亚开行-健全公共债务管理的十大问题（英）

TheGovernanceBrief

ISSUE57•2024

TheTenQuestionsof

SoundPublicDebtManagement

byMarceloGiugale*

Debtonceagaindominatesthedevelopment

agenda.Alargeandgrowingcohortofemerging

anddevelopingcountriesarefacingsovereigndebtdistressorarealreadyindefault.Theproblem

existedbeforethecoronavirusdisease(COVID-19);

however,ithasgottenmuchworsewiththesurge

inpandemic-relatedexpensesandthelowertax

collectionduringthecrisis.Amongthegovernmentsthatfellintobankruptcy,somearestrugglingto

restructuretheirwayoutofit—Ethiopia,Ghana,

SriLanka,andZambia.Others,likeArgentina,

Lebanon,andVenezuela,haveyettoapproach

theircreditors.Manythathavesofarhonored

theirobligationsfaceheavyrepaymentsoverthenextcoupleofyears,a“maturitywall,”withlimitedprospectsforrefinancing.TheseincludeBolivia,

theLaoPeople’sDemocraticRepublic,Maldives,

Mongolia,Nigeria,Pakistan,PapuaNewGuinea,

Tajikistan,andTunisia.Ifunattended,theirchallengeofliquiditycouldalsoturnintooneofsolvency.

Thedebtconundrumisheretostay.Thechancesforrapidresolutionareslim,forthreereasons.

First,traditionalmechanismsforrestructuring,

suchastheBradyPlanortheParis-Club-led

HeavilyIndebtedPoorCountriesinitiative,are

nolongereffective.Newtypesofcreditorsandinstruments,e.g.,non-Paris-Clubofficiallendersandprivatebondholders,makecoordination

particularlydifficult.TheprotractednegotiationsundertheG20’sCommonFrameworkshowthis

point.Second,theriseofinterestratesinadvancedeconomies,fromnearlyzerotoover5%inthe

past2years,hasmadenewexternalborrowing

Note:Inthispublication,“$”referstoUnitedStatesdollars.

*Currentlyanindependentconsultanttogovernmentsandinternationalinstitutions,MarceloGiugaleistheformerdirectoroftheWorldBank’sDepartmentofFinancialAdvisoryandBankingServices.HeisanadjunctprofessoratGeorgetownUniversityandafellowoftheUSNationalAcademyofPublicAdministration.

ThisbriefissupportedbyADBTechnicalAssistance6749onImprovingInfrastructureandState-OwnedEnterpriseGovernancefor

SustainableInvestmentandDebtManagement.ThefollowingADBpeerreviewersprovidedtheirinvaluablecommentstothisbrief:HiranyaMukhopadhyay,Director,PublicSectorManagementandSectorOffice(SG-PSMG);HanifA.Rahemtulla,PrincipalPublicSectorSpecialist,SG-PSMG;andRogeriodeAlmeidaVieiradeSa,PublicSectorSpecialist,SG-PSMG.

2

TheGovernanceBrief

prohibitivelyexpensiveforallbutafewmiddle-

andlow-incomecountries.Exceptforthelikes

ofIndonesia,India,Mexico,SaudiArabia,and

Thailand,marketaccesscannotbetakenforgrantedbytherest.Third,investors’attitudestowardrisk

mayhaveshiftedandbecamemoreselective.

Whileactualdefaultsremainfew,accordingtotheInternationalMonetaryFund(IMF)morethanhalfoflow-incomecountriesarehavingtroublepayingwhattheyowe.Thishasdimmedtheoverallappealof“frontiermarkets”thatcharacterizedthe2010s.TheheftyinitialyieldswithwhichAfricancountrieslikeBenin,Coted’Ivoire,andKenyaarereturningtothebondmarketattesttothat.

Allthisputsapremiumonthequalityofpublicdebtmanagement.Docountrieshavethecapacityto

steertheirfinancesthroughroughwaters?Howcanyoutellwhethertheydoordonot?Formalmodelstobenchmarkinstitutionalcapacitydoexist.1Theycallfordetailedstudyofstructures(whoreportstowhom),functions(fromtradingtoauditing),and

frameworks(notably,thelegalframework).Inotherwords,theyfocusprimarilyontheinputsofdebt

management.Andthattakestime.

Analternative,quickerwaytoassesspublicdebt

managementistolookforsignsofqualityinthe

outcomes,tolookatactualpractices.Forthat,youcanask10simplequestionsthatwillgiveasenseforstrengthsandweaknesses.Thosequestions

arelistedandexplainedinthisbrief.Twoinitial

considerationsareinorder.First,capacityto

managedebtisnotthesameasdebtsustainability.

Debtsustainabilityultimatelydependsonfiscal

discipline,somethingthatcannotbereplacedwithinstitutionalexcellenceorfinancialengineering—atleastnotforlong.Second,whatfollowsismeant

asa“ruleofthumb”tojudgehowagovernment

handlesitsborrowing.Thereisplentyofliterature,bybothmultilateralinstitutionsandacademia,forthosewhoseekamorethoroughelaboration.2

Question1:DoestheDebt

ManagementOfficeRunItsOwnDebtSustainabilityAnalysis?

Establishinghowmuchdebtistoomuchfora

governmenttocarryisnosmallfeat.Itdependsonpredictionsfortheevolution,foratleast5years,ofeconomicgrowth,interestrates,commodityprices,taxregimes,andothervariables.Itrequiresseriousstatisticalskillstoattachprobabilitiesto,andtracktheimpactof,eventsthatmayormaynothappen.

Italsocallsforagoodunderstandingofhow

marketsandfinancialinstrumentswork,andhowdifferenttypesoflendersbehave.Thecalculationsneedprecisedataonthetermsoftheexistingdebtportfolio—whatisowedtowhomatwhatrates

forhowlong.Thiscanmeanhundredsofbonds,loans,andguarantees,anddozensofcreditors.

Andtheactualexerciseofcomputingapathfordebtneedssoftwareflexibleenoughtoconstructmultiplescenarios.

Thatcanbevexingfordebtmanagementoffices

(DMOs)indevelopingcountries.3ManyrelyontheIMFandtheWorldBank’stechnology.Thiscomesintwotypes:theIMF’s“MarketAccessCountry

SovereignRiskDebtSustainabilityFramework”

(MACSRDSF)andthejointIMF–WorldBank’s“Low-IncomeCountryDebtSustainability

Framework”(LICDSF).4TheMACSRDSFis

moreapplicabletogovernmentsthathavetapped

externalbondmarkets,whiletheLICDSFbetter

suitssovereignsthatrelymostlyonmultilateralsandbilateralsfortheirborrowing.Bothmethodologies

arethoroughandproduceconsistent,defensible

projections.Theycanbothflagvulnerabilitiesand

risks,whichishelpfulinthedialoguebetweenpublicdebtmanagersandtheirpoliticalleaders.Both

theMACSRDSFandtheLICDSFcanbehadfreeofcharge.

1Forpublicdebtmanagementinemerginganddevelopingeconomies,thebestknownamongthosemodelsistheWorldBank’sDebtManagementPerformanceAssessment(“DeMPA”).See

/en/programs/debt-toolkit/dempa

.

2Foratechnicalcompendiumcoveringtheentirepublicborrowinganddebtmanagementprocess—fromDebtSustainability

AnalysisandMTDStotransparencyandlegalframeworks—seeM.Giugale,ed.2022.SustainableFinancingofDevelopmentandInfrastructure–AHandbookforBorrowersandLenders,MCDF.Thehandbookcanbedownloadedforfreeat

.

3ItispossibleforaunitattheMinistryofFinancedifferentfromtheDMOtobeinchargeofdebtsustainabilityanalysis,and

somegovernmentsareorganizedthatway.However,thisrequiresanadditionallayerofcoordinationwhichmaynotalwaysbepresent.Imperfectcoordinationmaythenleadtolackofspeedinadjustingstrategiestonewdevelopmentsandtofragmentedcommunicationswithinvestors,lenders,andmultilaterals.

4TheMACSRDSFisrathernew.ItwasapprovedbytheIMFBoardinFebruary2021,therelated

staffguidancenote

wasissuedinAugust2022,anditssoftwaretemplatewaspublishedinNovember2023.ItreplacedtheMarketAccessCountryDebt

SustainabilityFramework(MACDSF).TheMACSRDSFcanbefound

here

.TheLICDSFcanbefound

here

.

ISSUE57•2024

3

SoitmaynotbeworthaDMOdevelopingits

ownmodelofdebtsustainability.However,itis

importantthatithascapacityforrunningitsown

simulations,pluggingitsownassumptions,and

doingitsownanalysis,untilthemethodologyno

longerfeelslikea“blackbox.”Thismayseemalowpriorityinnormaltimes,butitisamajorhurdle

whendebtbecomesdistressedandgovernments

havenochoicebuttopassivelyacceptthedebt

sustainabilityassessmentoftheIMF—accurateasitmaybe.Thishasimplicationsforbothnegotiationswiththecreditorsandthesizeofthedemanded

fiscaladjustment.

Question2:DoestheDebtManagementOfficePublishItsMedium-TermDebt

ManagementStrategy?

Puttingoutamedium-termdebtmanagement

strategy(MTDS)meansthatthoseresponsibleforpublicdebthavemadechoicesbetweencostandrisk,andhavedrawnapprovalandcommitment

fromtheirsuperiorsingovernment.Whatarethosechoices?Thinkaboutfivetrade-offs:borrowingatfloatingorfixedinterestrates,inlocalorforeign

currency,forshortorlongmaturities,atnominalorindexedvalues,anddomesticallyorabroad.

Thosetrade-offsarebasedonthefactthatan

averageemergingcountrywould,exante,finditcheapertotakeashort-term,floating-rateloan

inUnitedStatesdollarsunderaforeignlegal

jurisdictionthanalong-term,fixedrate,local-

currencyloanunderthepurviewofthenational

judicialsystem.However,thatcountrywouldbe

takingcomparativelymorerisk:ofnotbeingabletorolloverthatdebtatmaturity,ofaspikeininterestrates,ofcurrencydepreciationduringthelifeof

theobligation,andofcostlyrepresentationinfrontofcourtsabroadifdisputesarise.Itwouldalsoberelinquishingthechancetodevelopitsdomestic

capitalmarkets,withallthelong-termbenefits

thatentails.Thesameconsiderationsapplyacrossinstruments,includingbondsandsyndications.

PickingtherightcombinationofcostandriskiswhattheMTDSisabout.“Right”shouldbeunderstood

as“preferred,”giventhemacroeconomicpolicies,

financialdevelopment,andlegalframeworkofthecountry.Thatmayexplainwhysovereignsvaryon

howspecifictheirMTDSisandhowfrequentlyit

ispublished.Ingeneral,atypicalstrategywould

listparameters,overthefollowing3years,forthe

minimumshareoffixed-ratedebt,themaximum

shareofforeign-currencydebt,thematurityprofileofthedebtportfolio,theaveragetimetomaturity,andtheproportionofgovernmentsecuritiessoldinthedomesticmarket.5

Notethatthoseparametersareonlytargets.

CircumstancesmaychangeandtheMTDSmayneedupdating.Butthefactthatapublishedstrategyexistsisasignofinstitutionalacumen,asitprovidesadegreeofdisciplineforparliamentarianseagertospend,forsectorministerswhoindependentlysearchforloan

commitments,formultilateralbankstryingtogrowtheirprojectportfoliointhematicareas,forofficial

bilaterallendersseekinggeopoliticalpositioning,andforinvestmentbanksmakingunsolicitedfinancing

proposals.Evenifnotwatertight,thatdisciplineisreflectedinbettercreditratings.

Question3:AreAnnualBorrowingPlansAnnounced?

TheMTDStellstheworldhowyouintendto

borrowinthecomingyears.Thatreflectstechnicalknowledgeandpoliticalcommitment.Theannual

borrowingplan(ABP)sayswhenyouplantoborrow.Thatshowsthataseriesofstructuralconditionsare

inplace.Forstarters,youhaveadomesticcapital

marketwhereyoucansellyourbonds—external

borrowingtendstobemoresporadic.Youhave

builtandmaintainedaninvestorbase;ifyoudid

not,youwouldnotfeelconfidenttoannounceyourauctions.Youmayhavedevelopedoraredevelopingasystemofprimarydealers,thosemarket-makers

thatcommittobuyingyourdebtandintermediateitinexchangeforpreferredaccesstoyourbond

sales.Andyouhaveenoughintra-government

coordinationtobeabletoforecast,overthecomingyear,fiscalfinancingneeds,monetarypolicytrends,andfinancialmarketconditions.6

5ForcontrastingexamplesofactualMTDSsin2023/2024,seetheMTDSsof

Bangladesh

,

Indonesia

,

Jamaica

,

Latvia

,

SouthAfrica

,and

Uruguay.

FormoreinformationonhowaMTDSisputtogether,seetheIMF’sMedium-TermDebtManagementStrategy:AnalyticalToolManual

here

.

6ForexamplesofactualABPsin2023/2024,seetheplansof

Brazil

,

Canada

,

Maldives

,

Mexico,

Uganda

,andthe

UnitedKingdom

.

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TheGovernanceBrief

Thatcoordinationdeservesqualification.Selling

publicdebttolocalfinancialinstitutionscanbeanefficientwaytoconnectsavers—throughpensionfunds,insurancecompanies,commercialbanks,

orretailinvestorprograms—tomarket-priced

opportunitiestoinvestsafelyinaspectrumof

maturities.ButlargesalesofTreasurybillsmay

actuallybeawaytoforcethoseinstitutionsto

financethefiscaldeficit,throughbiasedregulationormoralsuasion.Inotherwords,notallABPsarethesame.Theincentivesbehindthemmatter.

Question4:DoestheDebt

ManagementOfficeDoLiabilityManagement?

Borrowingisjustthefirststepingovernment

financing.Oncedebtisaccumulated,itdoesnot

andshouldnotsitidle.Thedebtportfolio,which

canhavehundredsifnotthousandsofloans,bonds,andderivatives,requiresconstantoptimization.

Expectationsonexchangeandinterestratesmay

beupendedbyglobalevents.Newinstruments

maybecomeavailable.Investorsmaychangetheirpreferences.Bumpsintheamortizationprofilemaybeapproaching.Socraftypublicdebtmanagersarealwaysonthelookoutforopportunitiestomake

obligationslessexpensive,lessrisky,orboth.Whenopportunitiesdocome,theyhavetheabilityto

enteractualtransactions.

Therearemanytoolsforliabilitymanagement,fromdebtbuy-backsanddebtexchangestocurrency

andinterestswaps.Theyassumedeepknowledge

oftheinvestorbase—whoisholdingwhatbondandwouldliketotradeit.Theyassumeskillfulstaffwhocancomputetheprobabilitiesbehindfairpricing.

Whentheyinvolveforeigncounterparties,they

alsoassumelegalauthoritytoenterintoover-the-countercontracts,andmorespecificallytousethe“MasterAgreement”templateoftheInternationalSwapsandDerivativesAssociation(ISDA).The

lattermaysoundlikeatechnicality;inpractice,

itisthemainimpedimenttopublicdebtmanagershedgingrisksintheirdebtportfolio.7Further

discussionfollows.

Question5:HastheGovernmentIssuedThematicBonds?

Thematicbondshaveprosandcons.These

securitiescarryapromisethattheproceedswillbeusedforgreen,blue,social,governance,orgendercauses.8Thepromiseisnotlegallybindingand

doesnotappearinthebondprospectusbutinanaccompanying“framework”document.9However,thebondscarryastrongstrategicstatement,suchasthegovernmentcaresabouttheenvironment.

Itwouldbedifficulttothenadoptpoliciesthat

contradictthatstatement.Thatiswhytheyare

attractivetoassetmanagersthatseekimpact,

notjustreturn.10Inthatsense,attachingathemetopublicdebtisaneffectivewaytodiversifytheinvestorbase—andthesenewinvestorsaremorelikelytobuyandhold.

Price-wise,theevidenceismixed.Inafewcases,greenbondsissuedbyhighlyratedsovereigns

(e.g.,FranceandGermany)aresaidtohave

commandedlowerinitialyields,a“greenium”ofa

coupleofbasispoints,comparedtotheirtraditionalissuancesaroundthesametimeonsimilarterms.

Fortheaverageemergingordevelopingissuer,pricingstilldependsoncreditworthiness.11

Ifthematicbondsarenotcheaper,whatdo

theyreallysayaboutthequalityofpublicdebtmanagement?ThattheDMOhasthecapacitytomobilizeandcoordinateacrossagenciesingovernment.Thisisnotastrivialasitsounds.

Gettingsectorministries—say,transport,energy,

water,fisheries,health,andsocialprotection—to

collectivelycontributeandagreeonaSustainable

DevelopmentGoalsframeworkandonspecific

sectoroutcomesisamonumentaltaskforadebt

manager.Thattaskismadetwiceashardbythenew

7ForinformationandtemplatefortheISDAMasterAgreement,see

.

8Interestingly,theWorldBank’sTreasurypioneeredthematicbonds,firstwithits“vaccinebond”in2006,soldtobilateralandmultilateralagencies,andlaterwiththefirst-evergreenbondin2011,whichitsoldtomarketinvestors.Today,thereareseveraltrilliondollarsofsovereignandcorporate,thematicbondsoutstandingworldwide.

9ThereareevencasesofsovereignSustainableDevelopmentGoal(SDG)bondswheretheframeworklistssocialobjectives

tobeachievedwiththeproceeds,whiletheprospectusexplicitlyclarifiesthatthemoneywillbeusedforgeneralbudget

purposes.See,forexample,the

prospectus

ofIndonesia’s2021SDGbond.Thepointdoesnotapplyto“sustainability-linked”bondsthattiethecoupontotheachievementofspecificenvironmentaloutcomes.

10Themeaningoftheword“impact”inthethematicbondmarketdiffersfromitsmeaninginscience.Intheformer,thererarelyarecontrolledevaluations,muchlessrandomizedcontrolledtrials,andwhatismeasuredisclosertooutcomesthanimpacts.

11Forresearchonthistopic,see

.

ISSUE57•2024

5

bondbeingunlikelytoincreasethebudgetforthoseministries.Atbest,itwillbringthembudgetstabilityfortheresultstheypromise.

Question6:IstheDebt

ManagementOfficeInvolvedinHedgingFiscalRisks?

Evenwiththebestdebtsustainabilityanalysis,

MTDS,ABP,liabilitymanagement,andthematic

presence,thepathofpublicdebtcanbe,andtoo

frequentlyis,derailedbyshocksoverwhicha

governmenthasnocontrol.Twoofthoseshocks

standout:commoditypricevolatilityanddisasters.Thinkofalargeandunexpectedchangeinthepriceofoil,gas,soybeans,nickel,copper,oranyother

commoditythatdominatesyourgovernment’s

fiscalaccountontherevenue(exporters)orthe

expenditure(importers)side.Orthinkofacountrypronetoearthquakes,droughts,orhurricanes.

Theycaneasilypushdebtontoanunsustainablepath,ifnottriggerdefault.Marketsknowthatandcreditratingsreflectit.

Fortunately,therearemechanismstohedge

againstthoserisks.Bothcommoditypriceoptionsandcatastrophebondsexist.Unfortunately,they

areunderutilized.Fewsovereignshavetapped

themandthosethatdidhavereportedexcellent

results:theCaribbeanislands(hurricanes),Mexico(oilexporter),Morocco(gasimporter),Peru

(earthquakes),andthePhilippines(typhoons).However,somethingthatshouldbecommonpracticeseldomhappens.12

Thereasonshavetodowithcost,politics,and

laws.Optionsandcatastrophebondscanbe

pricey,dependingontheprobabilityofthe

incidentandthevalueofthecoverage,with

aballparkestimateof3%–5%oftheeventual

payout.Butthatisthegrosscost.Hedgingcan

improvecreditratingsandreducethecostof

refinancing;so,inyearswhenlargeamortizationsaredue,thenetcostofthehedgemaybemuchlower.Fortheirpart,politiciansarereluctantto

spendonprecautions,letaloneifitturnsoutto

benefitonlyWallStreet;theyprefermoretangibleexpenditures.Morethananything,enteringa

derivativecontractrequiressigningthepreviouslymentionedISDAMasterAgreement,whichlocallegislationmaynotpermit.

Toovercomethoseobstacles,emergingand

developingcountriesthathedgefiscalriskdoitwiththeintermediationofmultilateralsliketheAsian

DevelopmentBank.13Thatway,theycontractwithacounterpartytheypartlyownandwithcontract

formatstheyarefamiliarwith.Eveninthosecases,aDMOengagedinprotectingthegovernment’s

financialstabilityagainstshocksisprobablyahighlyprofessionalone.

Question7:AreContingentLiabilitiesReported?

Fortheanswertobe“yes,”astringofprocesses

mustbeinplace.TheDMOorasimilarunitusuallyintheMinistryofFinancehasamandatetoidentify,quantify,monitor,mitigate,record,anddisclose

debtsforwhichthegovernmentmighteventually

beresponsible.Keepingabreastofwhoismakingorhasalreadymadefinancialcommitmentsthatmayimplicatethegovernmentisnotstraightforward.

Someofthosecontingentliabilitiesareknown,

likedepositinsuranceschemes,public–private

partnershipininfrastructure,pensionpromises,loanguarantees,andlawsuits.Butothersare“hidden,”

untiltheybreakoutandcauseseriousfiscaland

debtproblems.Typicalcasesareasubnational

governmentthatover-borrowedandmustnow

choosebetweendefaultandnotpayingteachers,

orastate-ownedelectricitycompanythatcannotserviceitsobligationsandisabouttoleavethe

countryinthedark.Thesearecostlyproblems,withabankingcrisisonaverageraisingthepublicdebt

burdenbyatenthofthegrossdomesticproduct.14

Knowingwheretheicebergsareisjustthefirst

step.Thenextistocalculatethevalueatrisk—theprobabilityofsomethinggoingwrongandthecostifitdoes.Thisrequiresserioustechnicalskills,whichnoteveryDMOoreventheMinistryofFinance

12Foracompletereviewofthoseandothercountryexperienceswithfiscalhedging,seeL.delaPlaza.2022.OldandNew

InstrumentforFiscalRiskManagement.InM.Giugale,ed.SustainableFinancingofDevelopmentandInfrastructure–AHandbookforBorrowersandLenders,MCDF,Chapter5.

13Theexceptionis

Mexico’s

government,whichhasbeensystematicallybuyingputoptionsonoilfromthemarketsince2002.

14SeeM.Petrie.2022.ContingentLiabilitiesandHiddenDebt.InM.Giugale,ed.SustainableFinancingofDevelopmentandInfrastructure—AHandbookforBorrowersandLenders,MCDF,Chapter6.

6

TheGovernanceBrief

hasin-house.15Thencomesmitigation:howto

minimizetherisk.Forthat,techniquesrangewidelyfromoutrightprohibitions,suchaslegalbanson

thefederalgovernmentbailingoutstates,downtorainy-dayfunds.Inthis,thebestcureisprevention,sotheprocessforapprovingcontingentliabilities

iscritical.16Onlyattheenddoregisteringand

disclosingtakeplace.Whokeepstrackofcontingent

liabilitiesinaneutralandcredibleway,andwhatexactlyispublished,arethemselvesstrategic

decisions.Soisthebalanceintheinformation

provided:enoughtotellthestoryandtoguide

politicaldebatesoverthetruefiscalsituation,butwithoutbreachingcontractualconfidentialityorunnecessarilyscaringinvestors.17

Question8:CantheCountry’sPublicDebtBeCalled“Transparent”?

Thereisnoformalcertificationforsovereigndebttransparency.Innormaltimes,theIMF,multilateraldevelopmentbanks,UNTrade

andDevelopment,OrganisationforEconomicCo-operationandDevelopmentorOECD,

InstituteofInternationalFinance,andothersmakebroadstatementsabouthowwellornotindividualcountriesdisclosetheirpublicobligations.18

Meanwhile,marketsseemimpervioustoblack

spotsindisclosure.Itisattimesofdebtdistress

thattransparencyjumpstothefrontoftheagendabecausecreditorswanttoknowwheretheystandinthequeuetoberepaid.

Theproblemisthattransparencyhasmanyangles.Startingwithaccountingsystems,somecountries

usecashbasis,someaccrualbasis,andsomehybridversions.Thismaymakepublicdebtsnotstrictly

comparable.Evenvaluationmethodsdifferacrossborrowersandacrossinstruments:face,book,fair,

andmarketvaluation.EffortsathomogenizationbytheIMFandbytheInternationalPublicSectorAccountingStandardsBoard,amongothers,arewelcome,butcannotbeenforced.Thencomes

institutionalcoverage—somegovernments

recordonlytheirownobligations,whileothers

includevariouscombinationsofpublicagencies,state-ownedenterprises,andstatesand

municipalities.Intermsofcollection,theIMF

collectsdebtdatathroughitsannualArticleIV

reports,whilelow-andmiddle-incomecountries

areexpectedtoprovidedataeveryyearontheir

publicandpubliclyguaranteeddebttotheWorld

Bankandotherinternationalfinancialinstitutions.19Needlesstosay,notalldoontimeorfully.Thatis

whyinvestors,mostlythroughcreditratingagencies,alsodotheirowncalculations,basedonbothofficialandmarketdata.Toaddtotheopacity,lendersmaydemandconfidentiality,andlocallawsmayallow

forit.20

Withsomuchdisparity,areputationfordebt

transparencyishardtoearn.Therearenowseveralrankingsavailable.21Whiletheyarenotstrictly

comparableorequallycomprehensive,theydo

showthatbeingknownas“transparent”ispossiblenotonlyforadvancedeconomieslikeAustralia,

Canada,Japan,NewZealand,andtheUnited

Kingdombutalsoforemerginganddeveloping

economieslikeIndonesia,Jamaica,Peru,the

Philippines,andTürkiye.TheDMOsinthose

countriesseemtobedrivenbytwoprinciples:theypublisheverythingtheirlawspermitandtheyfeelultimatelyaccountabletotheircitizens,onwhosebehalftheyborrow.22

15Forasuiteofmethodologiesandprogramstoassesscontingentliabilities,see

IMF:FiscalRiskToolkit

.

16Foranexemplaryprocesstodecideovercontingentliabilities,seethe

UnitedKingdom’sHMTreasury,2023,Contingent

LiabilityApprovalFramework:GuidanceUpdate,April

.

17Countriesvaryonthecoverageof,andvehiclefor,reportingcontingentliabilities.Thesethreeexamplesillustratethispoint:

Brazil

,

Indonesia

,and

Peru

.

18Someofthoseinstitutionsofferusefultechnicalassistancetofixgapsindisclosure.

19SeeIMF’s

GlobalDebtDatabase

.FortheWorldBank’sdebtdepository,see

InternationalDebtStatistics

.

20Forasurveyofcountrylegislationsthatmayhinderdebttransparency,seeK.Vasquezetal.2024.TheLegalFoundationsofPublicDebtTransparency:AligningtheLawwithGoodPractices.

IMFWorkingPaper

No.24/29

,IMF.

21See,forexample,theWorldBank’s

DebtReportingHeatMap

,USAID’s

DebtTransparencyMonitor,

andDevelopmentReimagined’s

DebtTransparencyIndex

.

22Anargumentcanbemadethatgovernmentsshouldnotjustdisclosetheirdebtsbutalsotheirassets—theyshouldpublishtheentirebalancesheetofthepublicsector.Somedo,mostlyinmiddle-incomecountries;however,themarketvalueislimited.

Ontheonehand,coverageandvaluationscanbearbitraryandnoncomparable.Ontheotherhand,collateralizingrealpublicassetsortheincomestreamtheymaygeneratehasprovenpoliticallydifficultbothatthetimeofpledgingandatthetimeofrepossession.Inaddition,multilateralbanksmayincludenegativepledgesofstateassetsintheirloancontracts.

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Question9:IstheDebtManagementOfficePartoftheCashManagementProcess?