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2012 Sovereign Debt Management Forum

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Despite the obstacles posed by Hurricane Sandy, public debt managers from around the world gathered at the World Bank’s Sovereign Debt Management Forum on October 31, 2012 to share their experiences. The 2012 Forum brought together over 120 debt managers and representatives from international financial institutions to review lessons learned from adapting and implementing public debt management strategies in the challenging economic environment over the past year.

Download the agenda.

See below presentations and video clips from this year Forum:

Plenary 1: Ten years after the guidelines: what impact did the guidelines have, and is there a need to revise them?

In 2001, The World Bank and the International Monetary Fund jointly published the Guidelines for Public Debt Management. At the time, the aim was to develop a set of guidelines on public debt management that would assist policy makers in strengthening the quality of their public debt management and reducing vulnerability to financial shocks. This session reviewed how the Guidelines have performed since publication, focusing on the usefulness of the Guidelines for countries in both calm and volatile periods, and whether the Guidelines are still valid in expressing sound practice.

For your reference, please find attached session summary note.

Presentations:
The guidelines for public debt management: a Swedish perspective
Brazilian public debt management guidelines: 10 years
The guidelines, 10 years on... their impact and effectiveness: a personal perspective    

Presentations:
Risk management in Colombia: contingent liabilities
Fiscal Risk Management in Mexico
Ireland’s National Treasury Management Agency Managing a complex portfolio of public assets and liabilities

Plenary 2: Should debt managers care about risk exposures that are not directly debt-related?

This session examined how countries have established institutional, analytical and transactional frameworks to deal with numerous risks to the budget in addition to those inherent in the management of the public debt portfolio. The former include explicit contingent liabilities, such as guarantees for sub-national debt, guarantees for PPPs and litigation against the State, as well as implicit contingent liabilities, such as natural disasters and bailouts of sub-national governments. Some countries manage the risks arising from commodity price volatility if this has an important impact on their budget, while still others address weather risks. The session also explored how the management of  these non-debt  risks relates to current public debt management arrangements and to debt management strategy design, and asked if they can be usefully analyzed within a sovereign asset and liability management framework.

For your reference, please find attached session summary note.

 

Plenary 3: Broadening the investor base: Practical examples from country experiences

This session discussed new trends and approaches to broaden the investor base beyond the core traditional institutional investors (e.g. banks, pension funds, insurance companies, mutual funds).  New types of investors that are increasing their relevance in debt managers’ policy agenda include foreign investors, retail investors, the Diaspora and Islamic investors. Issues addressed in the panel included: what is the rationale for expanding beyond the traditional investor base? Is it only diversifying risk or are there also other policies involved such as financial inclusion objectives? Is this trend introducing new types of risks and costs that debt managers need to take into account? Are the new types of instruments and investors having an impact on segmenting markets and therefore on the development of stable and liquid domestic bond markets?

For your reference, please find attached session summary note.

 

Presentations:
Broadening the investor base - the case for Hungary
Broadening the investors base: practical examples from Brazil

Presentations:
“Benign neglect” of the long-term interest rate
Closer coordination between debt policy and monetary policy?

Breakout Session 1: Is the crisis a call for closer coordination among monetary policy, fiscal policy and debt management?

The current financial crisis has presented central banks with the challenge of finding a transmission mechanism for expansionary monetary policies that can stimulate the pace of economic activity. With short-term interest rates already close to zero and a financial system unwilling or unable to lend to companies and households, some central banks have intervened in the markets, buying long-term government securities to drive down long-term interest rates. Recent discussions about the prospect of high public debt/GDP ratios in many advanced economies as well as the persistence of large fiscal deficits have raised concerns among both monetary authorities and public debt managers about the possibility of “fiscal dominance". This session explored the relationship among debt management, monetary policy and fiscal policy in a crisis environment. The discussion addressed how countries have approached the reformulation of these relationships and the concerns that may arise about the future when central banks move to a more restrictive monetary policy stance at a time when public debt levels are high.

For your reference, please find attached session summary note.

 

Presentations:
Overcoming obstacles to building public debt management capacity - case of Moldova
Overcoming obstacles to building public debt management capacity - case of Indonesia
Implementing debt management reform in Jamaica

Breakout Session 2: Overcoming obstacles to building public debt management capacity     

This session focused on how to develop debt management capacity, in light of common constraints countries face, such as low technical capacity, high turnover, and limited access to analytical tools. Some countries have been able to surmount these obstacles, and learning from successful examples of institution building across a diverse range of countries is critical to avoiding mistakes going forward. The workshop included a discussion of the Debt Management Performance Assessment (DeMPA), Medium Term Debt Management Strategy (MTDS) and reviewed how reform plan tools can be applied in improving debt management.

For your reference, please find attached session summary note.

 

 

Breakout Session 3: Analytical tools supporting debt management strategy development: In-house or off-the-shelf tools?

This session explored how some countries developed their own analytical models to support the development of their medium term debt management strategies, including discussion of the main challenges they faced in developing risk models. Questions that were addressed included: how complex/simple should these models be? How can analytical tools support the choice of medium term strategy and the development of annual funding plans? How useful or necessary are analytical models and what are their constraints? The session also included an example of an application of the Medium Term Debt Management Strategy Toolkit developed jointly by The World Bank and the International Monetary Fund.

For your reference, please find attached session summary note.

 

Presentations:
Developing analytical models for public debt management: notes from Turkish experience
Application of the MTDS deterministic scenario model
Approaches to cost/risk model development

Breakout Session 4: Improving governance in public debt management

This session reviewed best practices related to public debt management governance arrangements and discussed how different models might be applied in low income vs. middle and high Income countries. Other questions discussed included: How to structure the reporting link between the Head of the DMO and the Minister of Finance? What are some of the lessons of dealing with auditors and legislative bodies?

For your reference, please find attached session summary note.

Breakout Session 5: Selecting among different financing proposals for public sector investments: a practical approach

This session discussed the criteria used by countries to choose among different proposals from bilateral and multilateral sources as well as private sector in order to finance public sector investments. Topics included: i) the development of a framework to assess external and domestic financing sources; ii) how to compare the costs and risks arising from financing proposals; iii) how to take into account other considerations such as political relations, the expertise of the lenders in the sector or the additional services provided; iv) aligning project financing decisions with the debt management strategy; and v) what kind of procedures should  be developed for documenting the financial decisions. The session provided examples of choices countries have made and the lender perspective.

For your reference, please find attached session summary note.

 

Prsentations:
Mobilizing resources for project finance
Selection of financing proposals for project loans - Republic of Moldova
Governance arrangements in the Republic of Serbia
Vietnam public debt management

Presentations:
IT systems developed in the debt management office of Guatemala
Development of debt management IT systems in Peru
An appraisal of IT systems for debt managers: the case of Nigeria

 

Breakout Session 6: The second step in debt management IT systems: from debt registering to supporting the design and monitoring of a debt management strategy

A reliable debt recording system ranks first in the set of IT concerns sovereign issuers have. This session explored how to develop an IT system that supports the design of a debt management strategy, as well as risk management and the monitoring of the strategy. Are there off-the-shelf solutions in the market? What are the main challenges in developing an IT system in-house?

For your reference, please find attached session summary note.

 

2012 survey result on debt management strategies

Survey on Debt Management Practices and Concluding Remarks

The World Bank is conducting a short survey of debt management practices. The findings will shed light on the establishment and conduct of debt management strategies around the globe, improving our understanding of the progress being made in this critical area. The Forum was an opportunity to briefly share some preliminary results of this survey and ask countries for their participation. We are still receiving surveys and analyzing the results, and a paper with the main findings will be released soon.