Your Orgnization Newsletter Date Volume 1, Issue 1 DMF News Issue 27 April 2017 Inside this issue DMF Forum 2017, Vienna, Aus- tria May 22—23…...….…... Pg. 1 DMF Activities over Jan-March 2017 .……….......…………. Pg. 2 DMF Training Activities, Jan- March 2017 ..…..……….…. Pg. 3 DMN Webinar Series ..….. Pg. 4 DMPP-February Intake …...Pg. 5 DMF Note…..….…………..Pg. 5 Other Recent Activities and Events..…...…,…………......Pg. 6 Recent Publications .…...…..Pg. 8 World Bank Public Sector Debt Statistics database….…….....Pg. 8 Forthcoming Mission and Training The DMF Stakeholders’ Forum will facilitate the discussion of issues in Activities…………………….Pg. 8 public debt management in a changing global environment faced by de- veloping countries. The Forum is targeted toward policy-makers and gov- ernment debt managers, international and regional technical assistance providers, representatives of civil society organizations, as well as bilat- eral donors and multilateral development banks. See web-link: http://www.worldbank.org/en/events/2017/01/25/debt-management-facility- stakeholders-forum-2017 DMF Newsletter DMF Activities for the period January – March 2017 DMF Technical Assistance Missions can monitor the implementation of the chosen strategy. The team also discussed next steps, including preparation Debt Management Performance Assessments (DeMPA) of a draft strategy paper by the authorities; an annual >>Mozambique. A World Bank team in conjunction with borrowing plan in line with the strategic targets, and Implementing-Partner Debt Relief International (DRI), monitoring the implementation of the MTDS through the visited Maputo over February 15-23, 2017, in response to CNDP Technical Commission. a request from the authorities to provide technical assis- >> Liberia. At the request of the government of Liberia, tance in public debt management. The mission worked a World Bank team visited Monrovia over January 30 and closely with the Ministry of Economy and Finance (MEF) February 9, 2017, to provide technical assistance in de- to undertake a follow-up DeMPA evaluation, following veloping an MTDS. The West African Institute for Finan- the first engagement for this diagnostic program in 2008. cial and Economic Management (WAIFEM) joined the The mission assessed the strengths and areas in need of mission as an Implementing Partner. The team worked improvement through the application of the revised 2015 with government officials to strengthen capacity to better -DeMPA methodology, and discussed near-term needs understand and implement the joint WB-IMF MTDS tool, for technical assessment and follow-up reform plan activ- in order to support development of a new strategy report ities with the authorities. The main findings of the for the country. The work was grounded in quantitative DeMPA were shared with the authorities upon comple- analysis of the costs and risks of the current debt portfo- tion of the mission; these included several recommenda- lio, and design/simulation of alternative borrowing paths, tions pertaining to governance and strategy develop- consistent with the overall macroeconomic framework, ment, as well as debt recording and operational risk man- and including a key objective for development of the do- agement. mestic market. Medium-Term Debt Management Strategy (MTDS) >> Kosovo. In response to a request from the Ministry of >>Senegal. At the request of the Senegalese authorities, Finance (MoF), a World Bank team visited Pristina, Koso- a joint World Bank-International Monetary Fund (IMF) vo from February 22 to 27, 2017 to provide technical as- team visited Dakar, Senegal, over January 15-25, 2017 to sistance in developing an MTDS. Ms. Hsing C. Wong, Debt deliver technical assistance on developing a medium Management Practitioners’ Program participant from the term debt management strategy (MTDS). DRI and Agence Ministry of Finance, Guyana, also joined the mission. The UMOA-Titres joined the mission as Implementing Part- team worked closely in these efforts with staff of the ners. The team worked in close collaboration with the Treasury Department of the MoF, as well as other depart- members of the Technical Committee of the National ments within MoF and the Central Bank of Kosovo (CBK). Public Debt Committee (CNDP) including: Directorate of To develop a better understanding of conditions in the Investment, General Directorate of Finance (DGF), Gen- domestic market, the team met with representatives of eral Directorate of Public Accounts and Treasury (DGCPT), private banks (which are primary dealers) representatives Directorate of Economic and Financial Cooperation of the insurance sector, together with the supervisory (DCEF), Directorate General of Planning (DGP), Direc- authorities under the CBK, and the Kosovo Pension Sav- torate of Forecasting and Economic Studies (DPEE), and ings Fund (KPST). The scope of the strategy was total cen- the Central Bank of the States of West Africa (BCEAO). tral government debt (domestic and external), and the The mission team also met with some regional financial time period selected was 2017-20. In addition to a focus market participants, including banks and insurers. on domestic debt issuance, the mission discussed issues Since 2012 Senegal has drafted several strategy docu- affecting implementation of a debt management strategy ments; and the cost and risk analysis carried out by the for the Government of Kosovo, including coordination mission and the national team validated the orientation with the Macro-and International Financial Cooperation of previous strategies. The mission made several recom- Department to ensure smooth implementation of the mendations to address the challenges faced by the au- debt management strategy. thorities, including operationalizing the CNDP so that it >> Lesotho. In response to a request from the authori- 2 ties, a joint World Bank–IMF mission visited Maseru, Le- Issue 27 sotho, over March 13-24, 2017 to provide technical as- adopt a medium-term debt management strategy, make sistance on developing a baseline MTDS. The Macro Eco- it imperative for Zimbabwe to strengthen the framework nomics and Financial Management Institute of Eastern for domestic debt management operations and to devel- and Southern Africa (MEFMI) joined the mission as an op its nascent government securities market. The in- Implementing Partner. The team provided assistance to country workshop helped build the capacity for a group policymakers and operational officials in: (i) analyzing of 35 technical officials from the Ministry of Finance and the costs and risks inherent in the existing debt portfo- the Reserve Bank of Zimbabwe through a series of lio; (ii) understanding the medium-term implications for presentations, group discussions and hands-on exercis- the portfolio in terms of cost, risk, and market develop- es. The officials gained experience in macroeconomic ment arising from decisions regarding new borrowing; policy coordination issues, domestic debt issuance tech- (iii) evaluating potential strategies as to the composition niques and pricing of government securities, investor of new borrowing and the stock of the debt under base- base relations and diversification, building liquidity in line and stress scenarios; and (iv) drafting a multi-year, benchmark bonds and required market infrastructure. A medium-term debt management strategy, taking ac- key output from this workshop was the formulation of a count of existing debt, macroeconomic and fiscal projec- draft management reform plan by the participants. tions, vulnerabilities, and borrowing constraints. To that end, the mission provided comprehensive training re- garding the framework underlying the MTDS, and in ap- plication of the MTDS analytical tool. Debt Management Reform Plan >>Burkina-Faso. At the request of the Ministry of Econ- omy and Finance (MOEF) of Burkina Faso, a joint World Bank-IMF mission visited Ouagadougou over March 20- 31, 2017 to follow-up on the implementation of the country’s Debt Management Reform Plan. The team’s activities were geared to strengthen the capacity of the Debt Management Unit within the MOEF to implement a strategy for managing government debt. Previously, in September 2014, a World Bank mission assisted in de- signing a Reform Plan to improve the debt management function based on four pillars: (i) the institutional frame- DMF Training Activities work, (ii) risk management and medium-term debt man- Medium-Term Debt Management Strategy (MTDS) agement strategy development, (iii) treasury manage- ment and issuance of instruments in the regional market >>Switzerland. A joint World Bank -IMF-UNCTAD work- and (iv) operational risk and audit. The March 2017 mis- shop on the Medium Term Debt Management Strategy sion thus aimed to take stock of progress, focusing in framework was delivered in Geneva over February 6 to particular on functioning of the management of local 10, 2017. The program aimed to familiarize participants currency debt. with debt management strategy development using the MTDS framework and toolkit--based on cost-risk analysis Domestic Debt Market Development of alternative borrowing strategies--and to guide in the >>Zimbabwe. The International Monetary Fund in col- process of developing and implementing a medium-term laboration with MEFMI, delivered a workshop on domes- debt management strategy. Some twenty-eight partici- tic debt management and debt market development in pants from twelve countries joined the workshop, in- Kariba, Zimbabwe over January 16-27, 2017. Growing cluding from: Azerbaijan, Bangladesh, Belarus, Cambo- reliance by the government on domestic market borrow- dia, Ghana, Lao PDR, Moldova, Myanmar, Nepal, Paki- ing, recent initiatives to strengthen creditor relations to stan, Tajikistan and Uzbekistan. clear its arrears on external debt, and commitment to 3 n- DMF Newsletter Debt Sustainability Analysis (DSA) the training was to build capacity of country officials to >>Tanzania. As part of efforts to step -up comprehensive prepare and interpret a debt sustainability analysis. A training in concepts and practices of debt sustainability range of issues was discussed, including (i) key concepts analysis, the World Bank and IMF, together with Imple- of debt sustainability, (ii) macroeconomic linkages, (iii) menting Partners, are undertaking a series of ‘hub’ work- external and public debt dynamics, (iv) baseline and shops for DMF-eligible countries across world regions. shock scenarios, and (v) operational implications of risk Over February 6-10, MEMFI provided leadership in spon- ratings, debt ratios, and thresholds. The agenda com- soring a program in debt sustainability in Arusha Tanza- prised a combination of presentations by the mission nia, for member countries of the organization, which in- team, presentations by attendees, structured discussions clude: Angola, Botswana, Burundi, Kenya, Lesotho, Mala- and exercises. wi, Mozambique, Namibia, Rwanda, Swaziland, Tanzania, DMN Webinar Series Uganda, Zambia and Zimbabwe. With guidance from in- January 18, 2017: Azucena Arbeleche, Consultant in structors from the international financial institutions and Debt Management (Uruguay), presented on Liability MEFMI, participants gained a clearer understanding of Management Operations: the case of Uruguay. Liability the framework and principles for sustainability analysis, Management Operations (LMOs) are bond buybacks and as well as engaged in hands-on exercises with the DSA bond exchanges which facilitate achieving desired char- tool. Among highlights of the program were presenta- acteristics of the debt portfolio in a quick and efficient tions by groups of attendees on ‘alternative scenarios’ way. One of the main objectives of LMO is to reduce refi- designed by the teams, and an award presented for the nancing risk through the repurchase or exchange of debt most creative set of assumptions. due in the short term. Other objectives are the reduction >>Senegal. A joint World Bank–IMF team, with coopera- of foreign exchange risk, reduction of interest rate risk, tion from the African Development Bank, visited Dakar/ construction of benchmark bonds along the yield curve Saly, Senegal, from February 27 to March 3, 2017 to de- and a buildup of financial savings. The presentation also liver a workshop on debt sustainability analysis. Partici- reviewed two transactions executed by Uruguay. The pants included technical-level officials from the treasury audience included DMN practitioners and World Bank departments and debt management units of ministries of Economists/debt specialists. finance for the eight WAEMU countries—Benin, Burkina February 13, 2017: Fritz Florian Bachmair, Financial Faso, Cote d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, Officer, World Bank Treasury, and Mkhulu Maseko, Direc- and Togo. The workshop was organized by DMF Imple- tor, Credit Risk, National Treasury, South Africa, present- menting Partner- Agence UMOA-Titres, the central agen- ed on Contingent Liabilities: a Risk Management Frame- cy for the issuance of government securities by WAEMU work and Country Examples. The target audience includ- member states in the regional market. The objective of ed DMN members as well as staff of the Reserve Bank of India. March 6, 2017: the DMN webinar featured two presen- tations: (i) Mr. Tuan Minh Le, Senior Economist, World Bank Group, presented on Fiscal Policy for Environmen- tally Responsible Economic Growth; and (ii) Mr. Wei-Jen Leow, Senior Financial Specialist, World Bank Group, in- troduced the Climate Action Peer Exchange (CAPE), a fo- rum for peer learning, lesson sharing and mutual adviso- ry support for knowledge exchange. The intended audi- ence included DMN practitioners and World Bank econo- mists. 4 Issue 27 Debt Managers Practitioners Program: Update on February 2017 Participants Ms. Hsing Wong is an Economic & Financial Analyst at the Ministry of Finance, Guyana. With regard to her participation in the DMPP, Ms. Wong said: “It is a great privilege to be given an opportunity to work alongside the debt unit at the World Bank. My expectation as a DMPP participant is to enhance my skills as a debt man- ager through the sharing of knowledge and experience with global practices and exposure with the World Bank debt experts as per the program's objective. But more than that, I hope to take this experience and transfer it into application back home at the Ministry to strengthen the middle office’s capacity.” Under the DMPP, Ms. Wong has been focusing primarily on developing a Medium- Term Debt Management Strategy for Guyana. She participated in an MTDS Mission to Kosovo in February 2017, which enabled her to engage with the central bank, market participants and debt management professionals in that country and gain more hands-on experience. With regard to her immersion into the World Bank team, Ms. Wong also noted: “The diversity and pool of knowledge and experience concentrated into one space is a very conducive environment to be working once you get ‘onboard’ and open to learning.” Mr. Zakaria Issahaku is Head of the Risk Management Unit in the Debt Manage- ment Division of the Ministry of Finance of Ghana. Under the DMPP, he has worked on tasks related to Ghana’s Quarterly Medium-Term Debt Management Strategy. And jointly with a team from the World Bank Treasury, Mr. Issahaku has made efforts to develop a governance structure for credit risk management in Ghana, in- cluding a fee structure for government lending and guarantees. DMPP provides ample opportunities to participate in trainings offered by the World Bank-IMF. And Mr. Issahaku participated in a two-day face-to-face MAC DSA training offered in March 2017. He also joined the World Bank mission to Mongolia in April 2017 on a Public Expenditure Review and focus on debt management issues among mission activities. DMF Note: What have we Learned from over 100 DeMPA Evaluations? Through the Debt Management Performance Assessment (DeMPA), the World Bank helps developing countries ful- ly comprehend the complexity of tasks and improve the quality of sovereign debt management. World Bank experts developed and began applying the DeMPA methodology in 2008. Over the last nine years, 113 DeMPA evaluations were conducted for 78 countries across five regions. Evaluations assisted authorities to push forward the reform agenda through a joint formula- tion of reform plans and medium-term debt strategies, supported by the multi-donor Debt Management Facility Trust Fund (DMF –TF). The DeMPA assessment provides a comprehensive pic- ture of sovereign debt management in five core areas: 5 DMF Newsletter governance, coordination with macro and monetary policies, borrowing practices, cash flow forecasting, and oper- ational risk management. Thirty-one countries have conducted a follow-up DeMPA assessment in order to track progress in reform imple- mentation over time. The comparison of the results from multiple assessments reveals improvements in most as- sessed areas (see figure), including quality of the legal framework, development of debt management strategies, recording of debt data and publication of debt reports. However, further efforts are required across countries for a closer coordination of debt management with cash management and cash-flow forecasting. The DMF expert team is actively working to assist member countries in this area through a combination of regional training and country specific guidelines for development of annual borrowing plans. Other Activities and Events World Bank Treasury Webinar Series. As part of the World Bank Treasury Webinar Series, “IT Systems for Debt Management” webinar was held on March 7, 2017. Recordings and session information, as well as information on future webinar topics, can be accessed here. The World Bank Treasury’s Government Debt and Risk Management Program: Achievements in Select Countries . Peru: Sending Markets the Right Signals. After the global financial crisis of 2008, a key priority for the Peruvian government was to reduce fiscal vulnerability to external shocks. As part of this effort, the World Bank Treasury’s GDRM Program worked with the Peruvian Ministry of Finance and Economy on improving the debt management strategy to provide more clarity and transparency in the domestic issuance of government securities to inves- tors. Please click here to read more. Indonesia: Basing Infrastructure Investment on More Solid Ground. For Indonesia, with its large and far -flung population, a modern and efficient infrastructure is vital to connecting with markets at home and abroad. The Indo- nesian ministry of finance partnered with the GDRM Program to assess and manage the risks of government guar- antees for infrastructure projects. A new scorecard system is helping Indonesia finance infrastructure investment while managing government exposure to credit guarantees and making the economy more resilient to financial shocks. Please click here to read more. More news from the GDRM Program can be accessed here. WB-IMF-JICA Training in Public Debt Management for Asian Countries in Kobe and Tokyo Over eleven days between December 12th and 22nd 2016, the IMF, World Bank (WB), and the Japan International Cooperation Agency (JICA) co-hosted an Advanced Workshop on Developing Medium-Term Debt Management Strategies. Twenty-five Ministry of Finance and Central Bank officials from six countries participated: Bangladesh, Malaysia, Mongolia, Pakistan, the Philippines and Vietnam. The IMF and WB have conducted similar trainings in Vien- na for Central/Eastern European-and African countries. The workshop in Tokyo was the first training for Asian countries. Using the IMF-World Bank MTDS framework, the objective of the workshop was to strengthen the analytical capacity of participants to evaluate costs and risks of the public debt portfolio, design new borrowing strategies, and assess the cost-risk trade-offs among the different strategies. The importance of ensuring consistency between the MTDS and fiscal and monetary policies was highlighted, as well as building robust public debt portfolios, more resistant to exogenous shocks including realization of contingent liabili- ties. 6 Issue 27 A joint exchange meeting was held on the first day of the workshop between Japanese companies and pro- gram participants, hosted by JICA and the Kansai Economic Federation. And following keynote speeches from Mr. Sumi of the IMF Asia Pacific Office, and Dr. Hayashi from the Asia-Pacific Institute of Research, attendees actively exchanged their views on debt management related issues. The workshop was comprised of lectures and exercises on MTDS using individual country debt and macroeco- nomic data. And country representatives gave presentations on the results of their analysis as well as on spe- cial topics of common interest to participating countries. These included the Philippines’ presentation on its experience in issuing a Peso international bond; Bangladesh’s challenges in managing retail debt, and Malay- sia’s innovations in the Sukuk market. Special lectures were also provided by IMF staff on Contingent Claim Analysis (CCA); by the Japanese MOF official and by an academic on the experience of Japanese debt manage- ment; and by the former-Assistant Governor of the Bank of Japan on debt management in an ultra-low inter- est rate environment, among others. Moreover, a side event was organized by JICA and the IMF in which Dr. Dale Gray, a leading expert in the field of macro financial risk and public sector contingent liabilities at the IMF, offered lectures on CCA to Japanese experts and administrators from both public and private sectors. Overall, participants felt that they were able to obtain a good understanding on developing medium-term debt management strategies. Feedback indicated that the hands-on training would enable them to update their countries’ debt management strategies; that learning from the experiences of Japan and other partici- pating countries was quite useful, while participants recommended that IMF/WB/JICA organize additional joint trainings on other topics. OECD Global Forum on Public Debt Management. The OECD Global Forum on Public Debt Management was held in OECD Conference Centre, Paris during February 15-16, 2017. The Forum is a roundtable meeting where public debt managers from the OECD area, as well regulators, central bankers, other financial policy makers, discuss best practices, experiences, and policies in the field of government debt management and the development of government and corporate securities markets with their counterparts from non-OECD countries. Over the years, the relevance of these Global Forums has increased, as emerging market countries increasingly face challenges similar to those of advanced markets due to pressures from global finance, the international nature of financial volatility, and the related need to share and implement best practices in pub- lic debt management. The Global Forum was organized under the aegis of the OECD Working Party on Debt Management and financially supported by the Japanese government. The forum focused on: policy challeng- es posed by global macroeconomic environment; issuance procedures, particularly choice of auction mecha- nisms; the role of debt managers in pricing and managing contingent liabilities; and implications of debt strat- egies for domestic debt markets. Click here to find out more. OIC-COMCEC Financial Cooperation Working Group Meeting. A meeting of the Financial Cooperation Work- ing Group (COMCEC) of the Organization of Islamic Cooperation (OIC) was held on March 30, 2017 in Ankara, Turkey. The meeting was entitled “Improving Public Debt Management in Islamic Countries”. In addition to officials of several member countries, participants included representatives of the Islamic Development Bank (IsDB), OECD, International Islamic Financial Markets (IIFM), Secretariat of OIC Member States’ Stock Ex- change Forum and the Secretariat of the COMCEC Capital Markets Regulators Forum. The meeting served as a platform to discuss practices and policy options in OIC member countries. A report on the subject commis- sioned by the COMCEC Coordination office was also presented. As part of the agenda, Emre Balibek of the World Bank delivered a presentation on the World Bank’s Technical Assistance activities in the area of debt management. Further information about the meeting can be found at the COMCEC website: http:// www.comcec.org/en/cooperation-areas/financial-cooperation/comcec-financial-cooperation-working-group- meetings/8th-meeting-of-the-comcec-financial-cooperation-working-group/ 7 Issue 27 Recent Publications Global Report on Islamic Finance: The World Bank Group and the Islamic De- Forthcoming Mission Ac- tivities velopment Bank published the first Global Report on Islamic Finance, which de- tails the prospects for the global Islamic finance industry and potential to help (May 2017 onwards ) reduce worldwide income inequality, enhance sharing prosperity, and achieve the Sustainable Development Goals. Subtitled “A Catalyst for Shared Prosperi-  Bosnia and Herzegovina: ty?” The report provides an overview of trends in Islamic finance, identifies ma- Reform Plan May 15—19, jor challenges hindering the industry’s growth, and recommends policy interven- 2017 tions to leverage Islamic finance for promoting shared prosperity. Click here to access the report. Forthcoming Training Events Push and Pull: Emerging Risks in Frontier Economy Access to International Cap- ital Markets: Over the past decade a large number of low - and lower-middle (May 2017 onwards ) income ‘frontier economies’ have begun to access private international capital markets to meet fiscal financing needs. Authored by staff of the World Bank’s  DeMPA Training (AUT), Macroeconomics and Fiscal Management Global Practice - Tobias Haque, Jane Dakar, Senegal, May 15— Bogoev and Greg Smith, “Push and pull: emerging risks in frontier economy ac- 19, 2017 cess to international capital markets” discussion paper seeks to identify drivers  Sovereign Liabilities & of this trend as well as associated risks, and present policy implications for fron- Risk Analysis/Debt Strate- tier-market policy-makers. Through simple analysis of the characteristics of re- gy formulation—Regional cent frontier market issuers, the authors show that smaller, poorer, and less Training, Botswana, July well-governed economies are now accessing global credit markets. 17—26, 2017 Through cross-country regression analysis, however, authors also demonstrate  LIC-DSF Workshop that the capacity of these countries to issue debt (and the cost of this debt) con- (Regional W. Africa, An- tinues to be influenced by their macroeconomic performance and quality of gov- glophone), Abuja, Nigeria ernance. The authors draw on evidence from select countries to illustrate poten- July 17-21, 2017 tial risks arising from recent expansions of access to global debt markets, where  DeMPA training for Audi- rapid debt accumulation of foreign-currency denominated debt in the context of tors, JVI, Vienna, Aug. lessened market discipline and following recent debt relief, is now posing pro- 7—11, 2017 nounced debt sustainability and refinancing risks. The paper concludes that in- creased access to international debt markets presents both opportunities and  LIC-DSF Workshop (Regional - Asia), Kuala risks for frontier issuers. Click here to find out more. Lumpur, Malaysia or To- World Bank Public Sector Debt Statistics Database kyo, Japan, Nov. 6—10, 2017 Jointly developed by the World Bank and the International Monetary Fund, the Public Sector Debt Statistics (PSD) quarterly database brings together detailed  LIC-DSF Workshop quarterly public sector debt data of selected countries, initially mainly develop- (Regional East and South- ern Africa), Kenya or Zim- ing/emerging market economies. The main purpose of the PSD database is to babwe, Feb. 5—9, 2018 facilitate timely dissemination in standard formats of public sector debt data, supporting countries' efforts toward improving the coverage and availability of public sector debt data. The database supports macroeconomic analysis and cross-country comparison as it brings such data and metadata together in one central location. Countries participate in the centralized database on a voluntary basis. The PSD database includes country and cross-country tables, and enables users to query and extract data, by country, group of countries, and specific public debt components. The PSD database is linked to the Public Sector Debt Guide produced by the IMF. Click here to access the PSD database. 8 Issue 27 Debt Management Facility (DMF) Newsletter DMF News Issue 27, April 2017 The World Bank The DMF Newsletter is published quarterly and is distribut- ed to debt management practitioners from developing coun- Group tries, donors, DMF implementing partners, civil society or- ganizations, and private sector firms. The newsletter aims to share DMF work plans, lessons learned, and news and de- 1818 H Street NW, velopments related to debt management. Washington, DC On the web www.worldbank.org/debt Email Paloma Anos-Casero panoscasero@worldbank.org Abha Prasad: aprasad@worldbank.org Elliot Riordan: eriordan@worldbank.org Telephone (202) 473-5809 The Donors Fax DMF II donors are Austria, Germany, the Neth- (202) 522-3740 erlands, Norway, the Russian Federation and Switzerland. 9