debt problem de mpa
TRANSCRIPT
DeMPA and Small States
A comparative snapshot
Edgardo FavaroSustaining Development in Small States in a Turbulent Global Economy,
July 6-7, 2009
Roadmap1. 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 stateso DeMPA in small stateso A comparative analysis
3. Concluding remarks
What is DeMPA – An OverviewAnalytical tool with following attributes:
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
What is DeMPA – example of dimensions within PI
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)
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
DeMPA and the big picture
DeMPA: Follow-up actions
Possible follow-ups
Training/TA examples
Scope and distribution of DeMPA assessments as of end-May
Small states – stylized facts
Small states– indebtedness
Small states– indebtedness
What about our DeMPA sample?
Small economies – indebtednessCorollary:
More urgent need to build debt management capacity.
Key question:
How to operationalize given small market size and lacking capacity?
DeMPA in small states: basic statistics
DeMPA in small states (sample: 6)
DeMPA outside small states (sample: 21)
Comparing DeMPA outcomes: across countries for each PI
PIs
Comparing DeMPA outcomes: across PI for each country
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
PI ratings: >D
Concluding remarks