2007MDBWB DeMPA by 9vWWu0


									   Debt Management
Performance Assessment

      July 12, 2007
 Rationale
 Description

 Objectives

 Methodology

 Output – Performance Report

 Key Lessons

   Changing context
          With MDRI debt relief, debt levels in HIPCs have
           become low
          LICs attracting non-concessional creditors and issuing
           domestic debt
   In many LICs, debt management performance is
          Despite debt relief
          Despite 2-3 decades of TA provision
          Several lack adequate governance and borrowing
           strategy as well as proper debt records or
           transparent reports, etc.
   No comprehensive and standardized measure of
    debt management performance

                Description (1)
   The World Bank in collaboration with partners
    (including IMF) launched DeMPA to assess
    debt management performance in LICs
    • Set of 14 performance indicators
    • Builds on PEFA indicators for financial management

   Tested in 5 LICs to validate indicators and
    scoring methodology
    • Malawi, Gambia, Albania, Guyana and Nicaragua
    • Selected from different regions, differing levels of
      performance (WB measures), reform countries

               Description (2)
            Components of Program
  Component 1            Component 2                Component 3              Component 4

Development of          Field Testing of          Dissemination of            Application in
 DeMPA Tool             DeMPA Tool in 5             DeMPA Tool &                60 LICs &
                              LICs                  Methodology                Monitoring
                                                    (donors, govt              Programme
                                                     officials, TA
                                                  providers , others)

     Output:                                                                       Output:
1) Standardised list          Output:                                        1) 60 performance
of performance         1) Refinements to                Output:
indicators             Performance Indicators    1) Regional seminars &
                                                                             2) Monitoring trends
2) Scoring             2) Comparative analysis   workshops
                                                                             3) Dissemination
methodology            2) Assessment of          2) Training courses, web-
3) Guide and           sequencing of reforms     based services
guidance document      4) Synthesis Report

DeMPA would be firmly embedded in country programs to ensure
client ownership, donor coordination, and ongoing monitoring                                        5
            Objectives of DeMPA
   Assess debt management performance in a
    comprehensive and standardized way

   Enhance donor harmonization – provide a common
    platform/methodology for assessment

   Guide country dialogue, enable design of reform

   Monitor debt management performance over time

            Methodology (1)
14 Performance Indicators (PIs)
 • Based on recognized sound practice
 • Neutral with respect to institutional set up
   for debt management in country
 • Include all core debt management functions
      Assess policies and procedures to negotiate
       debt/contract loans
      Assess analytical tools / strategies to manage
       risk prudently
      Assess ability to manage and validate debt
       database, record and report debt data and audit
           Methodology (2)
Scoring methodology
       PEFA based

  • Quantifiable scores (A to D)
       Score C represents minimum requirement
        for effective and efficient debt management
       Score D represents absence of minimum
       Score A represents “sound practice”
       Score B is an in-between category - above
        minimum requirements
       Not rated – or that function is non-existent
                    Methodology (3)
Scope of Performance Indicators

   Governance and Strategy Development
    • Legal and managerial structure, debt management strategy, audit
      and evaluation of debt management operations

   Coordination with Macroeconomic Policies

   Borrowing, Loan Guarantees, On-lending and Derivatives

   Cash Flow Forecasting and Cash Management

   Operational Risk Management
    • Debt Administration and Data Security, Segregation of Duties, Staff
      Capacity and Business Continuity Plan

   Debt Records and Reporting

                    Methodology (4)
Performance Indicators: A Snapshot
          Governance and Strategy Development
  PI-1    Legal Framework
  PI-2    Managerial Structure
  PI-3    Debt Management Strategy
  PI-4    Evaluation of Debt Management Operations
  PI-5    Audit
          Coordination with Macroeconomic Policies
  PI-6    Coordination with Macroeconomic Policies
          Borrowing, Loan Guarantees, On-lending and Derivatives
  PI-7    Domestic Borrowing
  PI-8    External Borrowing
  PI-9    Loan Guarantees, On-lending and Derivatives
          Cash Flow Forecasting and Cash Balance Management
  PI-10   Cash Flow Forecasting and Cash Balance Management
          Operational Risk Management
  PI-11   Debt Administration and Data Security
  PI-12   Segregation of Duties, Staff Capacity and Business Continuity Plan
          Debt Records and Reporting
  PI-13   Debt Records
  PI-14   Debt Reporting
                  Output (1)
Performance Reports
   Standardized Format (10-20 pages):
    evaluate debt management performance
    based on indicator-led analysis
   Assessments finalized with country
   Highlight strengths and areas for
    improvement in debt management
    • No recommendations
    • Reports released by country authorities
                                        Output (2)
                                     Summary of case-studies
                                       (adjusted to revised indicators)
                                                         Evaluation of
                                                         Debt                             Coordination with
            Legal     Managerial         Debt Management Management                       Macroeconomic     Domestic
            framework Structure          Strategy        Operations         Audit         Policies          Borrowing
    2007        PI-1        PI-2                PI-3           PI-4             PI-5              PI-6         PI-7
Country 1        A           A                   B+             B                 C+               C+           B
Country 2        C           D                    D             D                 D                D+           B
Country 3       C+           C                    D             D                 D                C+           C+
Country 4        C           C                    D             D                D+                D+           C+
Country 5        A          D+                    D             D                 D                B            C+

                                         Cash Flow         Debt             Segregation of
                        Loan Guarantees, Forecasting and   Administration   Duties, Staff
            External    Onlending        Cash Balance      and Data         Capacity and                   Debt
            Borrowing   Derivatives      Management        Security         BCP            Debt Records    Reporting
    2007        PI-8          PI-9             PI-10            PI-11           PI-12           PI-13        PI-14
Country 1        D             C                C+                 B             D+              D+             C
Country 2        D             D                D+                 B             D+              C+             C
Country 3        C             D                D+                 B             D+              C+           C+
Country 4        D             C                C+                D+             D+               B           C+
Country 5       B+             C                 D                B+             C+               A             B

     Grey areas require priority attention                                                                      12
              Key Lessons
   Engage authorities in assessment
    process and outcomes
   Scoring based on quantitative and
    documentary evidence
   Interact with stakeholders, including
    donor community, market players,
    TA providers, etc.
   Focus on country-specific issues – no
    general reform strategies
        Thank You

Contacts: Abha Prasad and Dana Weist
Email: Aprasad@worldbank.org


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