Debt Management Performance Assessment ( DeMPA)

1. Debt Management Performance Assessment (DeMPA) July 12, 2007

2. Contents • Rationale • Description • Objectives • Methodology • Output – Performance Report • Key Lessons

3. Rationale • 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 weak • 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

4. 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

5. Component 3 Component 4 Component 1 Component 2 Dissemination of DeMPA Tool & Methodology (donors, govt officials, TA providers , others) Development of DeMPA Tool Application in 60 LICs & Monitoring Programme Field Testing of DeMPA Tool in 5 LICs Output: 1) Standardised list of performance indicators 2) Scoring methodology 3) Guide and guidance document Output: 1) Regional seminars & workshops 2) Training courses, web-based services Output: 1) Refinements to Performance Indicators 2) Comparative analysis 2) Assessment of sequencing of reforms 4) Synthesis Report Output: 1) 60 performance assessments 2) Monitoring trends 3) Dissemination Description (2)Components of Program DeMPA would be firmly embedded in country programs to ensure client ownership, donor coordination, and ongoing monitoring

6. 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 programs • Monitor debt management performance over time

7. 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

8. 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 requirement • Score A represents “sound practice” • Score B is an in-between category - above minimum requirements • Not rated – or that function is non-existent

9. 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

10. Methodology (4) Performance Indicators: A Snapshot

11. Output (1) Performance Reports • Standardized Format (10-20 pages): evaluate debt management performance based on indicator-led analysis • Assessments finalized with country authorities • Highlight strengths and areas for improvement in debt management performance • No recommendations • Reports released by country authorities

12. Output (2) Summary of case-studies(adjusted to revised indicators) Grey areas require priority attention

13. 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

14. Thank You Contacts: Abha Prasad and Dana Weist Email: Aprasad@worldbank.org Dweist@worldbank.org