## The Medium-Term Debt Management Strategy: An Assessment of Recent Capacity Building

## Source details

**Canonical URL:** [The Medium-Term Debt Management Strategy: An Assessment of Recent Capacity Building](https://www.imf.org/en/publications/policy-papers/issues/2017/07/28/pp072817-the-medium-term-debt-management-strategy)

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## Bibliographic details
- Published: July 28, 2017

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### Background
- This report to the Boards of the International Monetary Fund (IMF) and the World Bank (WB) is the third in a series regarding the evolution of the Medium-Term Debt Management Strategy (MTDS) framework and the associated capacity building efforts.
- In 2007 the two Boards endorsed the development of the MTDS and ancillary tools, and mandated a program of technical assistance to help countries build capacity in this area.
- Rationale: sound debt management is critical to macroeconomic stability and to the development and functioning of the financial sector.

### Capacity building delivery and evolution
- Delivery modes:
  - Country visits by staff and experts.
  - Regional training events.
  - Organization of forums.
- Evolving emphasis:
  - Greater tailoring to country circumstances and ownership.
  - Improved coordination within and across agencies in recipient countries.
  - Move from one-off missions toward sustained streams of support, which often produced better results.
- Complementary reforms and linkages:
  - Strengthening of institutions and governance arrangements.
  - Improvements in debt recording and government cash management.
  - Strengthened linkages with annual borrowing plans (ABP) and debt sustainability analysis (DSA), though more work is needed.
- Client focus:
  - Primary focus on middle- and lower-income countries.
  - Donor support recognized as generous.

### Outcomes, evidence, and metrics
- Documentation methods:
  - Qualitative and quantitative metrics.
  - Responses from national authorities to a questionnaire on MTDS technical assistance.
  - Case studies showing tailoring to country needs.
- Reported benefits:
  - Majority of recipient countries indicated technical assistance helped introduce a structured and coherent approach to designing a debt management strategy (DMS).
  - Assistance raised awareness of risks among senior officials and broader stakeholders.
  - Countries appreciated advice on institutional and governance reforms and on integrating debt management into macroeconomic policy formulation and implementation.
  - Many recipient countries are now better able to integrate debt management into overall economic policy and adapt DMS to changing country circumstances.
  - For some countries, risk exposure indicators have improved even as debt levels have increased.

### Technical challenges and future needs
- Changes in country circumstances:
  - Increasing market access (for example, issuance of Eurobonds or local currency bonds).
  - Potential realization of contingent claims.
- Implications for MTDS:
  - Need to consider additional risk factors.
  - Need for more diverse scenarios and market risk metrics.
  - Need for a wider range of strategies.
- Capacity spectrum:
  - Some countries will require more sophisticated techniques to analyze cost-risk trade-offs and to implement chosen strategies.
  - Others remain in the process of building a solid foundation for debt management.
- Delivery innovations:
  - In addition to hands-on trainings, greater use of on-line learning may enhance effectiveness and efficiency.
  - Building institutional capacity is a long-term endeavor that often requires a programmatic approach: diagnosis followed by an actionable reform plan supported by tailored technical assistance.

### Policy considerations and questions for the Boards
- The Boards are asked for their views on:
  - Priorities in a strategy for future development of capacity building in MTDS.
  - How best to ensure that improvements in debt management are sustained.
- Critical factors for sustained enhancement:
  - Country ownership, often reflected in commitments under IMF- or WB-supported programs.
  - Sustained client ownership and programmatic, sustained support rather than one-off interventions.

*The Medium-Term Debt Management Strategy: An Assessment of Recent Capacity Building, July 28, 2017.*

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## Content in this bundle

- **Policy Paper**
  - [Policy Paper (Markdown version)](/-/media/files/publications/pp/2017/pp072817-the-medium-term-debt-management-strategy.pdf.md){rel="alternate" type="text/markdown"}
  - [Policy Paper (PDF)](/-/media/files/publications/pp/2017/pp072817-the-medium-term-debt-management-strategy.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/policy-papers/issues/2017/07/28/pp072817-the-medium-term-debt-management-strategy_