Issue 11 January 2013 News 76272 Compliments for the New Year! Wishing you all the best for a very fruitful 2013 DMF Stakeholders’ Forum 2013 “Debt Management: Building Resilience through a Coordinated Policy Agenda and Enhanced Institutions� We are pleased to announce that the next annual DMF Stakeholders’ Forum will take place on May 2 to 3, 2013, in Berlin, Germany. This event is jointly organized by the German Federal Ministry for Economic Cooperation and Development and the World Bank. The target audience for the event includes policy-makers and debt managers from developing countries, international and regional technical assistance providers, representatives of civil society organizations, as well as bilateral donors and staff from multilateral development banks. Launch of the DMF Debt Manager’s Network Web page1 As part of the Debt Manager’s Network (DMN) activities, the DMF has invited debt managers to join this new initiative of creating a designated DMN’s web page. This would provide the opportunity for a virtual communication platform, where debt managers and debt experts from around the world could share experiences, follow up on development trends, share and consult on operational and functional issues including developing a debt management strategy legal and regulatory frameworks, etc. Recent DMN meetings ‘Six-Step ORM Framework’ The DMN meeting on October 31, 2012 focused on “dealing with operational risk�, considered “a potential iceberg for a government debt and treasury operation� by presenter Ian Storkey, Establish Risk Management an international consultant and expert in debt management. The Structure participants including several from United Nations Conference on Trade and Development (UNCTAD) and West African Institute for Financial and Economic Management (WAIFEM) were taken Understand & Document through the ‘6-step ORM framework’, the risks facing debt Business Activities managers, the potential impact on their debt operations, and the mitigation strategies including business continuity planning. Participants were particularly keen to understand the operational Continuous Identify, Assess & Improvement Measure Risks risks related to staff, management and related human resource failures and practical solutions to mitigate these risks. This relates Ongoing Reporting to their experience in low income countries where there are often difficulties in retaining staff in the debt management operations and the constant need for capacity building and training. The Monitor Performance Develop Risk Management operational risk management processes in Chile, Sweden, Turkey Strategies and Mexico were highlighted. Implement Capabilities The virtual meeting of the DMN held on January 31, 2013, focused on “Sub national financing and cash management�. The meeting was attended by 28 participants from Europe and Central Asia, Africa and South Asia regions. Debt managers and experts had the opportunity to discuss the current framework for subnational cash and debt management, the impact of the active liquidity balance management for a prudent and cost effective debt management, as well as the importance of a close coordination between these two areas of public finance. Two case studies were presented by officials from India and Pakistan on actual practice of sub national financing and cash management. Participants shared their views on existing challenges as well as the impact for debt management. Upcoming DMN Meetings »» March 7, 2013: Debt market development »» July 18 , 2013: DeMPA assessments and reform implementation »» September 26, 2013: Debt management and Debt sustainability »» November 28, 2013: Government debt recording 1. The web page is password protected and shared among the interested debt managers and professionals. DMF activities during the period October to December 2012 Since its inception in November 2008, the DMF has financed a total of 42 Debt Management Performance Assessment (DeMPA), 28 Medium Term Debt Management Strategy (MTDS) and 27 Debt Management Reform Plan missions. The facility has also financed 29 training events. Details of activities for the period October to December 2012 are as follows: DeMPA During this period, one DeMPA mission was undertaken under the DMF: »» A baseline DeMPA mission visited Pristina, Kosovo between November 11 and 19, 2012. The mission was joined by representatives from the Debt Relief International (DRI). The main objective of the DeMPA mission was to assess current debt management performance and capacity of Kosovo. The mission met with government agencies dealing with debt management, and representatives of international development partners in the field that provide related technical assistance. It was important to adopt a consistent approach, as the government has recently established a debt management unit and is in the initial phases of implementing the domestic market. Based on the findings of DeMPA reports, technical assistance (TA) by the World Bank or third party has been delivered in many countries and many other countries are likely to receive TA. DeMPA reports helped clarify constraints in debt management in a systematic and comprehensive manner. This has enabled authorities to recognize weaknesses, facilitate coordination activities among the authorities, and TA providers on structuring the purpose and type of TA required by the country. This coordinated TA contributed to improving debt management practices and to enhanced staff capacity, while maintaining efficiency of resource use and avoid overlaps. Other recorded improvements include in areas such as legal framework, institutional structures and control operational risk: Legal and Institutional Framework Efforts to strengthen the legal framework were recorded in Albania, Bangladesh, Malawi, Sao Tome and Principe, Sierra Leone, Swaziland, Tanzania, and Togo while authorities reviewed the legal framework in Samoa and Tajikistan. Institutional and organizational arrangements facilitated effective debt and cash management functions and reduced fragmentation of operations in Bangladesh, The Gambia, Maldives, Papua New Guinea, Moldova, Sierra Leone, Swaziland, and Togo. In Samoa, a separate debt management unit was established. And in Tanzania, a consolidated debt management unit is to be established. In St. Kitts and Nevis, third party assistance was provided to develop the middle office function. Mitigation of operational risks in Bangladesh, Malawi, Maldives, Rwanda, Sierra Leone, Tajikistan, Tanzania, Ghana, and few others, although this has remained an area requiring significant improvements in most developing countries. Debt Management Strategy (DMS) Some countries formalized and published a debt management strategy (eg. Burkina Faso, Cape Verde, Rwanda, The Gambia, Moldova, Mozambique, Tanzania and others). Several others took efforts to draft a debt management strategy based on quantitative analysis of the cost-risk indicators of their debt portfolio (e.g., Bangladesh, Ethiopia, Cote D`Ivoire, Kazakhstan, Malawi, Namibia, Nigeria, Solomon Islands, Maldives, Honduras, Samoa, Tajikistan, Togo, Vietnam and others) Staff Capacity Important initiatives were undertaken to provide technical training to staff on the DeMPA, MTDS, DSA and reform plans. Trainings on subnational fiscal and debt management were also provided and staff also participated in the Debt Management Practitioners’ program. Debt Recording and Reporting Improvements in debt recording systems were evidenced in Bangladesh, Comoros, Guinea-Bissau and Mali. Improved reporting of debt data and publications were observed in Burkina Faso, Central African Republic, Comoros, Mali, Mozambique, Nigeria and Togo. MTDS During this period, one MTDS mission was undertaken in Ethiopia: »» A baseline MTDS mission visited Addis Ababa, Ethiopia between October 9 and 19, 2012. The main objectives of the mission were to i) strengthen local capacity to develop and implement an effective MTDS; ii) work closely with the authorities in illustrating the application of the MTDS framework and toolkit; iii) evaluate the performance of alternative financing strategies under different market risk scenarios, such as exchange rate shocks, inflation and interest rate shocks, and ensure that the strategies examined are consistent with the overall macroeconomic framework and development strategy of the government; and finally, iv) provide hands-on training to authorities in the use of the MTDS analytical tool. One of the issues that was addressed was ‘how financing for public investment can be incorporated into the MTDS analysis’. The mission was joined by representatives from the DRI and the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI). Debt Management Reform Plan During this period, five Debt Management Reform Plan missions were undertaken: »» A debt management reform plan mission took place in Apia, Samoa between October 17 and 24, 2012. The main objective of the mission was to develop, jointly with the Ministry of Finance, a detailed and sequenced reform plan for debt management in Samoa. The debt management reform plan built on the findings of the DeMPA mission (2011) and other related technical assistance and advice provided by the development community. It focused on priority areas that were identified jointly with the authorities and the country team, and suggested recommended actions to strengthen and support debt management activities in Samoa. The project components being considered for reform included the institutional framework to support the recent establishment of a new Debt Unit in MoF, debt policy and strategy development, and operational risk and cash management. In addition, the mission provided direct training to help further develop staff capacity on conceptual aspects of cash and debt management, including debt sustainability analysis. »» A debt management reform plan mission visited Tonga during the period of November 28 and December 11, 2012 to provide technical assistance on reforming public debt management. The main objective of the mission was to jointly with the Debt Management Section (DMS) of the Ministry of Finance and National Planning (MoFNP), develop a detailed and sequenced reform plan for debt management. The debt management reform plan built on the findings of the PFTAC Mission: ‘Strengthening Debt Management Capacity’ and Commonwealth Secretariat Missions: ‘Scoping Mission on Debt & Cash Management’ and ‘Advisory Mission on Domestic Market Development’, in which several areas of debt management were covered and/or assessed. The mission was joined by DRI. »» A World Bank technical assistance mission visited Lusaka, Zambia, between November 12 and 19, 2012, to assist the authorities in developing a reform plan in the area of public debt management, and to provide training on debt management issues. The mission was joined by UNCTAD and MEFMI. The main objective of the mission was to jointly with the Investment and Debt Management Department (IDM) of the Ministry of Finance, develop a detailed and sequenced reform plan for debt management. The DeMPA mission that was carried out in 2011 provided important input to the discussions of reforms, as did meetings with various departments in the MoF, Bank of Zambia, and commercial banks. Taking into account the MoF Reform Strategy 2012-2014, TA being provided by UNCTAD, US Treasury, and MEFMI, and previous experiences with implementing broad debt management reforms in Zambia, it was agreed to focus the reform plan on a few selected topics that for a large part can be addressed without external assistance. Also, it was decided to focus on actions to be undertaken in 2013. »» A debt management reform plan mission took place in Bangui, Central African Republic (CAR), between November 19 and December 1, 2012. The main objective of the mission was to work with the authorities in the formulation of a Reform Plan for Public Debt Management, building on the findings of the DeMPA mission (2012). The mission met CAR authorities who requested support to formulate contents of legislation specific to debt management activities. This legislation was part of a revamped mandate for the Treasury, which was expected to be presented to Parliament for approval. »» A debt management reform plan mission took place in Yaoundé, Republic of Cameroun, between December 3 and 7, 2012. The main objective of the mission was to conduct a follow-up on the Reform Plan for Debt Management, and update the plan as needed. The mission noted a number of significant progresses over the last 18 months: namely, improvements in data management and protection against operational risks. »» The National Committee for Debt Management (NCDM) has become operational and its Technical Committee has met several times to discuss technical issues on debt management. »» They successfully launched emissions in the domestic market, and are working actively to produce a debt management strategy according to international standards. »» The authorities engaged in strengthening the analytical capacity of technical services… The authorities manifested their support to the updated proposed reforms, and signaled that a number of proposed reforms were already appropriated, which they intend to carry, including actively pursuing training on Debt Sustainability Analysis (DSA), as they are committed to producing their own DSA to accompany the budget law for 2014. DMF Training During this period, four DMF training events took place between October and December 2012: »» A MTDS workshop was conducted in November 2, 2012 in Washington, DC. The goal of the workshop was to familiarize participants with the MTDS frameowrk so that they could have an informed policy dialogue with governmet counterparts. Participants included IPs. »» A joint World Bank-IMF training event was jointly organized by AFDC and DMF in Shanghai from November 12 to 16, 2012. The objective of the workshop was to equip participants from 17 countries in the East and South Asia regions with a good understanding of the MTDS framework. This was done through presentations on conceptual issues, including individual steps of the framework, and through hands-on exercises. »» A MTDS training event was organized jointly with DRI, in Dakar, Senegal November 12 to 16, 2012. The objectives of the mission were to conduct a Hub Training on developing MTDS. The aim was to familiarize the participants with the framework for developing a MTDS as described in the joint Bank - Fund Guidance Note, and to provide training in the use of the Excel based analytical tool. The course was delivered in French through a mix of presentations and hands on exercises. Forty five (45) participants from 19 countries and 4 institutions attended the training. Overall, participants were very satisfied with the training and its usefulness, and most expressed the desire for further training on MTDS, especially in-country training. »» A training workshop on DeMPA evaluation for external auditors was conducted jointly with MEFMI from November 12 to 16, 2012 in Nairobi, Kenya. The workshop was attended by 33 participants from 16 countries from the Africa region. The objective of the course was to familiarize participants with the framework for assessing the debt management capacity and institutions based on the DeMPA methodology. The course was delivered through a mix of presentations and hands on exercises of DeMPA assessment and Reform Plan formulation. DMF activities for January to March 2013 Forthcoming DMF training events »» Joint Vienna Institute, Vienna, MTDS Training, March 4-8, 2013 »» CEMLA Subnational DeMPA, SN-DeMPA Training, March 18-22, 2013 Forthcoming DMF Missions »» Madagascar, DeMPA, January 16-24, 2013 »» Sierra Leone, MTDS, January 30 – February 8, 2013 »» Honduras, MTDS baseline, February 4-12, 2013 »» The Gambia, Reform Plan, February 11-15, 2013 »» Punjab, Pakistan, SN-DeMPA, February 17 to March 1, 2013 »» Malawi, MTDS Follow up, February 25 – March 2, 2013 »» Chad, DeMPA, February 25 – March 7, 2013 »» Sudan, Reform Plan, February 27-March 7, 2013 »» Ethiopia, DeMPA, March 14-22, 2013 »» Bosnia and Herzegovina, DeMPA, March 2013 »» Niger, Reform Plan, March-April 2013 CONTACT US On the web: www.worldbank.org/debt The Donors Email: The DMF’s donors are Austria, Belgium, Canada, Germany, The Abha Prasad: aprasad@worldbank.org Netherlands, Norway, Switzerland, the African Development Pascaline Maseko: pmaseko@worldbank.org Bank and the European Union/European Commission. economicpolicyanddebt@worldbank.org Telephone: (202) 458-7266 Fax: (202) 522-3740 Debt Management Facility (DMF) Newsletter Issue 11, January 2013. The DMF Newsletter is published quarterly and is provided to debt management practitioners from developing countries, donors, DMF implementing partners, civil society organizations, and private sector firms. The newsletter aims to share DMF work plans, lessons learned, debt management-related news and developments.