## ppea2020066

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---

### Executive summary — context and urgency
- Publication date: November 12, 2020.
- Amid rising debt risks in low-income developing countries (LIDCs) and emerging markets (EMs), the IMF and the WB have been implementing a multipronged approach (MPA) to address debt vulnerabilities.
- COVID-19 amplified debt risks, increasing urgency to implement the MPA and underscoring debt sustainability and transparency for long-term financing for development.
- Countries have limited capacities, further stretched by COVID-19; implementation of the MPA alone may not be sufficient to address debt vulnerabilities and risks from global shocks.

### The MPA: organization and objectives
- The MPA is organized around four mutually-reinforcing pillars:
  - (i) strengthen debt transparency by helping borrowing countries, and by reaching out to creditors, to make better public sector debt data available;
  - (ii) support capacity development in public debt management to avert and mitigate debt vulnerabilities;
  - (iii) provide suitable tools to analyze debt developments and risks;
  - (iv) explore adapting the IMF’s and World Bank’s lending policies to better address debt risks and promote efficient resolution of debt crises.
- Interactions among pillars:
  - Debt transparency feeds capacity development, analytical tools, and IFI policy calibration.
  - Capacity development enables more sophisticated tools and informs IFI policy flexibility.
  - Analytical tools support transparency requirements, capacity development, and IFI policy implementation.
  - IFI debt policy frameworks incentivize transparency, capacity development, and use of analytical tools.

### Key recent progress (since late 2018)
- Achievements:
  - Broader debt coverage in LIC Debt Sustainability Analysis (DSAs) of 11 countries and enhanced debt transparency from increased reporting by borrowers to international statistical databases.
  - Scaled-up debt recording and debt management capacity development activities supported by increased donor financing.
  - Expanded creditor outreach, in particular with the G20.
  - Near completion of the revision of debt sustainability analysis frameworks.
  - Near completion of a full redesign of the IMF and WB policies in relation to responsible borrowing and lending.

### COVID-19 impact and implications for the MPA
- COVID-19 effects:
  - Public revenues fell while governments increased public spending, driving up public borrowing needs.
  - At end-September, almost half of LIDCs were assessed at high risk of debt distress or in debt distress.
  - Several countries announced intentions to seek debt reprofiling or restructuring (example cited: Zambia).
- DSSI and official creditor response:
  - The G20 Debt Service Suspension Initiative (DSSI) defers debt service for International Development Association (IDA) countries and Angola due on official bilateral debt in 2020 and has been extended through June 2021.
- Fiscal risk and contingent liabilities concerns:
  - Deficits in understanding and managing fiscal risk exposures and contingent liabilities (government guarantees, SOE debt, PPP guarantees, collateralized financing, some central bank liabilities, and terms of bilateral restructurings).

### Adjustments to MPA implementation in light of COVID-19
- Debt transparency focus:
  - Greater reporting by borrowers and creditors; improve reporting to and data dissemination by IFI databases; provide analytical guidance to borrowers and creditors; clearer guidance on when and how to seek debt data in IMF-supported programs.
  - The forthcoming review of the Data Provision for Fund Surveillance will consider what data the Fund requires for its functions, including debt-related data.
  - The WB’s Sustainable Development Financing Policy will include performance and policy actions on enhancing debt reporting.
- Capacity development (CD):
  - Scaled-up and reallocated to crisis-prevention areas; modalities adapted to virtual delivery where possible.
- Debt analysis tools:
  - A revised MAC DSA framework is being proposed; new guidance on the framework and on implementing the LIC DSF will be prepared.
- IMF policy work on arrears and sovereign debt resolution:
  - Review of IMF’s lending into arrears policies to support rapid, comprehensive, and transparent resolution.
  - Implementation of reform options in the G20 note on resolving sovereign debt held by private creditors is underway with stakeholders.
- Creditor engagement priorities:
  - Coordinate G20 official creditors, emphasize the DSSI and the common framework for sovereign debt resolution, and continue creditor outreach.

### Monitoring and next steps
- IMF and WB staffs have set several indicators to assess progress.
- A short update on progress proposed in about 12 months.
- Indicators will be adapted over time to evolving needs and challenges.

*Prepared by an IMF and World Bank team; approved by Kristina Kostial, Miguel Savastano (IMF) and Marcello Estevão (WB).*

---

### Implementation risks and urgency
- Debt ratios are projected to ratchet upward, and financing sources could become more volatile, likely resulting in more countries tipping into debt distress.
- For countries that escape distress, safety margins will have shrunk, increasing the importance of responsible borrowing and lending.
- Urgent needs:
  - address debt transparency concerns;
  - apply accurate debt analysis tools;
  - implement well-designed IFI policies and international architecture to prevent debt distress and encourage rapid, comprehensive, and transparent debt resolution.
- Intensify transparency efforts in countries already in debt distress where public debt disclosure remains weak.
- The MPA addresses vulnerabilities related to institutional weaknesses but may not suffice against global economic developments.

### Structure of the paper (scope)
- Four sections aligned with MPA pillars: (i) debt transparency; (ii) strengthening capacity of borrowing countries and creditor coordination; (iii) analytical tools; (iv) updating IFI policies.
- Appendix I reports FY20 key accomplishments under each pillar.
- Final section summarizes accomplishments, adapts priorities (including debt relief initiatives), and proposes indicators to monitor progress.

---

### Enhancing debt transparency — rationale, principles, roles
- Rationale:
  - Debt transparency is prerequisite to assess a country’s debt situation and monitor/manage debt risks.
  - A complete picture requires data on all public sector debt exposures, contingent liabilities, and lending that could increase risks (e.g., collateral).
- Key principles:
  - Borrowers should fully disclose PPG debt stocks and terms; refrain from borrowing under non-disclosure agreements; provide collateral transparently; ensure transparency around restructurings.
  - Creditors should refrain from confidentiality clauses; publish loan-by-loan information including terms on a single website with regular updates where possible.
  - Both should ensure regular debt data reconciliation.
- IMF and WB need debt transparency for surveillance, program design, loan/grant allocations, and enabling effective debt workouts.

### Roles and responsibilities
- Primary responsibility rests with borrowers: only they can comprehensively record and publish commitments and obligations.
- Creditor reporting helps reconciliation but cannot substitute borrower reporting.
- Disclosure is often hampered in LIDCs by governance issues, capacity and contractual constraints, and weak incentives.

### IMF and WB data frameworks and standards
- IMF: Article VIII, Section 5 (supplemented in 2004) requires a narrow minimum set of debt data (stocks of gross national external debt; central government and central government-guaranteed debt; currency and maturity composition; resident vs nonresident holdings if possible). Members are under no obligation to publish data provided to the IMF.
- WB: IDA/IBRD recipients must report external PPG debt loan-by-loan through the Debtor Reporting System (DRS); aggregate data published in the International Debt Statistics (IDS) Database.
  - By end-2019, 79 percent of LIDCs have at some point reported information on SOE debt and 43 percent on private non-guaranteed external debt.
  - The DRS does not include collateral features of loans.
- Standards/databases:
  - Public Sector Debt Statistics (Guide for Compilers and Users, 2013), IMF Data Standards Initiatives, IMF’s Historical Public Debt Database (HPDD).
  - International definitions and concepts are not uniformly applied; coverage, valuation, and perimeters vary, impairing comparability.

### Recent IMF-WB work to support greater debt transparency
- Strengthening borrowers’ debt reporting:
  - Scaled up CD and operational engagements; number of LIDCs with public debt reports peaked at 47 in June 2020; only 9 had full instrument and sectoral coverage.
  - By end-2019, more than 35 countries published a Medium-Term Debt Management Strategy (MTDS) (from under 30 in 2016).
  - IMF piloted a training course on debt management, debt reporting and investor relations in early 2020; WB piloted training in 10 LIDCs and EMs and published a debt transparency heatmap for all IDA Countries.
  - Revised LIC DSF rolled out since mid-2018: 122 DSAs for 70 countries; 11 countries broadened debt coverage.
  - WB finalized methodological framework for a debt reporting heatmap, a White paper on debt transparency, and a framework for assessing debt sustainability impact of BRI financing with incomplete information.
- Supporting creditors:
  - Supported G20 creditors via the Diagnostic Tool; assisted G20 in enhancing transparency under DSSI; provided analytical guidance on collateralized borrowing and public sector debt definitions.
- IFI data collection and dissemination:
  - Number of countries reporting to IMF Quarterly Public Sector Debt Statistics has been rising, aided by Data for Decisions (D4D) fund CD.
  - Public Sector Balance Sheet (PSBS) database: comprehensive view for 38 countries and a narrower picture for a further 37 countries.
  - In June 2020, WB published detailed external debt stock and service data for 68 IDA eligible countries in the IDS database, including a breakdown by creditor.

### Key statistics and milestones
- Number of LIDCs with public debt reports peaked at 47 in June 2020; only 9 had full instrument and sectoral coverage.
- By end-2019, more than 35 countries had published an MTDS (from under 30 in 2016).
- 122 DSAs conducted under the revised LIC DSF for 70 countries, of which 11 countries broadened debt coverage.
- 79 percent of LIDCs have at some point reported SOE debt; 43 percent reported private non-guaranteed external debt.
- PSBS database: comprehensive view for 38 countries; narrower picture for a further 37 countries.
- June 2020: WB published detailed external debt stock and service data for 68 IDA eligible countries in the IDS database.

### Remaining gaps and risks
- Significant transparency gaps remain, especially for:
  - (i) non-standard debt instruments;
  - (ii) debt contracted by public sector entities other than the central government;
  - (iii) limited information on terms and conditions of some debt instruments;
  - (iv) terms of official bilateral debt restructuring.
- Disclosure remains particularly weak in countries at high risk of debt distress and fragile states.
- Risk that public sector indebtedness is substantially larger in several LIDCs and EMs than publicly reported.

---

### Next steps to enhance debt transparency
- Strengthening Borrowers’ Debt Reporting:
  - WB rolling out a diagnostic framework to identify institutional, legal, technical and capacity constraints for debt reporting; additional heatmap components released by end-2020 and early 2021.
  - CD will be scaled-up under the WB’s SDFP; IMF and WB working with many borrowers to improve SOE debt reporting.
  - WB preparing two flagship reports to be completed in FY2021: (i) a report on debt transparency; (ii) a report on infrastructure, growth and debt in Africa.
  - DSSI requires a one-off disclosure of public sector debt information; data can enhance DSAs and DRS.
- Supporting Creditors:
  - IMF and WB working with a group supporting implementation of IIF Voluntary Principles for Debt Transparency for private lenders.
  - OECD proposal to host a data repository is welcomed.
- Strengthening IFI policies and data collection:
  - 2021 Review of Data Provision to the Fund for Surveillance could propose extending the minimum data obligation under Article VIII, Section 5 to include general government and broader non-financial public sector debt.
  - Review of IMF’s debt limits policy proposes stronger guidance on seeking debt data in IMF-supported programs and including a table on holders of public debt in staff reports.
  - WB IDS to provide further stocks and flows by creditor in Q2 of FY2021; DRS pilots on domestic debt reporting from November 2020.
  - Expand and update the PSBS database; enhance support for compiling general government balance sheet data.
  - D4D submodule on fiscal and debt reporting to support country engagement over the next 18 months; webinars, remote TA, tool for integrated SOE stocks and flows; more than 30 PSDS CD missions planned.

---

### Capacity development — overview, findings, modalities
- Progress and remaining shortfalls:
  - With CD support, LIDCs have progressed in debt management and publishing strategies and reports, but most do not meet minimum debt management standards.
  - Effective debt management requires legal and institutional frameworks, human resources and IT, strategic planning, fiscal-monetary coordination, cash management, risk monitoring, market outreach, and investor relations.
- DeMPA findings:
  - Analysis of repeated DeMPAs in 65 countries shows progress but significant gaps: at most half of countries displayed satisfactory practices under any of the 14 DeMPA indicators.
  - Key weaknesses: inadequate debt recording, weak cash management, limited staff capacity, governance shortcomings.
- CD modalities and delivery:
  - Tools: DeMPA, MTDS, in-person and virtual missions, resident and regional advisors, peer-to-peer networks, workshops, MOOCs, interactive guidance tools.
  - COVID-19 response: just-in-time remote CD, expanded use of long-term experts regionally, MOOCs and online training (PFMx).
  - Delivery and coverage: increased CD supported by donors; over 40 percent of CD to Africa, 25 percent to Caribbean and Latin America.
- Funding and programs:
  - Debt Management Facility (DMF) III launched in 2019 scales up CD, includes capacity building on debt transparency, contingent liabilities, fiscal risk assessments, and a stronger results framework.
  - WB Government Debt and Risk Management (GDRM) Program supports MICs (current countries listed) with customized advisory services and results (market developments, risk models, legislation).
  - Regional/topical financing supports resident advisors and specific CD initiatives.

### IMF and WB toolkit for debt management CD
- DeMPA: WB tool for assessing debt management practices; revised user-friendly DeMPA to be rolled out in FY21; 30 DeMPAs for DMF-eligible countries publicly available by early-2020.
- MTDS methodology and analytical tool: revised AT published February 2019 with updated guidance and manuals.
- Guidance on local currency bond market development: new framework to benchmark and guide domestic market improvements.
- WB debt management crisis-response framework: provides fast guidance for LIDCs on business continuity, funding needs, and market functioning in crises.

### Fiscal risk tools and work
- IMF Fiscal Transparency Evaluations (FTE): 28 FTEs published; 191 CD activities since November 2018 to assess and support fiscal risk management.
- WB Fiscal Risk Assessments (FRA): embedded in lending and analytical work; examples include Cabo Verde, Ethiopia, Madagascar, Mongolia, Senegal, Peru, Serbia.
- Joint tool development: PFRAM recently revised; further development of fiscal risk toolkits ongoing.

---

### Debt analysis tools: toolkit, uptake, and recent work
- Toolkit purpose:
  - Support debt analytical work, early warning, program design, grant allocation decisions, and inform official creditors and civil society.
- Key tools and usage:
  - New LIC DSF (launched July 2018): assesses contingent liabilities, market financing pressures, macro shocks; since July 2018, 64 of 70 eligible LICs conducted a DSA under the revised framework; 10 countries expanded public-sector debt coverage so far; tailored stress tests used in 48 countries.
  - MAC DSA review: proposed horizon-based framework to be more robust and transparent; review to be completed (target Q4 2020).
  - Public debt dynamic tool (DDT): projects public debt consistent with MAC DSA and LIC DSF; used in CD and training.
  - Dynamic general equilibrium (DIG) models: reviewed applications and extended to governance, natural disasters, education, segmented labor markets.
  - IMF fiscal space framework: 38 pilots in 2017–2018; mainstreaming in 2018–2019 included 31 new countries.
- Training and dissemination:
  - Through end-February 2020: 29 LIC DSF training courses attended by 589 officials.
  - Interactive guide downloaded by 1,781 users through March 5, 2020.
  - One country (Uganda) published a DSA with the revised framework produced by the authorities themselves (as of report).
  - Joint LIC DSF-MTDS workshops delivered (first in August 2019).

---

### Priorities and near-term actions (Q4 2020 — 2022)
- LIC DSF:
  - Complete another round of DSFs across surveillance, emergency financing, and UCT program requests.
  - Use LIC DSF transparency requirements to broaden coverage and refine contingent liability stress tests.
  - Provide supplementary guidance on debt sustainability and fiscal space assessments.
- MAC DSA:
  - Complete review Q4 2020; guidance and new template Q2/Q3 2021; roll out Q3/Q4 2021; provide implementation support in 2022.
- Fiscal space framework:
  - Extension complete for 69 countries, from original 38 pilots, except for one country.
  - Of these 69 countries, 31 have a forthcoming Article IV consultation within the next six months.
- Debt policies and instruments:
  - IMF 2014 DLP: framework for setting conditionality; 2014 reforms on PV limits for external borrowing remain relevant.
  - WB SDFP (introduced July 1, 2020): two pillars—Debt Sustainability Enhancement Program and Program of Creditor Outreach; debt ceilings primarily as nominal limits on non-concessional external PPG debt.
  - WB DRF: Board approval sought for mandate extension in Q1/Q2 FY2021 and expanded scope, including legal advisory services related to external commercial creditors.
- Policy reviews and timelines:
  - DLP Review (considered October 2020): needs to enhance debt data disclosure to IMF and adapt policy for transition from concessional financing.
  - IMF to complete operational guidance note Q1 2021 and introduce new DLP framework Q1–Q2 2021.
  - WB SDFP: PPAs for FY21 being established; PPAs planned to be finalized around end-October 2020.
  - IMF LIA/LIOA review aimed to complete by Q3 2021.
  - IMF staff preparing a paper on resolution of domestic public debt in Q1 2021; follow-up on G20 reform options.
  - New MAC DSA guidance and template following Board endorsement (Q2/Q3 2021), roll-out Q3/Q4 2021, implementation support during 2022.
  - Supplementary guidance for LIC DSF implementation as needed.

### Summary of achievements since late 2018 and further adaptations required
- Achievements:
  - Progress in debt transparency; CD scaled up and reoriented; creditor outreach expanded (notably G20); DSA framework revisions near completion; IFI borrowing and lending policy redesign near completion.
- Pandemic-driven adaptations required:
  - Enhance borrower debt transparency via scaled-up CD and diagnostic tools, broaden DRS collection, implement DLP amendments requiring a table on creditor composition in IMF staff reports, upgrade data provision review, include debt reporting PPAs in WB SDFP.
  - CD modalities adapted to reduced travel; focus on crisis prevention including debt recording/reporting, manage near-term refinancing risks, and liquidity management.
  - Use debt analysis tools for timely assessments; prepare guidance for new MAC DSA and supplementary LIC DSF guidance.
  - IMF to review lending into arrears policies and follow up on international architecture reform options for private debt resolution.
  - IMF and WB creditor support to coordinate G20 official creditors (DSSI and common framework), highlight private debt resolution gaps, and outreach to non-Paris Club creditors.

---

### Monitoring indicators and accountability
- Staffs set several progress indicators (Appendix IV) including quantitative indicators for debt transparency and CD and milestones for toolkit and policy work.
- As milestones are completed, quantitative indicators will measure uptake of MAC DSA, DLP, SDFP, and new features.
- Indicators are amenable to annual monitoring; staffs propose a short update in about 12 months for IMF and WB Executive Boards.

---

### Appendix I — FY2020 progress highlights (selected)
- Implement the revised LIC DSF: Revised framework applied to more than 90 percent of LIC DSA countries.
- Review the IMF MAC DSA: In progress.
- Develop/Implement new tools: IMF DIG and DIGNAR; MFMOD integration with LIC DSF in progress.
- WB guarantee assessment framework completed; DVA piloted and implemented as of FY2021.
- During FY20: 16 countries implemented the e-GDDS and one subscribed to SDDS; six countries advanced from SDDS to SDDS plus.
- FY19–FY21: 28 CD missions delivered (20 public sector debt statistics; 8 external debt statistics).
- Domestic debt reporting survey launched; pilot to start in November 2020.
- Debt coverage enhanced in 11 countries for LIC DSAs.
- DeMPA: first round of review completed in FY2020; revised framework to be completed by end-2020.
- DMF scaled up and completed (DMF III launched in 2019).

### Appendix II — tools for contingent liability analysis (selected)
- IMF Fiscal Stress Test and WB SFSA used to assess shocks, contingent liabilities, and fiscal solvency; IMF developing a COVID-19 module.
- IMF public sector balance sheet assessments in Ethiopia, Georgia, Indonesia, Malawi, Zimbabwe.
- WB guarantee management guidance and credit-risk tools piloted in Kosovo, Maldives, Mozambique, Uganda since 2017.
- IMF SOE Health Check and SOE cash flow forecasting and stress test tools piloted in several countries.
- PFRAM 2.0 (joint IMF-WB) updated in 2019 to analyze PPP portfolios.

### Appendix III — recent IMF and WB debt management activities (Nov 2018–Aug 2020) (selected lists)
- DeMPA engagements across multiple countries and subnational units (examples listed in source).
- Debt management strategy and implementation engagements in a wide set of countries (examples listed in source).
- Cash management, market development, debt recording, contingent liabilities and fiscal risk engagements across many countries (examples listed in source).

### Appendix IV — Monitoring Indicators (summary)
- Pillar I (Enhancing Debt Transparency) outcomes and MIs include:
  - MI 1.1.1 and MI 1.1.2 on improving public debt data coverage in LIC DSAs and in IDA/PRGT-eligible countries (World Bank heatmap dimensions).
  - MI 1.2.1 and MI 1.2.2 on applying international public sector debt definitions, expanding PSBS and PSDS coverage, and enhancing DRS domestic debt reporting.
- Pillar II (Strengthen Capacity) outcomes and MIs include:
  - MI 2.1.1–2.1.4 on DeMPA revision and rollout, MTDS publication, cash management improvements, fiscal risk statements, and number of trainings delivered.
  - MI 2.2.1–M1 2.2.2 on outreach activities and number of inquiries to the Lending-to-LICs mailbox.
- Pillar III (Analytical Tools) outcomes and MIs include:
  - MI 3.1.1: complete MAC DSA review by end-2020 and start rolling out revised framework FY2022; launch MAC DSA website in FY2021.
  - MI 3.2.1–3.2.5: apply IMF DIG/DIGNAR, fiscal space framework heatmaps, WB MFMOD semi-annual updates, PSBS and fiscal risk toolkit application, and World Bank fiscal risk toolkit rollouts.
- Pillar IV (Debt Policies) outcomes and MIs include:
  - MI 4.1.1: begin implementing IMF DLP approved October 2020 (Q2 2021) and improve transparency on creditor composition in staff reports.
  - MI 4.2.1: implement WB SDFP via PPAs and the Program of Creditor Outreach and publish updated IDA debt website information.

*Source: UPDATE ON THE JOINT IMF-WB MULTIPRONGED APPROACH TO ADDRESS DEBT VULNERABILITIES (excerpts).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context and urgency
- Amid rising debt risks in low-income developing countries (LIDCs) and emerging markets (EMs), the IMF and the WB have been implementing a multipronged approach (MPA) to address debt vulnerabilities.
- Amplification of debt risks owing to COVID-19 has upped the urgency to implement the MPA and highlights the importance of debt sustainability and transparency for long-term financing for development.
- Countries have limited capacities which are further stretched by COVID-19 and implementation of the MPA by itself may not be sufficient to address debt vulnerabilities and risks from global economic shocks.
- Publication date: November 12, 2020.

### The MPA: organization and objectives
- The MPA is organized around four mutually-reinforcing pillars:
  - (i) strengthen debt transparency by helping borrowing countries, and by reaching out to creditors, to make better public sector debt data available;
  - (ii) support capacity development in public debt management to avert and mitigate debt vulnerabilities;
  - (iii) provide suitable tools to analyze debt developments and risks;
  - (iv) explore adapting the IMF’s and World Bank’s lending policies to better address debt risks and promote efficient resolution of debt crises.
- The four pillars are designed to be mutually reinforcing:
  - Debt transparency feeds capacity development, analytical tools, and IFI policy calibration.
  - Capacity development enables more sophisticated tools and informs IFI policy flexibility.
  - Analytical tools support transparency requirements, capacity development, and IFI policy implementation.
  - IFI debt policy frameworks incentivize transparency, capacity development, and use of analytical tools.

### Key recent progress (since late 2018)
- Notwithstanding rising debt vulnerabilities, important progress has been achieved:
  - (i) broader debt coverage in LIC Debt Sustainability Analysis (DSAs) of 11 countries, enhanced debt transparency from increased reporting by borrowers to the international statistical databases, and wider publishing of debt data by the IMF and the World Bank;
  - (ii) scaled-up debt recording and debt management capacity development activities for borrowers that have been supported by increased donor financing;
  - (iii) expanded creditor outreach, in particular with the G20;
  - (iv) the near completion of the revision of debt sustainability analysis frameworks;
  - (v) the near completion of a full redesign of the IMF and WB policies in relation to responsible borrowing and lending.

### COVID-19 impact and implications for the MPA
- The COVID-19 crisis has worsened public sector debt vulnerabilities:
  - Public revenues fell while governments took on additional public spending, driving up public borrowing needs.
  - At end-September, almost half of LIDCs were assessed at high risk of debt distress or in debt distress.
  - Since the onset of the pandemic, a number of countries have announced their intention to seek debt reprofiling or restructuring (example cited: Zambia).
- The IMF and the WB are supporting the implementation of the G20 Debt Service Suspension Initiative (DSSI):
  - DSSI defers debt service for International Development Association (IDA) countries and Angola due on official bilateral debt in 2020 and has been extended through June 2021.
- Some countries’ debt levels may become unsustainable given the depth of the current crisis; restoration of debt sustainability, including through restructuring, may be needed.
- The crisis has highlighted deficits in governments’ understanding and management of fiscal risk exposures and public sector contingent liabilities, including:
  - Lack of reliable information on government guarantees, debt of state-owned enterprises (SOE), guarantees extended to Public-Private Partnerships (PPP), collateralized financing, some central bank liabilities including foreign deposits and currency swaps, and on the terms of debt restructuring agreed on a bilateral basis.

### Adjustments to MPA implementation in light of COVID-19
- Debt transparency efforts will focus on:
  - greater reporting by borrowers and creditors;
  - improving reporting to and data dissemination by IFI databases;
  - providing analytical guidance to both borrowers and creditors;
  - clearer guidance on when and how to seek debt data in IMF-supported programs.
  - The forthcoming review of the Data Provision for Fund Surveillance will consider what data the Fund requires for the exercise of its functions, including debt-related data.
  - The WB’s Sustainable Development Financing Policy will include performance and policy actions on enhancing debt reporting.
- Capacity development will be:
  - scaled-up and reallocated to areas important for crisis prevention;
  - modalities adapted to a virtual format where possible to support urgent needs in light of the pandemic.
- Debt analysis tools will be updated to meet increased demand:
  - A revised MAC DSA framework is being proposed;
  - New guidance on using the new framework and on implementing the LIC Debt Sustainability Framework (DSF) will be prepared.
- IMF policy work in arrears and sovereign debt resolution:
  - Review of the IMF’s lending into arrears policies will focus on supporting rapid, comprehensive, and transparent resolution to limit distress and facilitate recovery.
  - Implementation of reform options in the G20 note prepared by IMF staff on the international architecture for resolving sovereign debt held by private creditors is underway in collaboration with relevant stakeholders.
- Creditor engagement priorities:
  - Focus on supporting coordination of G20 official creditors given debt vulnerabilities exacerbated by the pandemic.
  - Emphasis on the DSSI and the common framework for sovereign debt resolution that was recently agreed in principle, as well as continuing creditor outreach.

### Monitoring, indicators, and next steps
- To monitor implementation of the MPA going forward:
  - IMF and WB staffs have set out several indicators against which progress can be assessed.
  - A short update on progress is proposed to be prepared in about 12 months.
  - Indicators will be adapted over time as appropriate to evolving needs and challenges.

*Prepared by an IMF and World Bank team; approved by Kristina Kostial, Miguel Savastano (IMF) and Marcello Estevão (WB).*

### 9.      Implementation of the MPA remains critical. Debt ratios are projected to ratchet upward,

### 9.      Implementation of the MPA remains critical. Debt ratios are projected to ratchet upward,

### Implementation risks and urgency
- Debt ratios are projected to ratchet upward, and sources of financing could become more volatile, likely resulting in more countries tipping into debt distress, exacerbating the economic impact of the pandemic.
- For countries that escape distress, safety margins will have shrunk, heightening the importance of responsible borrowing and lending.
- There is an urgent need to:
  - address debt transparency concerns;
  - apply accurate debt analysis tools; and
  - implement well-designed IFI policies (and international financial architecture) to prevent debt distress when possible and encourage a rapid, comprehensive, and transparent debt resolution for those countries that need it.
- Intensify efforts to enhance debt transparency for countries already in debt distress where public debt disclosure remains weak.
- The MPA can help address debt vulnerabilities related to institutional weaknesses and constraints that compound risks of debt crises and jeopardize macroeconomic stability, but it may not be sufficient to address debt vulnerabilities and risks from global economic developments.

### Scope and structure of the rest of the paper
- The rest of the paper discusses:
  - what the MPA has accomplished to date;
  - the priorities going forward;
  - how progress will be measured.
- Appendix I reports key accomplishments under each of the pillars in FY20.
- Consistent with the four pillars of the MPA, the paper contains four sections covering:
  - (i) debt transparency;
  - (ii) strengthening capacity of borrowing countries and enhance creditor coordination;
  - (iii) analytical tools; and
  - (iv) work to update IFI policies.
- Each section discusses identified gaps, ongoing work, and next steps.
- The final section summarizes key accomplishments to date, adapts priorities for the period ahead—including to support ongoing and prospective international debt relief initiatives—and proposes a set of indicators to monitor progress going forward.

### Enhancing debt transparency — rationale and principles
- Debt transparency is a prerequisite to accurately assess a country’s debt situation and to monitor and manage its debt risks.
- A complete picture of debt-related risks requires data on all public sector debt exposures, including contingent liabilities and where lending could increase risks (e.g., use of collateral).
- Key principles to enhance public debt transparency:
  - Borrowers should:
    - fully disclose their public and publicly guaranteed (PPG) debt stocks, including terms and conditions;
    - refrain from borrowing under non-disclosure agreements;
    - provide collateral in an effective, transparent and prudent manner;
    - ensure full transparency around public debt restructurings.
  - Creditors should:
    - refrain from confidentiality clauses and allow borrowers to publish detailed information;
    - disseminate data on their lending and publish loan-by-loan information, including terms, on a single website with regular updates where possible.
  - Both borrowers and creditors should ensure regular debt data reconciliation.
- The IMF and the WB need debt transparency for:
  - monitoring fiscal and debt developments and analyzing risks for surveillance purposes;
  - assessing debt vulnerabilities and sustainability, including for program design and approval;
  - determining loan/grant allocations to appropriately safeguard their resources;
  - enabling effective debt workouts.

### Roles and responsibilities
- Debt transparency is primarily the responsibility of the borrower.
  - Only the borrower can comprehensively record, monitor, and publish all its commitments and obligations to all lenders.
  - Borrowers can refrain from engaging in non-disclosure agreements that prevent publication of financing amounts and key terms.
  - Disclosure is often hampered in LIDCs by governance issues, capacity and contractual constraints (e.g., confidentiality clauses), and weak incentives (lack of demand for reliable data, limited public scrutiny, weak integration with public finance management systems).
- Creditors’ reporting can help overcome capacity problems in debtor countries but cannot substitute borrower reporting.
  - Creditor reporting helps enhance transparency and reconcile public debt data.
  - The G20’s Operational Guidelines on Sustainable Financing emphasize information sharing by official bilateral creditors (guideline 2).
  - The IMF-WB Diagnostic Tool identifies publishing loan-by-loan information, terms, and public templates and refraining from confidentiality clauses as strong transparency practices.

### IMF and WB data provision frameworks and standards
- IMF debt data provision requirements:
  - Article VIII, Section 5 (supplemented in 2004) requires a narrow minimum set of debt data: stocks of gross national external debt, and central government and central government-guaranteed debt, including currency and maturity composition and, if possible, resident vs nonresident holdings.
  - Compliance with minimum requirements is generally good, but there are cases of weak reporting on arrears and contingent liabilities.
  - General government and broader non-financial sector data and contingent liabilities are not directly covered in Article VIII, Section 5.
  - Under IMF-supported program financing, the IMF can request information beyond the minimum if critical for program goals/monitoring and can decide not to lend if such critical information is not forthcoming.
  - Members have no obligation to provide detail that discloses affairs of individuals or corporations (Article VIII, Section 5(b)) and are under no obligation to publish data provided to the IMF.
- WB data provision requirements:
  - All WB member countries receiving IDA or IBRD funding must report volumes and terms of external PPG debt loan-by-loan through the Debtor Reporting System (DRS).
  - Aggregate data are published in the International Debt Statistics (IDS) Database.
  - By end-2019, 79 percent of LIDCs have at some point reported information on debt of SOEs and 43 percent on private non-guaranteed external debt.
  - The DRS is the only database collecting loan-by-loan information but does not include collateral features of loans.

- International statistical standards and databases:
  - Public Sector Debt Statistics: Guide for Compilers and Users, 2013, based on GFSM, sets a standard for debt statistics reporting.
  - IMF’s Data Standards Initiatives require dissemination of timely and comprehensive statistics, including debt data.
  - IMF and WB publish aggregated debt databases, e.g., IMF’s Historical Public Debt Database (HPDD).
  - International definitions and concepts are not uniformly and widely applied; coverage of instruments, valuation methods, and debt perimeter can vary substantially across countries, impairing comparability.
  - A recent joint IMF-WB report discusses causes of differences and highlights the need for more granular reporting on loan terms and collateralization.

### Recent IMF-WB work to support greater debt transparency
- Strengthening borrowers’ debt reporting:
  - The IMF and the WB have scaled up capacity development (CD) and operational engagements to enhance public debt reporting.
    - The number of LIDCs with public debt reports peaked at 47 in June 2020; however, only 9 countries had full instrument and sectoral coverage.
    - By end-2019, more than 35 countries (from under 30 in 2016) had published a Medium-Term Debt Management Strategy (MTDS).
  - In early 2020, the IMF piloted a new training course on debt management, debt reporting and investor relations, with plans for broader delivery and eventual online availability.
  - The World Bank piloted training on debt reporting and investor relations in 10 LIDCs and EMs and published a comprehensive debt transparency heatmap for all IDA Countries.
  - The revised LIC DSF has been rolled out since mid-2018:
    - The IMF and the WB conducted 122 DSAs under the framework for 70 countries of which 11 countries have broadened their debt coverage.
    - DSAs have further analyzed risks from contingent liabilities using the new tailored tool.
  - The IMF and World Bank have regularly published papers monitoring debt vulnerabilities for many countries.
  - The World Bank finalized analytical papers including a methodological framework for a debt reporting heatmap, a White paper on debt transparency, and a framework for assessing debt sustainability impact of BRI financing with incomplete information.

- Supporting creditors in enhancing debt transparency:
  - The IMF and the WB supported G20 creditors in implementing sustainable financing principles via the Diagnostic Tool, establishing sound practices for creditor data and loan contract disclosure.
  - Both institutions assist the G20 in enhancing debt transparency under the DSSI.
  - Provided analytical guidance including a framework to assess collateralized borrowing and a note on public sector debt definitions and reporting in LIDCs.

- Strengthening IFI policies and debt data collection/dissemination:
  - The number of countries reporting to the IMF Quarterly Public Sector Debt Statistics database has been rising gradually, aided by CD through the Data for Decisions (D4D) fund.
  - The Public Sector Balance Sheet (PSBS) database provides a comprehensive view of public sector wealth for 38 countries, and a narrower picture for a further 37 countries.
  - In June 2020, the WB published detailed external debt stock and service data for 68 IDA eligible countries in the IDS database, including a previously unavailable breakdown by creditor.
  - The WB has improved coverage and quality of published debt data via strengthened internal collection, assessment and verification processes and collects information on PPPs.

### Key statistics and milestones reported
- Number of LIDCs with public debt reports peaked at 47 in June 2020; only 9 had full instrument and sectoral coverage.
- By end-2019, more than 35 countries had published an MTDS (from under 30 in 2016).
- 122 DSAs conducted under the revised LIC DSF for 70 countries, of which 11 countries broadened debt coverage.
- 79 percent of LIDCs have at some point reported SOE debt; 43 percent reported private non-guaranteed external debt.
- PSBS database: comprehensive view for 38 countries; narrower picture for a further 37 countries.
- June 2020: WB published detailed external debt stock and service data for 68 IDA eligible countries in the IDS database.

### Remaining gaps and risks
- Significant debt transparency gaps remain; availability of comprehensive, timely and consistent public sector debt data produced by borrowing countries needs improvement, especially for:
  - (i) non-standard debt instruments;
  - (ii) debt contracted by public sector entities other than the central government;
  - (iii) limited information on terms and conditions of some debt instruments;
  - (iv) information on the terms of official bilateral debt restructuring.
- Public debt disclosure remains particularly weak in countries at high risk of debt distress and fragile states.
- There is a risk that public sector indebtedness is substantially larger in several LIDCs and EMs than publicly reported.

*IMF staff update on the Joint IMF-WB Multipronged Approach to Address Debt Vulnerabilities (excerpts).*

### 19.      In this context, the following next steps are important to enhance debt transparency

### 19.      In this context, the following next steps are important to enhance debt transparency

### Strengthening Borrowers’ Debt Reporting
- The WB is rolling out a diagnostic framework to identify key institutional, legal, technical and capacity constraints for debt reporting to support targeted reforms.
  - Additional components of the debt reporting heatmap—the transparency of domestic debt issuance procedures and debt management legal frameworks—will be released by end-2020 and early 2021, respectively.
  - CD will be scaled-up significantly under the WB’s SDFP, with many IDA countries enhancing debt transparency.
  - The IMF and the WB are working with many borrowing countries to improve reporting of SOE debt.
- The WB is preparing two flagship reports to be completed in FY2021:
  - A report on debt transparency providing detailed analysis and guidance on institutional and capacity issues around debt transparency.
  - A report on infrastructure, growth and debt in Africa providing a methodology to analyze public borrowing and spending for infrastructure.
- The Development Committee in its Fall 2020 Communique asked the IMF and WB to continue supporting the DSSI implementation, including strengthening the quality and consistency of debt data and improving debt disclosure.
  - The G20 DSSI requires a one-off disclosure of information on public sector debt; data collected can be used to enhance debt data in DSAs and in the DRS.

### Supporting Creditors in Enhancing Transparency
- The IMF and the WB, as part of a working group, are supporting implementation of the Institute of International Finance (IIF) Voluntary Principles for Debt Transparency, which provides a framework for private lenders to disclose information about lending to sovereigns.
- The proposal by the Organization for Economic Cooperation and Development (OECD) to host the data repository is welcome.

### Strengthening IFI Policies and Debt Data Collection/Dissemination
- The upcoming Review of Data Provision to the Fund for Surveillance Purposes in 2021 could consider proposals to extend the minimum data provision obligation under Article VIII, Section 5 of the IMF’s Articles of Agreement to include data on general government debt and the broader non-financial public sector.
  - This aims to enhance the Fund’s capacity to assess fiscal space and analyze debt risks.
  - Countries have made important progress in compiling general government debt and SOE debt data.
- The Review of the IMF’s debt limits policy proposes stronger guidance on when and how to seek debt data in IMF-supported programs and proposes including a table on holders of public debt in staff reports for IMF-supported programs.
- Expanding the IDS Database and DRS:
  - In Q2 of FY2021, the WB’s IDS database will provide further information on stocks and flows by creditor for each borrowing country.
  - The WB is examining DRS reporting requirements for domestic debt data—launching a survey on domestic debt reporting, with pilots from November 2020—and broadening external debt data requirements, e.g., collateralization features of loans.
- Expanding the PSBS Database:
  - Update the IMF’s PSBS database with the latest data on assets and liabilities of the public sector and subsectors.
  - Expand country coverage and improve coverage of sub-sectors and debt instruments.
  - Enhance support for compilation of balance sheet data of the general government through the Financial Sector Stability Trust Fund.
- Data for Decisions (D4D):
  - The IMF’s D4D submodule on fiscal and debt reporting supports countries in addressing gaps in the compilation and dissemination of public sector debt statistics.
  - In the next 18 months there will be a broad-based effort to ensure close engagement with countries to address the most pressing gaps and emerging needs, e.g., monitoring additional public sector debt from the COVID-19 pandemic and SOEs data.
  - Webinars and on-demand country specific remote TA have been introduced, including a tool that allows compilation of integrated stocks and flows data for SOEs.
  - More than 30 Public Sector Debt Statistics (PSDS) CD missions are planned to follow up on needs identified in regional workshops and discussions with IMF country teams.

### Capacity Development — Overview and Results
- With support from CD, LIDCs have made progress on most dimensions of debt management and publishing debt management strategies and debt reports, yet most countries do not meet minimum debt management standards.
- Debt management is central to meeting a country’s financing needs at the lowest cost subject to an acceptable degree of risk over the medium to long term and to identifying and monitoring debt-related fiscal risks (e.g., currency composition of debt, guarantees to SOEs).
- Effective debt management requires:
  - Sound legal and institutional framework;
  - Appropriate human resources and information technology;
  - Capacity for strategic planning and financial literacy;
  - Fiscal and monetary policy coordination and effective cash management;
  - Capacity to identify and monitor risks, engage in market outreach, and support market development.
- The Revised Guidelines for Public Debt Management and the Debt Management Performance Assessment (DeMPA) provide frameworks and tools for reform and assessment.

### DeMPA Findings and Gaps
- Analyzing repeated DeMPAs in 65 countries shows progress in debt management, institutional arrangements, and coordination with fiscal policy, but significant gaps remain.
  - At most half of countries displayed satisfactory practices under any of the 14 DeMPA performance indicators.
  - Key weaknesses: inadequate debt recording, weak cash management practices, limited staff capacity, and governance shortcomings.
  - Frontier economies have mixed results: improvements in staff capacity, debt recording, and external borrowing practices, but shortcomings in implementing audits and cash flow management; debt strategy formulation has improved but implementation impact on borrowing decisions is unclear.

### CD Modalities and Delivery
- IMF and WB CD modalities used to address gaps:
  - DeMPA and MTDS frameworks and analytical tools;
  - In-person and virtual CD missions;
  - Resident and regional advisors;
  - Peer-to-peer learning networks;
  - In-country and regional training workshops; online training including MOOCs and interactive guidance tools.
- In the context of COVID-19 both institutions offer immediate CD as crisis-response and have continued remote missions; IMF expanded use of long-term experts to deliver CD regionally.
- Regional training and improved online resources have supported CD; emphasis on peer-to-peer learning and close coordination with regional and global debt management CD providers including COMSEC and UNCTAD.
- Delivery and coverage:
  - Strong demand has been met with a rise in the amount and variety of CD delivered in recent years, supported by increased donor resources.
  - Over 40 percent of CD delivered to Africa, and a quarter to the Caribbean and Latin America.
  - CD has focused on institutional reforms, debt management strategy design and implementation, market development, legal aspects, asset-liability management, investor relations, management of government guarantees and cash, debt-related fiscal risks, cash forecasting, and institutional frameworks for cash and debt management.

### Funding and Programs for CD
- Key sources of external funds and programs:
  - The Debt Management Facility (DMF) for low- and middle-income countries, implemented jointly; DMF III was launched in 2019, builds on a 10-year track record, and scales-up CD substantially.
    - DMF III introduces capacity building in improving debt transparency (debt reporting and monitoring), and in managing contingent liabilities and other fiscal risks; enhances CD and training on institutional set-up, legal frameworks, operational arrangements, developing debt markets, reform implementation, and training on debt sustainability analyses.
    - DMF III places a larger focus on debt transparency and fiscal risk assessments and offers a stronger results framework.
  - The WB’s Government Debt and Risk Management (GDRM) Program (for MICs) since 2011 provides customized technical advisory services for strengthening public debt and risk management capacity and institutions in MICs.
    - Current GDRM supported countries include Albania, Azerbaijan, Colombia, Egypt, Ghana, Indonesia, Morocco, North Macedonia, Peru, Serbia, South Africa, Ukraine, Tunisia, and Vietnam.
    - Results cited: developments in domestic markets in Colombia and Peru; a risk management model for government guarantees to SOEs in Indonesia; approved revised primary legislation in North Macedonia.
  - Regional and topical financing from development partners supports IMF and World Bank CD delivery outside DMF, including resident debt management advisors in West Africa, the Pacific and the Caribbean; funding for improving investor relations in ECCU countries; development of new knowledge products.

### IMF and WB Toolkit for Debt Management CD
- DeMPA:
  - Developed and implemented by the WB, key tool for assessment of sound government debt management practices, institutions, and processes.
  - Applied from low-income to emerging market economies at national and subnational levels; comprehensive indicators identify reform priorities and track reform implementation.
  - A revised user-friendly DeMPA in preparation and to be rolled out in FY21; revision will allow more efficient tracking of progress and enhanced focus on debt transparency.
  - By early-2020, DeMPAs for 30 different DMF-eligible countries had been made publicly available.
- Medium-term Debt Management Strategy (MTDS) methodology and analytical tool (AT):
  - Developed jointly by Bank and Fund staff to formulate and implement debt management strategies based on comprehensive cost and risk analysis.
  - A revised analytical tool was published in February 2019 with updated guidance note, user guide, and data preparation manual.
  - Links to MTDS published by countries are available on IMF and WB websites.
- Guidance Note on Local Currency Bond Market development:
  - New framework to enhance TA and guide authorities in local currency bond market development, building on the 2013 Local Currency Debt Market Diagnostic Framework; framework will enable benchmarking and steps to improve domestic currency bond markets.
- WB debt management crisis-response framework:
  - Provides LIDCs fast and effective guidance on addressing immediate challenges, offering just-in-time and remote support on safeguarding business continuity, scrutinizing government funding needs, ensuring sufficient and timely government funding, and supporting domestic market functioning in the crisis context.

### Fiscal Risk Tools and Work
- IMF Fiscal Transparency Evaluations (FTE):
  - Benchmark country practices on the IMF’s Fiscal Transparency Code which divides fiscal risks into macroeconomic risks and specific fiscal risks.
  - 28 FTEs are published on the IMF website.
  - The IMF has conducted 191 CD activities since November 2018 to: (i) assess countries’ risk management principles and institutional capabilities; (ii) support fiscal risk analysis; (iii) define priorities for improving risk management processes and practice; and (iv) develop fiscal risk statements to disclose key fiscal risks.
- WB Fiscal Risk Assessments (FRA):
  - Diagnose main sources of vulnerability to the budget and map them into a fiscal risk matrix categorizing direct/contingent and explicit/implicit liabilities to allow for tailored policies.
  - FRAs have been embedded in many WB lending operations or analytical products, with recent focused examples including Cabo Verde, Ethiopia, Madagascar, Mongolia, Senegal, Peru, and Serbia.
  - FRAs support the design of reforms that strengthen debt sustainability analysis and increase debt transparency.
- Joint tool development:
  - Both institutions are further developing fiscal risk toolkits; the Public-Private Partnerships Fiscal Risk Assessment Model (PFRAM) was recently jointly revised.

*Source: UPDATE ON THE JOINT IMF-WB MULTIPRONGED APPROACH TO ADDRESS DEBT VULNERABILITIES (excerpt).*

### 27.      The WB’s SDFP supports the systematic reform implementation in the areas of debt

### 27.      The WB’s SDFP supports the systematic reform implementation in the areas of debt

### The WB SDFP and implementation support
- The WB’s SDFP supports systematic reform implementation in the areas of debt transparency, fiscal policy and debt management across a large number of IDA countries.
- Under the debt sustainability enhancement program, IDA countries must define performance and policy actions to address debt vulnerabilities in the areas of debt transparency, fiscal policy and debt management.
- Implementation of these actions is supported through scaled-up CD and operational engagements.

### Priority going forward: scale up support and adjust capacity building post-COVID
- Volume:
  - The work program remains ambitious as it seeks to meet country needs at a time of crisis, which poses challenges for implementation.
  - While CD is country-driven, high demand is expected given elevated public sector debt vulnerabilities.
  - Focus areas: scaling up and targeting CD on debt reporting and monitoring, debt-related contingent liabilities, and fiscal risks to support debt transparency outcomes.
  - CD will continue to seek to support countries’ efforts in removing constraints to expanding public sector debt coverage.
- Types:
  - COVID-19 has required a rapid recalibration of CD with strong demand for CD related to:
    - revision and implementation of medium-term debt strategies, including domestic and external issuance plans given changing market conditions;
    - improving external communications;
    - cash-flow forecasting and asset and liability management operations;
    - fiscal risks analysis and management.
  - CD for debt transparency will go beyond public sector debt reporting to include addressing institutional and legal constraints:
    - a training course on debt management for parliamentarians has been launched;
    - a new training course on legal debt management issues is currently under preparation.
- Modalities:
  - Since March 2020, the IMF and the WB have introduced on-demand and just-in-time and remote CD and training.
  - IMF-WB CD has been adapted to a virtual format where possible across debt, cash, and fiscal risk management, utilizing remote missions to support member countries’ urgent needs related to COVID-19.
  - New Massive Online Open Courses (MOOCs) on the LIC DSF and MTDS are being prepared to provide accessible learning on key frameworks for debt management and debt sustainability.
  - The IMF’s public finance management Online Course (PFMx) helps government officials increase capacity on benefits of fiscal transparency, fiscal reporting, cash and debt management coordination, and management of fiscal risks.
- Note on fiscal risks:
  - Fiscal risks stem from standardized guarantee schemes launched to deal with the impact of COVID-19, state-owned enterprises, and macro-fiscal risks related to the crisis.

### Lenders: supporting efforts towards sustainable lending
- Lenders’ responsibilities:
  - Carefully assess whether lending is consistent with a country’s debt sustainability, is transparent, and allows borrowers to comply with IMF and WB policies.
  - Ensure borrowers understand legal implications of financing, especially for complex investment projects.
- IMF/WB support to G20 and creditors:
  - Staff supported the G20 in implementing the Operational Guidelines for Sustainable Financing, calling on official creditors for adequate financing, information sharing, consistency of financial support, coordination of stakeholders, and promotion of contractual and new financial instruments to strengthen resilience and minimize litigation issues.
  - Staff developed detailed financing practices for the five key dimensions of the Guidelines and created self-diagnostic tools for official creditors to evaluate practices and identify shortcomings.
  - Staffs provided guidance to build capacity to analyze collateralized transactions.
- Ongoing interactions with creditors:
  - Paris Club:
    - IMF and WB are observers at Paris Club meetings, which meet regularly about 8 to 9 times a year; in light of the pandemic, meeting frequency increased to bi-weekly on many occasions.
    - IMF and WB staffs provide country-specific updates on macroeconomic and debt developments, and alert Paris Club members when countries’ risk of debt distress change.
  - G20 International Financial Architecture Working Group (IFA WG):
    - IMF and WB are observers. The IFA WG meets 3-4 times per year with debt issues prominent on the agenda.
    - IMF and WB staffs provide inputs including analyses of debt developments and debt architecture issues, including in the context of the DSSI and its extension to the first half of 2021.
  - OECD export credit group:
    - With adoption of the Recommendation of the Council on Sustainable Lending Practices and Officially Supported Export Credits, OECD member-country ECAs have committed to ensure export credits are consistent with sustainable lending practices and should take into account results of the most recent IMF/WB country-specific DSAs; decisions should be in line with debt limits conditionality under the IMF’s DLP or the WB’s (IDA).
    - IMF/WB post monthly updates on debt limits in IMF programs and under the NCBP at the referenced URL; creditor mailboxes are maintained to answer creditors’ questions about debt policy issues in the context of IMF and WB programs.
  - Multilateral Development Banks (MDBs):
    - The WB organizes an annual MDB technical meeting on debt with up to 16 institutions, discussing enhancing debt transparency, changing creditor landscape challenges, debt sustainability of borrowers and large infrastructure projects, and fiscal risks from climate change.
    - Regular coordination with MDBs also occurs in the context of design and implementation of debt policies.
  - Support to non-Paris Club lenders:
    - IMF and WB provide training and extensive outreach; creditor mailboxes are available but used infrequently by these creditors.

### Recent creditor-focused work and initiatives
- DSSI:
  - G20 launched the DSSI in May 2020 to provide debt service relief to 73 IDA and UN LDC countries, following calls by WB President Malpass and IMF Managing Director Georgieva.
  - IMF and WB staff provide technical support to implement the initiative, inform countries, and monitor commitments on debt transparency, fiscal policy responses, and observance of IMF and WB lending policies.
  - Staffs provided several updates to the G20 on DSSI implementation.
- G20 Common Framework for Debt Treatments:
  - G20 creditors, with staff support, are discussing a common framework for treatments beyond the DSSI to address impediments to sovereign debt resolution owing to shifts toward non-Paris Club and private sector creditors, aiming to facilitate timely and comprehensive debt resolution and comparable relief from private sector creditors.
- G20 creditor self-diagnostic tool:
  - During 2019 staffs converted the 5 Operational Guidelines for Sustainable Financing into 18 underlying practices specifying different levels of practice.
  - Staffs supported 15 G20 and 5 non-G20 creditors to utilize the self-evaluation tool to identify areas for improvement.
- Consultations on sustainable financing:
  - The WB expanded consultations with MDBs through technical meetings and virtual seminars to strengthen coordination in SDFP roll-out discussions, including core principles of sustainable financing, resource allocation frameworks, selective debt policies, and debt management CD.
- Creditor outreach:
  - IMF and WB staffs have exchanged views with official creditors on public sector debt vulnerabilities, proposed analytical tool reforms (collateralized borrowing framework, MAC DSA, MAC DSA pillar 3), and policies (DLP, and SDFP, pillar 4).

### Continued and planned creditor engagement
- Provide tailored support to G20 creditors to meet evolving needs for debt relief related to the COVID-19 pandemic, including through the DSSI and the Common Framework for Debt Treatments beyond the DSSI.
- Support repeat creditor self-diagnostic exercises as requested by several official bilateral creditors.
- Support enhanced use of IMF and WB mailboxes by non-Paris Club creditors.

### Debt analysis tools: toolkit and purposes
- Tools being strengthened to support debt-related analytical work and early warning systems:
  - The new LIC DSF, launched in July 2018, assesses key risks including contingent liabilities, market financing pressures, and macroeconomic shocks; contains tools to gauge realism of macroeconomic and debt baseline projections.
  - The MAC DSA review will propose clearer signals on sovereign risks.
- Suite of tools developed by IMF and WB:
  - Debt sustainability frameworks.
  - Dynamic general equilibrium (DGE) models to analyze debt-investment-growth linkages.
  - A framework to assess fiscal space (i.e., whether a government can raise spending or lower taxes without endangering market access and debt sustainability).
  - Public debt dynamic tool (DDT) that produces public debt projections consistent with MAC DSA and LIC DSF and computes adjustment paths consistent with user-defined debt targets; used for CD and training in low-capacity countries.
- Roles of tools:
  - Debt sustainability analyses inform IMF and WB policies (pillar 4): IMF may only lend if a member’s debt is assessed as sustainable.
  - Sovereign debt risk from frameworks informs debt conditionality in program arrangements and fiscal and other policies to reduce debt vulnerabilities.
  - DSAs determine grant allocations for IDA countries and access to Scale-Up-Facility (SUF) financing.
  - DSAs inform identification of priority policy and performance actions under the WB SDFP. WB Development Policy Loans require an adequate macroeconomic framework and thus, debt sustainability.
  - Tools are a broader public good used by official bilateral creditors and Civil Society Organizations; official creditors and donors use results to guide lending and grant-allocation decisions.
  - In April 2019, Chinese authorities announced using a debt sustainability framework aligned with the framework used by the WB and the IMF to evaluate debt sustainability for borrowers under the Belt and Road Initiative.
- Publicly available tools designed for direct use by country authorities and feed into IMF-WB CD (pillar 2).

### Training, dissemination, and uptake of tools
- Through end-February 2020:
  - IMF and WB staffs provided 29 training courses on the LIC DSF to country authorities, attended by 589 officials from LIC authorities globally.
  - One course aimed at jointly training officials from both creditor and debtor countries was held at the China-IMF CD Center (CICDC) in February 2019, and in July and December 2020.
  - Since the onset of the pandemic the course was delivered in a virtual format in July 2019 and is planned again for December 2020.
  - An interactive guide has been downloaded by 1,781 users through March 5, 2020.
  - So far, one country (Uganda) has published a DSA with the revised framework produced by the authorities themselves.
  - Increasingly, training workshops use participants’ own country-specific macro and debt data rather than a given case study.
  - The first joint LIC DSF-MTDS workshop was delivered in August 2019 using country-specific data.

### Updates and recent work on major tools
- LIC DSF:
  - Since July 2018, 64 countries out of 70 eligible LICs have conducted a DSA under the revised framework.
  - Ten countries have expanded their public-sector debt coverage so far.
  - DSA writeups include fuller discussions on baseline realism, contingent liabilities, and other country-specific debt vulnerabilities.
  - Tailored stress tests have been used in 48 countries and have been useful in illuminating risks.
  - A discussion of the realism of assumptions underlying public debt projections is included in IMF and WB (2020).
- MAC DSA Review:
  - Review over the past two years identified scope to strengthen and modernize the framework.
  - Issues: mixed predictive capacity (large country heterogeneity), narrow and uneven coverage of debt-related risks, limited use of probabilistic methods, and difficulty summarizing and communicating framework signals.
  - Staff will propose a horizon-based framework intended to be more robust, discriminatory on risks, and transparent.
- DIG models:
  - A stock-taking paper by Gurara and others (2018) reviewed over 65 applications and highlighted lessons:
    - importance of reforms to increase efficiency of public investment;
    - need for gradualism in public investment scaling-ups due to debt sustainability and absorptive capacity constraints;
    - criticality of domestic resource mobilization (public investment is important for growth, but it does not pay for itself).
  - In 2018–20 the models were extended to analyze: governance reforms (IMF, 2018); effects of natural disasters and adaptation policies (Marto and others, 2018; Cantelmo and others, 2019); public investment in education (Atolia and others, 2020); and segmented labor markets (Buffie and others, 2020).
- IMF fiscal space framework:
  - A total of 38 pilots were implemented during 2017 and early 2018 covering EMs and advanced economies.
  - A Board Paper “Assessing Fiscal Space: An Update and Stocktaking” was discussed by the Board on June 2018, leading to refinements and extensions to low-income economies and commodity producers.
  - The mainstreaming phase covering 2018 and 2019 included 31 new countries, nearly all concluded.

*Source: ppea2020066 - 27.      The WB’s SDFP supports the systematic reform implementation in the areas of debt*

### 35.      Looking ahead, given the debt landscape and rising debt risks, it is a high priority to

### ppea2020066 - 35.      Looking ahead, given the debt landscape and rising debt risks, it is a high priority to

### Priorities for IMF–World Bank (WB) work
- LIC DSF
  - Complete another round of DSFs in the context of surveillance, requests for emergency financing and UCT program requests.
  - Use LIC DSF’s debt transparency requirements to broaden coverage and refine contingent liability stress tests for all countries.
  - Articulate supplementary guidance on debt sustainability and fiscal space assessments, including on how to expand debt coverage in DSAs, based on lessons learned during the current period of debt stress.
- MAC DSA
  - Complete the review (Q4 2020).
  - Complete the guidance note and the new template for debt sustainability and fiscal space assessments following Board endorsement (Q2/Q3 2021).
  - Roll out the new framework (Q3/Q4 2021).
  - Provide enhanced support to country teams through a first round of implementation during 2022.
- Fiscal space framework
  - Extension complete for 69 countries, from the original 38 pilot countries, except for one country.
  - Of these 69 countries, 31 have a forthcoming Article IV consultation within the next six months.
  - New countries will be added only after the framework is upgraded in tandem with the roll-out of the new MAC DSA in mid-2021.

### Debt policies, instruments, and institutional tools
- IMF 2014 DLP
  - Establishes framework for setting conditionality to address debt vulnerabilities in IMF-supported programs; current framework adopted in 2014.
  - Public sector debt conditionality normally included when significant debt vulnerabilities are identified by LIC DSF or MAC DSA, or where fiscal statistics quality and coverage favor public debt conditionality.
  - Limits on non-concessional borrowing for PRGT-supported programs are longstanding; 2014 reforms allowed present-value limits on external borrowing in countries at moderate-risk of debt distress under certain debt management competency conditions; programs for countries at low risk need not include limits on accumulation of external debt.
- WB Sustainable Development Finance Policy (SDFP)
  - Introduced on July 1, 2020; rests on two pillars: (i) Debt Sustainability Enhancement Program; and (ii) Program of Creditor Outreach.
  - Debt ceilings primarily take the form of nominal limits on non-concessional external PPG debt; ensures policy continuity and consistency with IMF’s DLP.
- DRF (World Bank’s Debt Reduction Facility)
  - Established in 1989 to help IDA-only member countries with strong reform programs and high public sector debt reduce external commercial debt as part of comprehensive debt resolution programs.
  - WB seeking Board approval for an extension of the DRF mandate in the second quarter of FY2021 and an expansion in scope of DRF-supported activities, including legal advisory services related to public and publicly guaranteed borrowing from external commercial creditors not linked to debt reduction operations.

### Progress, reviews, and policy updates
- DLP Review (considered by Board in October 2020) identified needs to:
  - Enhance debt data disclosure to the IMF and contribute to debt transparency through a table on the profile of debt holders.
  - Better adapt policy to country-specific circumstances for countries transitioning from concessional financing to international financial markets.
  - Broaden deployment of PV limits to more concessional-financing-reliant countries at moderate risk of debt distress.
  - Provide greater clarity on exceptions to non-concessional borrowing (NCB) limits for concessional-financing-reliant countries at high risk of debt distress.
  - Clarify definition and measurement of concessional debt.
- SDFP implementation
  - Performance and policy actions (PPAs) for each country being established for FY21.
  - Analytical framework informed by DSAs and tools such as public expenditure reviews (PERs), DeMPAs and coordinated portfolio investment assessments (CPIAs).
  - PPAs to address: (i) improving coverage and timeliness of debt reporting; (ii) enhancing fiscal sustainability (e.g., revenue mobilization, public expenditure efficiency, public investment management); (iii) strengthening debt management.
- IMF work on debtor–creditor engagement and arrears policies
  - IMF has policy on lending into arrears (LIA) for private holders of sovereign debt to incentivize debtor-creditor engagement.
  - IMF reviewed lending into official arrears (LIOA) policy in 2015; IMF will review both arrears policies in the first half of 2021.
- International financial architecture work
  - IMF monitoring uptake of enhanced CACs in international sovereign bonds.
  - IMF staff completed a paper for the G20 on gaps in architecture for resolution of private sovereign debt identifying reform options.
  - Staff studies on state-contingent debt features (2017 paper identifying natural disaster and commodity price volatility clauses) and a 2020 staff discussion note further examining these instruments.

### Near-term actions and timelines
- IMF DLP
  - Complete operational guidance note in Q1 2021.
  - Introduce new framework during Q1–Q2 2021; outreach to borrowers and lenders planned.
- WB SDFP
  - Annual screening of all IDA-eligible countries to identify which require PPAs completed in May 2020.
  - Preparation of PPAs well under way, with all PPAs planned to be finalized around end-October 2020.
- IMF LIA/LIOA Review
  - Aim to complete review of arrears policies by Q3 2021.
- IMF work on international architecture
  - Staff preparing a paper on the resolution of domestic public debt in Q1 2021; following up on reform options identified in G20 paper.
- WB DRF
  - As part of DRF mandate extension, staff will propose adaptations to DRF scope and modernize implementation arrangements to meet current IDA-only member country needs.
- Guidance and tool rollouts
  - New MAC DSA guidance and template following Board endorsement (Q2/Q3 2021), roll-out Q3/Q4 2021, implementation support during 2022.
  - Supplementary guidance to support implementation of LIC DSF where necessary.

### Summary of achievements and remaining work
- Achievements since late 2018
  - Progress with debt transparency in several countries; initiatives to tackle debt transparency gaps specified and underway.
  - CD activities scaled up and re-oriented toward reducing public sector debt vulnerabilities, aided by additional donor support.
  - Creditor outreach greatly expanded, particularly in relation to the G20.
  - Revision of DSA frameworks nearing completion.
  - Full redesign of IFI responsible borrowing and lending policies nearing completion.
- Further adaptations required due to the pandemic and rising debt risks
  - Enhance borrower debt transparency by scaling up CD and diagnostic tools, collecting more comprehensive debt data in WB’s DRS, implementing October 2020 DLP amendments requiring a table on the profile of debt holders in staff reports for IMF-supported programs, upgrading debt reporting requirements in the upcoming Review of Data Provision to the Fund for Surveillance Purposes, strengthening guidance on when and how to seek debt data in IMF-supported programs, and including debt reporting PPAs in WB SDFP.
  - CD modalities adapted to reduced travel; future CD to focus more on crisis prevention areas including debt recording and reporting, managing near-term refinancing risks for international financing, and liquidity management.
  - Use debt analysis tools for timely assessment of emerging debt problems; prepare guidance for new MAC DSA following Board endorsement and supplementary guidance for LIC DSF implementation.
  - IMF to review lending into arrears policies and follow up on reform options in international architecture paper for the G20.
  - IMF and WB creditor support to focus on coordinating G20 official creditors (e.g., DSSI and common framework), highlighting gaps in private debt resolution architecture, and outreach to non-Paris Club creditors.

### Monitoring and next steps
- Staffs have set out several progress indicators (Appendix IV) including quantitative indicators for progress with debt transparency and CD, and key milestones for toolkit and policy work.
- As milestones are completed, quantitative indicators will become available to measure uptake of MAC DSA, DLP, SDFP, and their new features.
- These indicators are amenable to annual monitoring and can be used to assess need for course corrections.
- Staffs propose a short update prepared in about 12 months for the IMF and WB Executive Boards, laying out progress with the MPA and any adjustments being made.

*Source: ppea2020066 - 35. Looking ahead, given the debt landscape and rising debt risks, it is a high priority to ensure the toolkit is up to date and functioning effectively.*

### Appendix I. Progress Overview for FY2020

### Appendix I. Progress Overview for FY2020

### Improve Debt Analysis/Early Warning
- Implement the revised LIC DSF.
  - Revised framework applied to more than 90 percent of LIC DSA countries.
- Review the IMF MAC DSA.
  - In progress.
- Develop/Implement new tools.
  - IMF DIG and DIGNAR. MFMOD integration with the LIC DSF in progress.
- Update WB fiscal sustainability analysis.
  - Framework for guarantee assessment completed.
- Enhance the WB early warning framework.
  - DVA piloted and implemented as of FY2021.
- Expand IMF debt surveillance toolkit.
  - Fiscal space, Public sector balance sheet assessments.
- Integrate debt more systematically in WB monitoring and operations.
  - Debt related prior actions and monitoring were enhanced.
- Strengthen macro-fiscal dialogue with authorities.
  - In progress.
- Develop platform for voluntary sharing of LIC DSA templates.
  - In progress.

### Enhance Debt Transparency
- Data dissemination and standards
  - During FY20, 16 countries implemented the e-GDDS and one country subscribed to the SDDS. In addition, six countries advanced from SDDS to SDDS plus.
  - During FY19-FY21, 28 CD missions were delivered, of which 20 were public sector debt statistics and 8 external debt statistics.
- Expand WB Debtor Reporting System.
  - Domestic debt reporting survey launched. Pilot to start in November 2020.
- Strengthen access to debt data and tools
  - Enhance public information on LIC DSAs. WB portal created.
  - Expand LIC DSA debt coverage. Debt coverage enhanced in 11 countries.
  - Facilitate access to MAC DSA information. In progress.
  - Encourage MTDS publication. MTDS publication increased between end-2018 and August 2020.
  - Expand access to the WB fiscal risk toolkit. Revised WB web portal created in FY2020.
  - Expand public sector balance sheet database. In progress. Database launched. Data for existing countries are being revised and new country analysis are being added.
  - Prepare a joint IMF/WB note on debt definitions and reporting requirements. Completed in FY2020.
- Creditor Outreach
  - Deliver training to non-PC and expand scope of MDB meeting and workshops. Completed in FY2020. In progress for FY2021.
  - Regular newsletter on debt policy issues. In progress.
  - Support the G20 IFAWG, and the self-assessment to sustainable financing principles. Completed in FY2020, In progress for FY2021.
  - Deliver note on G20 Sustainable Financing Guidelines self-assessment tool. Completed a self-assessment tool for the implementation of the Guidelines published in FY2020.
  - Expand the MDB meetings. MDB meetings enhanced to include additional plurilateral creditors.
  - Support private sector initiatives. Support provided to the IIF Sustainable Financing WG and IIFs DSSI engagements.
  - Capacity Development. CD on debt transparency and reporting for borrowing countries and creditors scaled-up effectively, including through DMF III.
  - Integrate debt transparency considerations in WB operations. Transparency prior actions increasingly included and led to several outcomes, e.g., Cabo Verde and Ethiopia.

### Strengthen Debt Management Capacity
- Scale up the DMF
  - Completed.
- Expand WB debt management diagnostic toolkit.
  - First round of DeMPA review completed in FY2020. Revised framework to be completed by end-2020.
  - Guarantees work published.
- Develop online MTDS module.
  - Completed in FY2020, to be implemented in Q1 FY2021.
- Strengthen capacity to manage fiscal risks.
  - In progress. Fiscal risk CD as a key work stream under IMF’s fiscal risk work program, DMF III and WB policies (IDA19 and SDFP).
  - Fiscal Risk Toolkit is being expanded (revised P-FRAM and new SOE forecasting and stress test tool published). CD missions ongoing.
- Extend the WB DRF.
  - In progress, completion in Q1 FY2021.
- Explore innovative debt instruments.
  - Integrated into the G20 sustainable financing principles.

### Review of Debt Policies
- Review IDA NCBP, IMF DLP, and LIA/LIOA.
  - SDFP operational as of July 1, 2020.
  - IMF DLP Review completed in October 2020. Operationalization of approved reforms proposed for March 2021.
  - LIA/LIOA review in the first half of 2021.

### Summary of Implementation Progress (Figure AI.1)
- Visual summary presented as number of undertakings under each pillar with status Completed / In Progress across:
  - Review of Debt Policies
  - Improve Debt Analysis/Early Warning
  - Strengthen Debt Management Capacity
  - Enhance Debt Transparency

### Appendix II. Tools for Contingent Liability Analysis
- Overview
  - IMF and WB updating and integrating fiscal risk toolkits to assess exposure to contingent liabilities and build capacity for management, mitigation, and reporting.
- IMF Fiscal Stress Test and WB SFSA
  - IMF Fiscal Stress Test examines impact of macroeconomic shocks and contingent liability realizations on fiscal flows, assets, and debt and other liabilities; assesses implications for fiscal solvency, liquidity, and financing burden.
  - IMF developing a COVID-19 module to analyze alternative health policy and containment strategies.
  - Tool utilized in CD missions to Angola, Egypt, Malawi, Mozambique, Zambia, and Zimbabwe.
  - IMF conducting public sector balance sheet assessments in Ethiopia, Georgia, Indonesia, Malawi, Zimbabwe.
  - WB SFSA incorporates uncertainty (e.g., climate-change shocks) into debt sustainability analysis in a probabilistic and endogenous framework; mostly utilized by WB staff for lending operations and analytical studies.
- WB guarantee management guidance and tools
  - Guidance note on sound guarantee management framework and analytical tool for quantifying credit risk from guarantees to public corporations, subnational governments, and other beneficiaries.
  - Tool piloted in Kosovo, Maldives, Mozambique, Uganda since 2017; to be deployed more broadly via workshops and technical assistance.
  - WB finalizing a Credit Rating Tool to assess and quantify credit risk from public entities; approach used in Dominican Republic, Ghana, Indonesia, Mauritania, Mozambique, Morocco, North Macedonia, Samoa, South Africa, Tunisia.
  - Workshop and learning notes “Assessing and managing credit risk from contingent liabilities, with a focus on government guarantees” published in 2018.
- SOE and related tools
  - IMF SOE Health Check piloted in Tajikistan, Kazakhstan, Malawi, Odisha State (India), Ethiopia, Serbia, Zimbabwe.
  - IMF SOE Cash Flow Forecasting and Stress Test Tools monitor portfolios of non-financial SOEs and inform mitigating actions.
  - IMF SOEs fiscal statistics compilation tool piloted in Kosovo, Cote d’Ivoire; used for virtual training for English and French speaking Sub-Saharan African countries.
  - WB Integrated State-Owned Enterprises Framework (iSOEF) applied in Angola, Croatia, Honduras, Kyrgyz Republic, Niger, Sri Lanka, Togo.
- Loan and guarantee assessment tools
  - IMF developing tools to analyze fiscal costs and risks of one-off and standardized guarantee schemes; piloted for SME loan guarantees (Credit Guarantee Schemes) in Albania, North Macedonia and Serbia.
- PPP Fiscal Risk Assessment Model (PFRAM 2.0)
  - Joint IMF-WB tool to assess macro-fiscal implications of PPP projects, identify and quantify fiscal risks, and evaluate mitigation measures.
  - Updated in 2019 to analyze portfolios of PPP projects; user guide published.

### Appendix III. Recent IMF and WB Debt Management Activities (November 2018ꟷAugust 2020)
- DeMPA engagements (examples)
  - Countries listed under DeMPA: Cameroon, Georgia, Guyana, Lao PDR, Lesotho, Malawi, Mali, Maldives, Moldova, Mongolia, Papua New Guinea, Solomon Islands, Zambia, Zimbabwe.
  - Subnational DeMPA: India (Himachal Pradesh), Nigeria (Kaduna Province), Nigeria (Ogun Province).
- Reform Plans
  - Benin, Bosnia & Herzegovina, Comoros, Equatorial Guinea, Kenya, Kosovo, Kyrgyz Rep, Lao PDR, Maldives, Nepal, Tajikistan, Vietnam, Zambia.
- Debt Management Institutions engagements
  - Azerbaijan, Chad, Dominican Republic, El Salvador, Equatorial Guinea, Ghana, Honduras, Kenya, Niger, North Macedonia, Pakistan, Senegal, Serbia, South Africa, Sri Lanka, Ukraine.
- Debt Management Strategy and Implementation
  - Albania, Angola, Argentina, Bahrain, Bangladesh, Benin, Bosnia & Herzegovina, Burkina Faso, Cameroon, CAR, Chad, Congo Republic, DRC, Dominican Republic, Ecuador, Ethiopia, El Salvador, Egypt, Gabon, Ghana, Guinea, Guinea-Bissau, India, Ivory Coast, Indonesia, Lao PDR, Malawi, Mauritania, Mongolia, Montenegro, Nepal, Nigeria, North Macedonia, Peru, Sao Tome & Principe, Saudi Arabia, Senegal, Sierra Leone, Sri Lanka, Togo, St. Lucia, SVG, Uzbekistan, Vietnam, Zambia, Zimbabwe.
- Cash Management engagements
  - Afghanistan, Albania, Bangladesh, Bhutan, Bolivia, Bosnia & Herzegovina, Burkina Faso, Dominican Republic, DRC, Djibouti, Ecuador, Ethiopia, Gabon, Gambia, Ghana, Haiti, Indonesia, Kenya, Lesotho, Liberia, Mali, Montenegro, Nauru, Niger, Nigeria, Samoa, Sierra Leone, Sudan, Somalia, Tanzania, Tunisia, Togo, Sri Lanka, Uganda, Vietnam.
- Domestic and International Markets
  - Albania, Armenia, Azerbaijan, Bangladesh, BEAC, China, Colombia, Curacao, DRC, Ecuador, ECCB, Egypt, Ethiopia, Georgia, Ghana, Honduras, Jamaica, Mauritania, Malawi, Montenegro, North Macedonia, Peru, Serbia, Sierra Leone, Suriname, Ukraine, Zambia.
- Debt Recording, Reporting & Monitoring
  - Argentina, Burkina Faso, Costa Rica, Dominican Republic, DRC, ECCB, ECCU, Gambia, Ghana, Guinea, Honduras, Indonesia, Kenya, Liberia, Nicaragua, Niger, Nepal, Mali, Pakistan, Peru, Sierra Leone, South Africa, Tunisia, Togo, Zambia.
- Contingent Liabilities & Fiscal Risks
  - Afghanistan, Albania, Aruba, Barbados, Bosnia & Herzegovina, Brazil, Botswana, Colombia, Cabo Verde, Comoros, Costa Rica, Curacao, Egypt, El Salvador, Ethiopia, Fiji, Gambia, Gabon, Georgia, Ghana, Guatemala, Guinea-Bissau, Honduras, India, Iran, Kazakhstan, Kenya, Kosovo, Lithuania, Lebanon, Malawi, Montenegro, Morocco, Mozambique, Myanmar, Namibia, Niger, Nigeria, North Macedonia, Maldives, Moldova, Morocco, Panama, Peru, Philippines, Russia, Rwanda, Saudi Arabia, Senegal, Serbia, Sierra Leone, South Africa, Sudan, Tajikistan, Ukraine, United Arab Emirates, Uzbekistan, Vietnam, Zambia, Zimbabwe.

*Appendix I. Progress Overview for FY2020, ppea2020066*

### Appendix IV. Monitoring Indicators

### Appendix IV. Monitoring Indicators

### A. Enhancing Debt Transparency
- Objective: Enhance public debt transparency through (i) publishing timely, consistent, detailed and comprehensive public debt reports; (ii) improving timeliness, consistency and comprehensiveness of existing debt recording and monitoring; and (iii) providing guidance on technical aspects, including statistical and accounting standards, around public debt.
- Context: Indicators structured by the four pillars of the MPA; indicators will be adapted as relevant. Indicators under pillars I, III, and IV are mainly supply driven; indicators under pillar II are largely demand-driven.
- Monitoring Indicators
  - Outcome 1.1: Enhanced debt data reporting by borrowers
    - MI 1.1.1: Improve public debt data coverage in joint IMF/WB LIC DSAs, under (i) the baseline scenario; and (ii) the contingent liability stress test scenario. These will be measured by the changes in debt coverage and assumptions on contingent liabilities that are required to be reported in LIC DSAs.
    - MI 1.1.2: Improve public debt reporting in IDA/PRGT-eligible countries measured through the World Bank debt transparency heatmap for IDA countries across two dimensions: (i) publication of quarterly and/or annual public debt reports; (ii) sectorial and/or instrument - terms and conditions - coverage.
  - Outcome 1.2: Strengthened IFI policies, debt databases, and reporting standards
    - MI 1.2.1: Enhance (i) the application of international public sector debt definitions, concepts in debt compilation, and publication of adequate metadata in the quarterly external debt statistics (QEDS) and public sector debt statistics (PSDS) (measured by the number of debt instruments reported by countries in their QEDS and PSDS, and the availability of published metadata); and (ii) apply IMF’s FTC requiring that comprehensive, relevant, timely and reliable data on the government’s financial position be disseminated, measured by the number of countries publishing high frequency (at least quarterly) data on public assets and liabilities covering at least general government.
    - MI 1.2.2: Refine and expand IMF and World Bank debt databases and reporting through:
      - (i) increasing the number of countries in the PSBS database and enhancing content;
      - (ii) further enhancing PSDS by broadening the coverage of state own enterprises, measured by the number of countries reporting public corporations debt in the quarterly PSDS database; and
      - (iii) further enhancing the World Bank Debtor Reporting System by piloting domestic debt data collection and subsequently developing an action plan to initiate comprehensive domestic debt data collection and to specify granularity of such data.

### B. Strengthen Capacity for Sustainable Borrowing and Lending
- Objective: Continue scaling up support to assist countries in addressing mounting debt vulnerabilities. Delivery of assistance and training will be adapted to a virtual format where possible to ensure continuity despite the pandemic.
- Monitoring Indicators
  - Outcome 2.1: Sustainable borrowing practices in borrowing countries
    - MI 2.1.1: Improve debt institutional frameworks:
      - Public disclosure: finalize the DeMPA revision in FY2021 and roll out the new DeMPA framework; track improvements in public disclosure of DeMPA results as measured by the number of published DeMPAs.
      - Quality increase: report improvements in debt institutional frameworks (legal framework and organizational set-up) following delivery of capacity development by IMF or WB, as measured by respective DeMPA indicators and under Reform Plans, including completion of Results-Based Management (RBM) milestones set out in the relevant CD work.
    - MI 2.1.2: Improve debt management strategy and policy:
      - Basic debt management strategy: publication of medium-term debt management strategies covering the current fiscal/calendar year. Data collected through the World Bank’s debt transparency heatmap.
      - Advanced debt management strategy: publication of an annual borrowing plan in the last 12 months, or a report on debt strategy implementation being captured by a publicly available document. Data collected by the Debt Management Facility.
      - Cash management and its coordination with debt management: report improvements in this area following delivery of capacity development by IMF or WB, as measured by relevant respective DeMPA and PEFA indicators.
      - Domestic sovereign debt market development: Report improvements in this area following delivery of capacity development by IMF or WB, including completion of milestones in the RBM framework for CD.
    - MI 2.1.3: Improvements in disclosure and management of fiscal risks;
      - Publication of fiscal risk statements, or disclosure of fiscal risks, preparation of fiscal risk registries measured by the number of publications.
      - Improvements in institutional frameworks for fiscal risks (legal framework and organizational set-up) following CD by the IMF and/or the WB. Report improvements in this area following delivery of capacity development by IMF or WB, measured by completion of milestones in the RBM framework for CD.
    - MI 2.1.4: Number of trainings delivered under D4D, DeMPA, DSM, LIC DSA, MAC DSA, and MTDS.
  - Outcome 2.2: Sustainable lending practices in lending countries
    - MI 2.2.1: Number of outreach activities, including training of official bilateral lending agencies and multi- and plurilateral development banks in the use of the LIC DSF and sustainable lending practices.
    - M1 2.2.2. Number of inquiries of the Lending-to -LICs mailbox.

### C. Analytical Tools
- Objective: Ensure the analytical toolkit is up to date, functions well, and addresses evolving needs, including (i) helping to inform the implementation of IMF and WB policies; (ii) constituting a broad public good to be used by official creditors and civil society organizations; (iii) guaranteeing that the publicly available debt analysis tools are designed to be directly used by country authorities in their debt management work.
- Monitoring Indicators
  - Outcome 3.1: Improve Debt and Fiscal Sustainability Assessments
    - MI 3.1.1: Complete the review of the MAC DSA by end-2020 and start rolling out the revised framework starting FY2022. Launch a dedicated new MAC DSA website in FY2021.
  - Outcome 3.2: Support Macro-Fiscal Debt Analysis
    - MI 3.2.1: Apply the IMF DIG and DIGNAR models through: (i) increased uptake by country teams; and (ii) launch of an online module.
    - MI 3.2.2: Apply the IMF fiscal space framework through quarterly update of heatmaps that summarize visually the updated fiscal space assessments.
    - MI 3.2.3: Apply the World Bank MFMOD through semi-annual updates to monitor key macroeconomic developments in low- and middle-income countries.
    - MI 3.2.4: Apply the IMF’s PSBS and fiscal risk toolkit (SOE Health Check Tool, SOE cash flow forecasting and stress test tool, and a new COVID-19 module to our Fiscal Stress Test) to support countries in expanding their better analysis, monitoring and manage of macro-fiscal debt situation. This will be measured using the RBM framework for CD and the number of times the PSBS and fiscal risk toolkit is applied.
    - MI 3.2.5: Continue to enhance the World Bank fiscal risk toolkit and support countries in publishing fiscal risk assessments through: (i) rolling out the guarantee management framework; and (ii) revising the fiscal risk assessment based on the fiscal risk matrix.

### D. Debt Policies
- Objective: Reviews of debt policies are conducted by the IMF and WB staff on a regular basis and are subject to discussion and approval by the respective Boards.
- Monitoring Indicators
  - Outcome 4.1: Review the IMF Debt Limits Policy
    - MI 4.1.1: Begin to implement the IMF DLP approved in October 2020 (Q2 2021). Improving debt transparency with reporting/publication of the creditor composition of public debt as evidenced by staff report documentation.
  - Outcome 4.2: Implement the World Bank SDFP
    - MI 4.2.1: Implement the World Bank SDFP through: (i) rolling out the Debt Sustainability Enhancement program by timely defining performance and policy actions (PPAs), and (ii) implementing the outreach program through the Program of Creditor Outreach and publishing updated information on activities developed on the IDA debt website.

*Update on the Joint IMF-WB Multipronged Approach to Address Debt Vulnerabilities — Appendix IV. Monitoring Indicators*

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_Source: https://www.imf.org/-/media/files/publications/pp/2020/english/ppea2020066.pdf_