private creditors. The concentrated nature of the investor base and the high domestic debt stock limit the choices available to debt management, particularly with regards to extending the maturity of the domestic debt. Public debt management in Albania follows an organized process but will benefit from a number of technical changes. The domestic borrowing plan has been revised frequently due to unexpected flows in the treasury account. In an environment of volatile treasury balances, cash flows safety nets or minimum cash buffers should be implemented. A number of initiatives are recommended to improve the transmission of price signals in the primary market - overall this will provide incentives for secondary market development. To support the development of the secondary market the General Directorate of public debt management should modify its issuance program and focus on key maturities on the yield curve. It is suggested that the issuance program takes a small step in this direction by limiting the number of tenors and focusing on for example, two, five, seven, and ten-year treasury bonds as well as increasing the frequency of 5 and 7-year maturities from quarterly to bi-monthly. This will provide more frequent price discovery in the primary market that will support portfolio valuation.Publication Reforming Government Debt Markets in MENA(2011-03-01)This paper examines the current stage of development of government securities markets in the non-GCC MENA region focusing in five countries that have government bond markets with a minimum size and greater potential for market development: Egypt, Jordan, Lebanon, Morocco and Tunisia. The analysis focuses on the five key building blocks that normally sustain deep and liquid public debt markets: (i) money markets; (ii) primary market (issuance policy and placement mechanisms); (iii) secondary market organization; (iv) investor base; and (v) clearing and settlement infrastructure. The study shows that despite country differences, several common weaknesses in the key building blocks explain the underdevelopment of MENA bond markets. Most important among these are a symbiotic relationship between banks and Governments caused by lack of alternative investments that makes banks act as captive demand and dominate bond markets, opportunistic primary issuance practices, and excess liquidity in the financial system. These demand and supply characteristics have led to highly concentrated buy-and-hold portfolios by banks and State-owned institutions, poor price discovery and lack of liquidity in secondary markets. A set of actions to unlock market development in MENA is proposed involving measures in all key building blocks - from improvements in monetary policy implementation and liquidity management to enhancements in issuance practices, price transparency, and clearing & settlement infrastructure. Measures to improve the role of mutual funds and foster foreign investor presence are also of utmost importance to increase competition and investor diversification in these markets.Publication Domestic Syndications(World Bank, Washington, DC, 2015-05)This background note is intended to assist debt management offices (DMOs) in assessing whether a bond placement scheme combining auctions and syndications is an appropriate strategy in their markets and, if so, to assist them in designing the corresponding procedures.Publication Pakistan : Issues Related to the Government Securities Market and Government Debt Management(Washington, DC, 2010-06-25)The government of Pakistan borrows in the domestic market through a range of instruments, and this market is a critical source of funding for both shorter-term cash management and longer-term deficit-financing. The government has taken actions over the past 18 months that have enhanced the effectiveness of the market as a source of funding, as well as its efficiency. These include the movement toward more predictable, volume-based, market-determined pricing of government securities. Taking account of the dynamics of demand will be important as the government continues to develop its medium-term debt management strategy. Doing so will help identify potential constraints that may impede the implementation of the chosen strategy. Specific actions that the government is recommended to take include: a) reducing the number of tenors issued, b) consolidating the debt stock so as to improve liquidity in individual bonds, c) reducing time delays in auction processing, and d) developing and investor-relations function, with readily accessible information on the operation of the government securities market.Publication Foreign Investment in Local Currency Bonds : Considerations for Emerging Market Public Debt Managers(World Bank, Washington, DC, 2012-12)Foreign investors are increasingly important participants in the local currency sovereign bond markets of developing countries. This note provides context on the overall growth of local currency sovereign debt markets in emerging markets and the growth of foreign investor participation in these markets, a short review of the relevant academic literature, and a summary of the sources of foreign demand. The note concludes with a discussion of the implications of growing foreign investor participation for the managers of public domestic debt in developing countries. The aim of the note is to provide a useful, practically-oriented primer for debt managers beginning to engage on this issue, and in particular to facilitate moving the dialogue beyond overly simple categorizations of countries as "emerging markets" and of investors as a homogeneous source of "hot money".
Users also downloaded
Showing related downloaded files
Publication World Bank Annual Report 2024(Washington, DC: World Bank, 2024-10-25)This annual report, which covers the period from July 1, 2023, to June 30, 2024, has been prepared by the Executive Directors of both the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA)—collectively known as the World Bank—in accordance with the respective bylaws of the two institutions. Ajay Banga, President of the World Bank Group and Chairman of the Board of Executive Directors, has submitted this report, together with the accompanying administrative budgets and audited financial statements, to the Board of Governors.Publication Digital-in-Health(Washington, DC: World Bank, 2023-08-18)Technology and data are integral to daily life. As health systems face increasing demands to deliver new, more, better, and seamless services affordable to all people, data and technology are essential. With the potential and perils of innovations like artificial intelligence the future of health care is expected to be technology-embedded and data-linked. This shift involves expanding the focus from digitization of health data to integrating digital and health as one: Digital-in-Health. The World Bank’s report, Digital-in-Health: Unlocking the Value for Everyone, calls for a new digital-in-health approach where digital technology and data are infused into every aspect of health systems management and health service delivery for better health outcomes. The report proposes ten recommendations across three priority areas for governments to invest in: prioritize, connect and scale.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication Morocco Economic Update, Winter 2025(Washington, DC: World Bank, 2025-04-03)Despite the drought causing a modest deceleration of overall GDP growth to 3.2 percent, the Moroccan economy has exhibited some encouraging trends in 2024. Non-agricultural growth has accelerated to an estimated 3.8 percent, driven by a revitalized industrial sector and a rebound in gross capital formation. Inflation has dropped below 1 percent, allowing Bank al-Maghrib to begin easing its monetary policy. While rural labor markets remain depressed, the economy has added close to 162,000 jobs in urban areas. Morocco’s external position remains strong overall, with a moderate current account deficit largely financed by growing foreign direct investment inflows, underpinned by solid investor confidence indicators. Despite significant spending pressures, the debt-to-GDP ratio is slowly declining.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.