Debt Problem De Mpa


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Debt Problem De Mpa

  1. 1. DeMPA and Small States A comparative snapshot Edgardo Favaro Sustaining Development in Small States in a Turbulent Global Economy, July 6-7, 2009
  2. 2. Roadmap 1. General setting o What is DeMPA? Why have a DeMPA? o Fitting DeMPA into the big picture 2. Are small states different? o Stylized facts of small states o DeMPA in small states o A comparative analysis 5. Concluding remarks
  3. 3. What is DeMPA – An Overview Analytical tool with following attributes:
  4. 4. What is DeMPA – the PIs Governance and Strategy Development DPI-1 Legal Framework DPI-2 Managerial Structure DPI-3 Debt Management Strategy DPI-4 Evaluation of Debt Management Operations DPI-5 Audit Coordination with Macroeconomic Policies DPI-6 Coordination with Fiscal Policy DPI-7 Coordination with Monetary Policy Borrowing and Related Financing Activities DPI-8 Domestic Borrowing DPI-9 External Borrowing DPI-10 Loan Guarantees, On-lending and Derivatives Cash Flow Forecasting and Cash Balance Management DPI-11 Cash Flow Forecasting and Cash Balance Management Operational Risk Management DPI-12 Debt Administration and Data Security DPI-13 Segregation of Duties, Staff Capacity and Business Continuity Debt Records and Reporting DPI-14 Debt Records DPI-15 Debt Reporting
  5. 5. What is DeMPA – example of dimensions within PI
  6. 6. What is DeMPA – scoring method Scoring method - quantifiable scores (A to D) i) Meet minimum requirement = Score C Important for effective debt management ii) Absence of minimum requirement = Score D Signals an area of priority attention iii) Sound practice = Score A (B intermediate for more granularity) iv) Not rated – if process/system does not exist (e.g., derivatives)
  7. 7. So what? - motivation for DeMPA • HIPC and MDRI debt relief – opened space for new debt • Mounting fiscal deficits • Current volatile and uncertain financial environment ⇒ institutional framework necessary to manage public debt prudently
  8. 8. DeMPA and the big picture
  9. 9. DeMPA: Follow-up actions Possible follow-ups Training/TA examples
  10. 10. Scope and distribution of DeMPA assessments as of end-May
  11. 11. Small states – stylized facts
  12. 12. Small states– indebtedness
  13. 13. Small states– indebtedness
  14. 14. What about our DeMPA sample?
  15. 15. Small economies – indebtedness Corollary: More urgent need to build debt management capacity. Key question: How to operationalize given small market size and lacking capacity?
  16. 16. DeMPA in small states: basic statistics
  17. 17. DeMPA in small states (sample: 6)
  18. 18. DeMPA outside small states (sample: 21)
  19. 19. Comparing DeMPA outcomes: across countries for each PI PIs
  20. 20. Comparing DeMPA outcomes: across PI for each country PI ratings: >D Small states PI Outside small states PI Max 8 (53%) 14 (93%) Min 2 (13%) 1 (7%) Median 30% 40% Average 30% 44% • an average small state has 30% of its PI above the minimum requirement (4.5 PI out of 15) • an average outside small state has 44% of its PI above the minimum requirement (6.5 PI out of 15), but larger variability
  21. 21. Concluding remarks
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