International Monetary Fund (IMF) and World Bank staffs have prepared and issued to the Executive Boards of both institutions the Revised Guidelines for Public Debt Management for information on April 1, 2014. Application of these guidelines should strengthen the international financial architecture, promote policies and practices that contribute to financial stability and transparency, and reduce member countries’ external vulnerabilities.
The revision of the original 2001 Guidelines and their 2003 Amendments was requested by the G-20 Finance Ministers and Central Bank Governors at their meeting in Moscow on February 15–16, 2013. The request was triggered by structural changes in many countries’ debt portfolios— in terms of both size and composition—over the last decade, as a result of financial sector and macroeconomic policy developments, especially in response to the recent financial crisis.
The 2014 revision of the Guidelines was carried out by the IMF and World Bank staffs, supported by a working group of debt management offices and central bank authorities from Argentina, Bangladesh, Belgium, Brazil, the Comoros, Denmark, the Gambia, Germany, India, Italy, Jamaica, Korea, the People’s Republic of China, Russia, Sierra Leone, Spain, Sudan, Sweden, Turkey, the United States, Uruguay, and Vietnam. Lars Hörngren, Chief Economist at the Swedish National Debt Office, chaired this working group. The OECD provided inputs during the review process.
The revisions to the Guidelines mainly concentrate on: (i) management objectives and coordination, including clarifying the roles and accountabilities of fiscal authorities and debt managers to the debt sustainability analysis process; (ii) transparency and accountability by enhancing communication with investors, especially during periods of crisis; (iii) institutional framework with the use of collective action clauses (CACs) in bond contracts as necessary for the efficient resolution of sovereign debt restructuring; (iv) debt management strategy, including debt portfolio risk mitigation strategies and contingency plans; (v) risk management framework, with emphasis on stress testing of the public debt portfolio and the use of derivatives in managing portfolio risk; and (vi) development and maintenance of efficient markets for government securities, as an integral part of developing a robust debt management strategy.
The revised Guidelines will be used by IMF and World Bank staffs to provide a framework for technical assistance and will serve as background for discussions in the context of IMF surveillance. It may also be used as reference material by third party consultants and experts dealing with public debt management issues.