Your Organization Newsletter Date Volume 1, Issue 1 DMF News Issue 28 July 2017 Inside this issue Summary of the DMF Forum 2017, Vienna, Austria May 22— 23…...….………………… Pg. 2 Background ……………....Pg. 2 Global Fiscal Challenges & their Impact on Debt Management ……………………………..Pg. 3 Challenges and Successes in Debt Management Reform……..Pg. 4 Innovations in Debt Management ………………………….… Pg. 5 Can Africa Borrow Without sor- row? …………………….... Pg. 7 DMF Activities over April—June 2017 .……….......………… Pg. 9 DMF Training Activities, April— June, 2017 ..…..……….…. Pg. 10 DeMPA ELearning training .….. ……………………….. Pg. 12 Recent Activities and Events ………….….......................Pg. 12 This Newsletter highlights a summary of the DMF Website ……………..Pg. 12 DMF Stakeholders’ Forum Forthcoming Mission and Training Activities……………………Pg. 13 DMF Newsletter Contents Background................................................................................................................................................... 2 I. Global Fiscal Challenges and their Impact on Debt Management .................................................. 3 II. Challenges and Successes in Debt Management Reforms .............................................................. 4 III. Innovations in Debt Management ................................................................................................... 5 IV. Can Africa Borrow Without sorrow? ............................................................................................... 7 Background The Debt Management Facility (DMF) held its 8th annual Stakeholders’ Forum: “Borrow without Sorrow”, May 22-23, 2017 in Vienna, Austria. The Forum was co-hosted by the Austrian Federal Ministry of Finance. The Forum program was targeted to policy-makers and debt managers from both developing and developed countries, international and regional technical assistance providers, representatives of civil society organizations, as well as donors and multilat- eral development banks. The event saw active participation from over 120 debt managers from across 50 countries. The objective of the Forum was to facilitate a discussion on debt management challenges and opportunities in a changing global environment. This DMF Newsletter summarizes some of the insights shared at the Forum, under four headings: (i) Global Fiscal Challenges and their Impact on Debt Management; (ii) Recent Challenges and Successes with Debt Management Re- forms; (iii) Innovations in Debt Management; and (iv) a regional focus session “Can Africa Borrow Without Sorrow?” Opening and Keynote address: from left is Mr. A. Lejsek, Deputy Director General, Economic Policy, Finan- cial Markets & Custom Duties, Ministry of Finance, Austria; Prof. Carmen Reinhart, Harvard University; Mr. Carlos F. Jaramillo, Sr. Director, Macroeconomics and Fiscal Management GP; Ms. Abha Prasad, DMF Program Manager, Macroeconomics and Fiscal Management GP, World Bank and Mr. K. Wappel, Direc- tor, Federal Academy of Finance, Austria. 2 Issue 28 I. Global Fiscal Challenges and their Impact on Debt Management Keynote Speaker: Prof. Carmen M. Reinhart, Minos A. Zombanakis Professor of the International Financial System, Harvard University, Kennedy School of Government The discussion started with a sharing of insights on how global challenges and domestic vulnerabilities are affecting public debt management. Challenges were viewed as particularly severe in emerging and frontier market economies. The double bonanza of high commodity prices and strong capital inflows had come to an end, and this ‘fortuitous period’ had since been replaced by more volatile and uncertain times, as highlighted by recent trends of increasing global and domestic vulnerabilities. Emerging markets (EM) remained resilient during the 2008-09 global financial crisis – with relatively strong debt pro- files consisting of high shares of domestic and long-term debt, unlike in previous episodes of global crises. Low global interest rates stimulated a search for yield by investors, leading to increased capital inflows to EMs. At the same time, there were some countries with a strong build-up of domestic debt at shorter tenors, showing signs of incipient dis- tress. In sum, global vulnerabilities faced by Frontier and EM debt managers are uncertainty on interest rates, commodity prices, and the policies in the United States. On the domestic side, vulnerabilities include: (i) rising twin deficits - cur- rent account and fiscal; (ii) an increase in ‘hidden debt’ in the form of contingent liabilities from private borrowing, sub-sovereign debt, and off-balance sheet borrowings; and (iii) an increased dollarization of borrowings and shorten- ing of maturities. Good Policies Today Can Reduce the “sorrow” faced in Tough Times A positive message emanating from discussions was that despite many debt managers ‘facing sorrow’, good debt management policies today (plus an increase in countries debt carrying capacity) could lay the foundation to address future challenges. Key steps include the ability of policy makers to:  Monitor, assess and manage financial risks;  Closely coordinate fiscal and monetary policy activities;  Commit to a fiscal anchor underpinned by a credible macro -fiscal path;  Strengthen institutions and governance;  Embrace reforms supporting growth (for example promoting better targeted investment or enhanced productivi- ty); and  Diligent use of macro-prudential regulation to promote health of the financial sector 3 DMF Newsletter II. Challenges and Successes in Debt Management Reforms Debt management is an evolving practice and requires continuous learning, evolving skills, and institutions ready to adapt and react to market conditions and the use of new debt instruments. There is a need for continued innovation and capacity building. Support by the DMF has yielded positive results in enhancing debt management capacities in many developing countries, but challenges remain. The Forum provided valuable feedback to improve the quality and effectiveness of DMF technical assistance and support. Governance Presentation on the evaluation of governance systems in sovereign debt management focused on:  Legal framework: several DMF-eligible countries recorded improvements in establishing legal frameworks with well-defined authorization to borrow and purposes for borrowing; however, performance has varied across coun- tries. While Europe and Central Asia is an ‘outlier’ with sound legal frameworks, nearly half of all DMF-eligible countries still lack a solid legal foundation for managing government debt. At the same time, a study of West Afri- can countries highlighted that all, except Liberia, have made substantial improvements in setting up stronger le- gal frameworks, in collaboration with WAIFEM and the World Bank.  Debt management strategy (DMS): more DMF-eligible countries are developing DMSs, and the implementa- tion of these strategies has improved. However, the quality and regular updating of strategies varies significantly across countries. Countries in Eastern Europe, such as Armenia and Romania, started preparing and imple- menting DMS in the 2000s, along with annual updates. Progress in many other countries has been less substan- tial.  Institutional setup: several countries have forged ahead to consolidate and integrate debt management func- tions in recent years, to reverse the earlier trend of segregation either along borrowing instruments, and domes- tic/external. Compliance with sound practice has improved to roughly 70 percent, from about 50 percent in DMF - eligible countries (since first DeMPAs) – including in several Eastern European countries, where previously frag- mented functions were consolidated into a single debt management office, with back - middle and front office functions. In contrast, almost all Western African countries continue to share debt management responsibilities between the Ministry of Finance, Central Bank and the Accountant General, although governed through formal- ized coordination mechanisms.  Accountability and transparency: reporting to legislatures and the public on debt operations, as well as publi- cation of debt statistics, remains weak. As with other indicators, Europe and Central Asia region recorded better results. Across DMF-eligible countries, the use of sustained and programmatic advisory services, along with strong political leadership and support, played an important role in initiating and strengthening debt management governance. But high staff turnover in some countries, weaker implementation capacity, lack of resources to undertake comprehen- sive audits of debt management, and difficulties in political prioritization of debt management emerged as hurdles toward sustained improvement. Contingent Liabilities A prominent topic throughout the Forum was ‘hidden debt’ and contingent liabilities (relating to SOEs, the financial sector as well as disaster risks). When realized, they can be very costly and create a large burden on public finances. It was highlighted that it remains crucial not to forget implicit contingent liabilities, for example, risks associated with the government having to bail out commercial banks, legal claims of the government, and risks related to Public- Private Partnerships (PPP). A key takeaway, highlighted once again by the global financial crisis, is that private sector debt in good times can become public debt in bad times. Debt managers have been building frameworks for the monitoring and management of risks, especially those related to government guarantees. This has required debt managers to seek input from across the government (including for example financial market regulators), and many guarantee issues are complex in nature and require significant coordi- nation. 4 Issue 28 A frequent and basic building block in the frameworks is internal scorecards that can provide a structured and standardized approach to risk assessment. A typical challenge highlighted was procuring data on the per- formance of guaranteed entities and making judg- ments about risk without any prior default history as input. The manner in which the central government issues guarantees was deemed important to ensure that the right type of support (for example guarantee, on- Plenary session in progress lending, or direct financial support) was provided for the right organization. Charging fees for issuing support has been used as a means to build buffers and to make guarantees and other government support relatively less attractive. Across DMF-eligible countries, the use of sustained and programmatic advisory services, along with strong political leadership and support, played an important role in initiating and strengthening debt management governance. But high staff turnover in some countries, weaker implementation capacity, lack of resources to undertake comprehensive audits of debt management, and difficulties in political prioritization of debt management emerged as hurdles toward sustained improvement. Active Cash management Findings from Debt Management Performance Assessments (DeMPAs) reveal that despite efforts, many developing coun- tries still face challenges in cash flow forecasting and cash management. These include deficiencies in the flow of infor- mation and coordination, a lack of specialized forecasting functions, and constrained ability to borrow and lend short- term in domestic money markets. There is a clear need for further capacity building to modernize cash management practices in developing countries. Effi- cient cash management would not only improve budget execution and reduce cost-of-carry related to having to have large cash holdings, but also provide for better management of risks by giving debt managers more flexibility in imple- menting their borrowing plans, which in turn would help to build investor confidence. Debt Data The quality and coverage of public debt data have improved over recent years. However, gaps in data quality/coverage continue as an issue (several DMF countries have challenges reporting and recording external debt and related data). Challenges raised with ensuring quality debt data are related to: (i) underreporting or partial reporting of publicly guaran- teed debt; (ii) lack of adherence to methodology, resulting in inconsistencies between stock and flow estimates, (iii) mis- classification of loan creditors or debtors, (iv) frequent changes in international definitions in a complex and dynamic debt environment, making it difficult for countries to keep up, (v) weak and fragmented debt management entities, (vi) weak integration with other public finance systems (e.g. TSA) and (vii) existing operational risks with respect to data storage. A new tool developed jointly by UNCTAD and ComSec – Data Quality Assessment Methodology, allows for self - assessment of the quality of databases in recording systems on four criteria- completeness, timeliness, accuracy and con- sistency – thereby allowing countries to monitor and strengthen its debt records and identify specific gaps for technical assistance. III. Innovations in Debt Management During the Forum insights were provided on two emerging instruments for finance: Climate Bonds and Sukuk financing. 5 DMF Newsletter Climate Bonds Climate bonds, or green bonds (blue when linked to water infrastructure) are created to finance projects that have a positive environmental or climate benefit. Participants highlighted how climate bonds have become mainstream, with most investment banks today either being involved in transactions or building the capacity to do so. While there has been a significant uptick recently in the market for green bonds, the original concept is not new (for example The Netherlands has undertaken financing for investment against flooding risk for a long period). These historical examples can provide lessons to guide the development of the financial capacity to manage increasing climate risks by funding adaptation appropriately and at sufficient scale. A challenge for climate bonds in many emerging markets is finding a sufficient quantity of projects with similar characteristics to be bundled into a bond issuance. A recent example is the World Bank and the Global Environment Facility providing guaran- tees for debt issued to finance improvements in the value-creation and sustainable management of the Seychelles fisheries sector. The Forum also presented a new initiative called the ‘Climate Action Peer Exchange of Finance Ministries’ or CAPE. This initia- tive supports interested finance ministries with a platform for exchanging experience and questions regarding environmental and debt policies. Sukuk as a public debt instrument Sukuk commonly refers to the equivalent of bonds in Islamic Finance. Over the last decade, the Sukuk market has grown and emerged as a viable asset class. Growth in sovereign Sukuk issuance was initially driven by Malaysia, concentrating on domes- tic markets, followed by international issuances by the Gulf Cooperation Council region. Recently, other countries with pre- dominantly Muslim populations, such as Indonesia and Turkey, became regular issuers. Inaugural sovereign issues from coun- tries that do not have majority Muslim populations, including Hong Kong (China), Luxembourg, South Africa and the United Kingdom, underline the significance of the market. Cote d’Ivoire, Senegal and Togo are among the latest issuers in Africa, with their issues denominated in the regional currency, the CFA franc. Malaysia’s recent Global Sukuk offerings using the Wakalah (Agency) structure, marks a major breakthrough in sovereign issu- ance. This is the first sovereign Sukuk issued without utilizing physical assets (such as land and buildings) or commodities. Re- cently, Indonesia launched a retail-oriented ‘Saving Sukuk’ as an effort to diversify the investor base; while Turkey issued an Inflation-Linked Sukuk (Lease certificate) in the domestic market. Several other countries, with or without majority Muslim populations, are now considering to expand the instrument set avail- able to public debt managers by including Sukuk with a view to enlarge and diversify the investor base. Today, Sukuk markets link issuers, sovereigns and corporations to the wide pool of investors around the world, seeking to diversify their holdings beyond traditional asset classes. A strong legal framework that forms the basis for the activities of debt managers is crucial for enabling an effective public debt management function, and sovereigns that envision issuing Sukuk should design a careful legal framework, which not only complies with relevant Islamic principles, but also has to reflect the distinctive features of Sukuk from an operational perspec- tive. Drawing on the cases of recent sovereign issuers, these begin with a clear provision of mandate to issue and employ pub- lic assets in the execution of underlying transactions, as well as to establish-engage with and administer the Special Purpose Vehicles used in structuring the issuance. Another aspect that needs to be addressed is the treatment of proceeds and the as- surance of investors with regard to debt service. The enabling environment could be complemented by facilitating changes in the taxation regime and financial market regulations. Click here for more information on Sukuk 6 Issue 28 Plenary session in progress IV. Can Africa Borrow without Sorrow? Since the mid-2000s the story of Sub-Saharan Africa rising has been widely repeated. The period of high com- modity prices and large capital inflows led to an increase in economic growth and debt. Countries from across the region issued bonds in international capital markets, many for the first time. Investment banks arrived, offering support to issue, without the supervision that is an integrated element in borrowing from traditional bilateral and multilateral sources. Added to this has been increasing options for infrastructure finance from some bilateral countries. The result has been both an increase in opportunities to finance development, and an accumulation in debt. Access to markets has been celebrated by many, but it was stressed that “…one hasn’t established themselves in the financial markets when they have issued their first international bond, but rather when they have repaid their first international bond”. This is not the first time debt levels have ramped up quickly on the continent. From the early 1980s to mid -1990s debt levels soared in most African economies. By 1995, many countries were facing unsustainable levels of debt. As debt servicing increased, it crowded out development expenditure which was subsequently met with debt forgiveness via the HIPC and MDRI initiatives. In exchange for policy reforms and implementing strategies to re- duce poverty, countries could access this relief if debt levels exceeded 100 percent of GDP. What followed was better macroeconomic policies and substantially lower debt levels, and despite flight in the search for yield (briefly in 2007 before the global financial crisis and from 2012 -14), African economies were consequently well placed to borrow. But as commodity prices fell and many currencies depreciated, debt burdens increased substantially for many sovereigns. Capital flows slowed and very few African countries issued in international debt markets in 2016. There has been some recovery on both fronts in 2017, but huge challenges remain following the recent build -up of mostly U.S.-dollar denominated debt. In addition to currency risk, African economies also face refinancing risk. For example, the Eurobonds issued up until 2015 are of a bullet structure, amortizing on a single day in five or ten years ’ time. This creates a pressing need to adapt strategies to cope with higher levels of debt and on how repayments are to be made as the bonds mature (2022 will be the start of this process for many African sovereigns). Savings facilities have been highlight- ed, including resource funds or sinking funds, but to date only a few countries, for example Gabon, have estab- lished sinking funds. Recently, bonds with amortizing repayment schedules have not been more common. Participants at the Forum warned of the fickle nature of financial markets, and that investors’ willingness to lend may not be a reflection of their approval of good economic fundamentals. A good portion of global investors fol- 7 DMF Newsletter low a ‘search for yield’ path, and several of these market -savvy investors will be quick to turn their backs when prospects for returns and profits erode. The recent decline in global commodity prices has highlighted that the cost of debt accumulated in foreign currency can rise quickly. This reinforced the view of how critical is the careful monitoring of risk exposures and debt sustainability. The good news is that many African countries will likely grow faster in 2017. “…one hasn’t established themselves in the financial markets when they have issued their first interna- tional bond, but rather when they have repaid their first international bond ”. To avoid another round of “sorrow”, the Forum raised ideas on what policies should be targeted and what reforms may be required. First, to implement prudent and sound macroeconomic frameworks. Second, to ensure continuation of re- forms for productivity and growth—reinforcing gains in the “denominator” (debt/GDP)—keeping the debt burden man- ageable. Third, to develop and strengthen domestic debt markets, reducing gradually the exposure of the portfolio to foreign currency risk. And fourth, achieve progress on governance reforms, and improving the quality of debt manage- ment (slipping institutional and governance standards provoked many rating agency downgrades in recent years). Debt mangers may wish to reflect on their recent DeMPAs and Reform Plans, and consider doubling -up efforts where progress has been slow. In addition, capacity and skill development of debt offices can help facilitate monitoring of market condi- tions and improving communication with the markets. Plenary session in progress Acknowledgements This note was compiled by Gregory Smith, Abha Prasad, Lilia Razlog, Lars Jessen, Emre Balibek, Smriti Seth and Dirk Heine—all from the Macroeconomics and Fiscal Management Global Practice (MFM) World Bank Group. 8 Issue 28 DMF Activities for the period April – June, 2017 DMF Technical Assistance Missions Debt Management Performance Assessments (DeMPA) >>Djibouti. A World Bank team in conjunction with UNCTAD, visited Djibouti during April 23—27, 2017, to support the government in the area of debt manage- ment through a programmatic technical assistance (TA). The objectives of the mission were (i) to assess the strengths and areas in need of development through the application of the 2015 DeMPA method- ology; (ii) to discuss with the authority’s immediate needs for TA and follow-up reform plan activities. The first DeMPA assessment for Djibouti was conducted Moments after the wrap up session of the Benin DeMPA mission by the WB in 2010. Djibouti’s public debt increased significantly from ng May 10—17, 2017, to support the government in 2014 to 2016, with public and publicly guaranteed the area of debt management through a program- (PPG) debt rising from a level of 48 percent of GDP to matic technical assistance. The mission assessed the 85 percent as a result of newly contracted loans for debt management performance of the government to investment projects. Managing this high level of debt, manage central government debt by applying the around two-thirds of which is in the form of govern- 2015 DeMPA methodology. This is the second evalua- ment guaranteed or on-lent debt to public enterpris- tion of the government debt performance for the es, poses challenges for public debt management. The country. The first DeMPA assessment was conducted recent institutional reform that resulted in the crea- by the WB in 2010. The objectives of the mission were tion of the Ministry of Budget (MB) with several de- (i) to assess the strengths and areas of development; partments relocated from Ministry of Finance, Econo- (ii) to discuss with the authorities’ immediate needs my and Industry (MEFI), appears not to have helped for TA and follow-up reform plan activities. as it led to the fragmentation of debt management functions between the two ministries. Overall, while Benin’s public debt has been constantly increasing in the technical and analytical skills of the debt manage- the past years, reaching 50.3 percent of GDP at end - ment team have been improving, the institutional and first quarter (Q1) 2017. This represents an increase of operational framework have deteriorated since the almost nine percentage points of GDP since end -2015. previous assessment. This trend should continue as the government elected in 2016 unveiled an ambitious 5-year action plan to The authorities are conscious of some of the current develop infrastructure, amounting to 170 percent of issues and have drafted a proposal of a Public Debt GDP, two- thirds of which to be financed through pub- Management Law (Loi portant gestion de la dette lic private partnerships (PPPs). Assessing and monitor- publique). The proposed legal framework would in- ing the risks for the public finances of these invest- clude the purposes and objectives of borrowing, the ments will pose challenges for public debt manage- requirements for elaboration of a debt management ment, and the authorities are appropriately exploring strategy and reporting to the parliament. The law advisory support and TA on this. would also include the policy guidelines for issuing and monitoring loan guarantees and on -lending. The Overall, it has been noted that, since 2010, debt man- authorities also envisage the formation of a national agement practices in Benin have achieved notable debt committee that would serve for better coordina- progress: improvement in the governance of debt tion. functions and in the quality of debt / macroeconomic data, more proactive approach to collect information >>Benin. A World Bank mission including a repre- (e.g. on disbursement of loans), better understanding sentative from UNCTAD, visited Cotonou, Benin, duri- of the use of analytical tools (MTDS and DSA), which 9 DMF Newsletter has improved the quality of the reports and ex- to significant delays in the finalization of loan and changes of information while facilitating the imple- guarantee contracts. mentation of robust processes. Domestic Market Development Debt Management Reform Plan >>Guyana. At the request of the Ministry of Finance, a >>Bosnia and Herzegovina. A World Bank mission technical assistance mission from the IMF visited visited Sarajevo, Bosnia and Herzegovina (BiH) be- Georgetown during June 12—22, 2017, to provide tech- tween May 15—19, 2017. The main objective of the nical advice and recommendations on the development mission was to draft a reform plan for debt manage- of the domestic government securities market. The ment jointly with the Ministry of Finance and Treas- mission comprised a diagnostic assessment, and the ury (MoFT) i.e. the State level ministry. Within the design of a reform roadmap leading to a new system of MoFT, the team worked closely with staff of the domestic government securities issuance. The diagnos- Financial Institutions Relations Department (FIRD), tic assessment established that there is considerable which acts as the front office for contracting exter- scope for enhancing public debt operations, particularly nal debt and issuing sovereign guarantees. Other by making a cleaner demarcation between instruments departments met within MoFT include the State issued for monetary policy purposes and those used for Debt Management Department (SDMD) which ful- fiscal policy purposes. Additional recommendations fills middle and back-office functions; as well as the aimed at strengthening other elements of public debt departments for Information Technologies (IT), Le- management—including the primary market, legal, in- gal Affairs, Internal Audit and Human Resources. stitutional, and infrastructure arrangements. The mis- Outside the MoFT, the mission met with officials of sion prepared a sequenced reform agenda covering the the Central Bank of BiH (CBBiH), the Audit Office of next 12 months, which is envisaged to culminate in a the Institutions of BiH, the Civil Service Agency and system of issuing domestic government debt securities the representatives of the subnational Ministries of that will be more efficient and reliable in itself, and that Finance in the Federation of Bosnia and Herze- will contribute to the overall financial development of govina (FBiH), Republika Srpska (RS), and the District the country. of Brčko (DB), i.e. the entities and the district. To evaluate the guarantee issuance framework, DMF Training Activities meetings were held with the European Bank for Reconstruction and Development (EBRD), as the Debt Sustainability Analysis (DSA) main creditor and two guarantee beneficiaries—the >>Mauritius. The World Bank and IMF held a semi- RS Motorways Company and the Municipality of nar on debt sustainability analysis over April 24—28, Bijeljina. 2017. The event was hosted by the IMF’s Regional The mission noted the important steps taken by the Technical Training Center (AFRITAC South) in Mauri- authorities since the DeMPA in 2013. The areas that tius. registered progress cover mainly middle and back The seminar brought together government officials office functions, such as the preparation and publi- from Comoros, Lesotho, Madagascar, Mozambique, cation of a consolidated debt management strategy, Zambia and Zimbabwe. It focused on the main prin- upgrading of the debt recording systems and draft- ciples of debt sustainability and the link to IMF Debt ing of manuals for debt service processes. The au- Limits Policy and World Bank Non-Concessional Bor- thorities are now focusing on the procedures for rowing Policy. Experts from the IMF and WB external debt and guarantee issuance. External bor- worked with seminar participants on understanding rowing is mainly conducted by the MoFT and on- and using the IMF-WB Debt Sustainability Frame- lent to the entities and DB. work (DSF) for Low-Income Countries (LICs). The While the country has a comprehensive BiH-level DSF is a standardized framework for conducting debt management law that governs these process- public and external debt sustainability analysis in es, this is yet to be complemented with secondary LICs. It aims to help guide the borrowing decisions legislation, and there are important bottlenecks in of LICs, provide guidance for creditors’ lending and implementation, especially regarding the exchange grant allocation decisions, and improve World Bank of information between relevant parties, that lead and IMF assessments and policy advice. 10 Issue 28 The experts provided hands on training on how to regional experience were highly appreciated, espe- develop baseline stress-test scenarios by using the cially in the context of ongoing harmonization initia- DSF and how to interpret the results from the debt tives. With a view to diversifying the investor base, sustainability analysis. Specific attention was given the Tanzanians conceded that their strictures on to practical application of the framework by engag- capital movements warranted further review. The ing participants to use the analytical tool and inter- potential contributions of hedging instruments and pret results. Participants discussed the importance new financial instruments were noted. of individual country contexts and macroeconomic and technical challenges they face in using the DSF DeMPA Training as a tool for guiding their borrowing decisions. >>Gambia. The World Bank and WAIFEM delivered Debt Market Training a regional Debt Management Performance Assess- ment (DeMPA) training on the application of the >>Tanzania. A joint IMF-World Bank Technical As- revised 2015 DeMPA methodology during May 8— sistance (TA) Mission visited Dar es Salaam, Tanza- 12, 2017, in Banjul, The Gambia. nia to conduct a workshop on the Government Se- curities Market (GSM) during the period May 2—5, The course was attended by debt management 2017. The workshop disseminated the findings of practitioners from all the WAIFEM member coun- the December 2015 joint IMF-World Bank TA report tries. It: (i) familiarized participants with the main on developing the GSM. areas of performance measurement while evalu- ating the government debt activities, according to There were over 35 participants drawn mostly from revised performance criteria as per 2015 DeMPA (ii) the Bank of Tanzania (BOT), Capital Market and Se- informed participants about the scope and method- curities Authority (CMSA), commercial banks, pen- ology for the application of the DeMPA, and about sion funds, stock exchange, insurances and other the available tools and techniques for improving financial market participants. debt management practices at the central govern- Most of the presentations drew directly from the TA ment level, and (iii) trained participants in the appli- report in line with the set objectives. Exceptions cation of the scoring methodology and formulation were presentations on the: macroeconomic picture; of the priorities for reform plans. By the end of the monetary policy framework; and three presenta- course, participants were able to use the debt per- tions on the EAC experience as was requested by formance indicators and evidence-based data for the authorities. Three presentations on the EAC assessing the quality of government debt manage- ment. Participants for the Debt Market Training, Tanzania 11 DMF Newsletter The course format included presentations, discus- tional Treasures of WAEMU member states and sions of country specific issues and hands-on case three (3) AUT. The work took place in the form of studies with discussions on operational application. presentations, exchanges and a practical case study. A group exercise was designed to promote The presentations focused on an introduction to the knowledge exchange of the existing modalities of general framework for assessing the performance of debt management in the region and international debt management (DeMPA) and the performance sound practices in this area. The course evaluation indicators that stem from good international debt and comments by the participants revealed a strong management practices. demand for such training opportunities in the re- The DeMPA methodology, was presented to the gion, as well as high relevance of the course. participants who reviewed the fourteen (14) perfor- >>Senegal. From May 15—19, 2017 a seminar was mance indicators and thirty-three (33) dimensions held in Somone, Republic of Senegal, to strengthen of the DeMPA, grouped under five (5) main themes the capacities of the National Treasures (WN) exec- covering all activities and functions of debt manage- utives of WAEMU member countries on the theme ment. A practical exercise based on the use of infor- "Good Debt Management Practices". mation on the management of the debt of a ficti- tious country, allowed the participants to become Organized by the UMOA-Securities Agency (AUT) in familiar with the analytical approach. collaboration with the World Bank, this seminar was attended by fourteen (14) executives from the Na- E-Learning Course on Debt Management Performance Assessment (DeMPA), April 03 - May 05, 2017 The second e-learning course on Debt Management Performance Assessment (DeMPA) was delivered from April 3 to May 5, 2017 in collaboration with the World Bank ’s Open Learning Campus (OLC) with funding pro- vided by the DMF and the Korean Trust Fund. The online course comprised core readings, as well as multi - media presentations, summarizing key messages, a set of interactive quizzes, series of hypothetical case - based assignments and a final assignment that builds on these cases. For this offering, 143 applicants were accepted in order to open the course to wider audiences in line with OLC ’s approach to democratize learning. The participants’ country representation was diverse and included: Bangladesh, Chad, Dominican Republic, Guyana, India, Indonesia, Maldives, Moldova, Mongolia, Namibia, Niger, Nigeria, Papua New Guinea, Rwanda, Samoa, Sierra Leone, Tanzania, United Kingdom, and Zimbabwe. New DMF Website: Please avail yourselves of the updated and improved DMF site. Your comments and sug- gestions are much appreciated. Other Recent Activities and Events IMF Mexico 16th PDM Forum: More than 100 representatives from 30 countries, international financial institutions, and private sector firms gathered on June 1-2 in Mexico City for the 16th IMF Public Debt Management Forum, co -hosted by the IMF and Mexico’s Ministry of Finance. The central theme of this year’s event was how best to adapt sovereign debt management approaches to cope with recent and anticipated macroeconomic shifts, new risk factors, as well as structural and regulatory changes. Political risk and the normalization of monetary conditions in advanced economies, as well as structural shifts (e.g. in demographic trends) were among the issues discussed. Another session addressed the experience of several countries that are innovating in the adoption of an integrated approach towards sovereign asset -liability management. 12 Issue 28 Forthcoming Mission Ac- tivities (August 2017 onwards )  Sri Lanka, MTDS mis- sion, Sept. 21—29, 2017  Mozambique Reform Plan mission, Sept. 27— Oct. 5, 2017  Uganda Reform Plan fol- low up mission, Oct. 2— 6, 2017 Forthcoming Training Events (August 2017 onwards ) Such a coordinated approach can improve the cost-risk trade-off, but may be technically demanding and require enhanced financial govern- ance across the public sector. Other issues discussed included the  DeMPA training for Au- emerging risks from climate change and its importance for sovereign ditors, JVI, Vienna, Aug. 7—11, 2017 debt, as well as the debate on whether the time is ripe for large -scale use of state-contingent debt instruments, such as commodity or GDP-  MTDS Training, AUT linked bonds. (Fr.), Sept. 11—15, 2017  Regional MTDS Training The next IMF Public Debt Management Forum will take place in 2019. (Sp.) , Mexico, Sept. 25— Click here for the press release on the Forum. Oct. 10, 2017  L IC - D SF W o r ks hop (Regional - Asia), Kuala Lumpur, Malaysia or To- Joint World Bank/IMF Board Paper on Medium-Term Debt kyo, Japan, Nov. 6—10, Strategy (MTDS): 2017 Over the course of FY17, the joint board paper The Medium-Term  Regional DeMPA Train- Debt Management Strategy: An Assessment of Recent Capacity Build- ing (LAC region), Nov. ing was prepared jointly by staff from the Bank and the IMF. The re- 6—10, 2017 port was discussed by the World Bank Board on July 20, 2017, and  L IC - D SF W o r ks hop Executive Directors expressed their appreciation and support of MTDS (Regional East and South- technical assistance. The current review did not only evaluate pro- ern Africa), Kenya or gress achieved over the past years on the Medium -Term Debt Man- Zimbabwe, Feb. 5—9, agement Strategies, but also discusses further enhancements to the 2018 MTDS toolkit and work program, based on the lessons learned. Click here for more information on the paper. 13 DMF Newsletter Debt Management Facility (DMF) Newsletter DMF News Issue 28, July 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 panos- casero@worldbank.org Abha Prasad: aprasad@worldbank.org Elliot Riordan: eriordan@worldbank.org Telephone The Donors (202) 473-5809 DMF II donors are Austria, Germany, the Neth- erlands, Norway, the Russian Federation and Fax Switzerland. (202) 522-3740 14