Medium-Term Debt Management Strategy: Analytical Tool Manual
Technical Notes and Manuals, May 15, 2019
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- Medium-Term Debt Management Strategy: Analytical Tool Manual
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Bibliographic details
- Authors: Emre Balibek, Tobias Haque, Diego Rivetti, Miriam Tamene
- Published: May 15, 2019
- Series: Technical Notes and Manuals
- DOI: https://doi.org/10.5089/9781498314961.005
Summary / Purpose
- Provides guidance on using the Analytical Tool (AT) of the Medium-Term Debt Management Strategy (MTDS).
- The MTDS framework consists of:
- a methodology published as the “Guidance Note for Developing a Medium-Term Debt Management Strategy”, and
- an associated analytical tool (AT) to assess cost-risk trade-offs of alternative strategies to help identify the preferred strategy.
- The MTDS framework supported by the AT quantitative analysis helps to determine the financing strategy.
- The chosen debt management strategy sets out the financing composition path to meet the debt management objective(s).
- The profile of future interest payments and the amortizations of new debt are driven by the debt management strategy.
Analytical Tool (AT): Features and Assumptions
- The MTDS AT is based on annual cash flow.
- Annual cash-flow aggregation is generally sufficient for analyzing alternative debt management strategies.
- The manual notes limitations where higher-frequency cash flows would be helpful:
- Particularly relevant for countries heavily dependent on short-term securities with maturities of less than a year.
- In such cases, working with cash flows with higher frequency than annual is recommended.
Key Uses and Intended Users
- Assess cost-risk trade-offs across alternative debt management strategies.
- Identify a preferred debt management strategy that aligns with stated debt management objectives.
- Determine financing strategy and the resulting interest payment and amortization profiles driven by the chosen strategy.
- Targeted to debt managers and public financial management practitioners involved in medium-term debt planning.
Subject Coverage and Keywords
- Subjects: Currencies, Exchange rates, External debt, Financial institutions, Foreign exchange, Government cash forecasting, Interest payments, Money, Public financial management (PFM), Securities
- Keywords include: base currency, baseline interest rate, Currencies, debt management, Debt Management Strategy, debt manager, debt portfolio, Debt Portfolio Cost and Risk Analysis, environment debt securities, Exchange rates, Government cash forecasting, interest payment, Interest payments, medium-term debt management strategy, MTDS, portfolio data, Securities, TNM, tool manual
Practical Implications and Recommendations (as stated)
- Use the MTDS AT to quantify cost-risk trade-offs to inform the selection of a financing strategy.
- When countries rely substantially on short-term securities (maturities < 1 year), consider operationalizing the AT with higher-frequency cash flows to capture short-term rollover and interest-payment dynamics more accurately.
- The debt management strategy selected should explicitly set the financing composition path to meet the debt management objective(s), recognizing that this path determines future interest payments and amortization schedules.
Source: Medium-Term Debt Management Strategy: Analytical Tool Manual — https://www.imf.org/en/publications/tnm/issues/2019/05/14/medium-term-debt-management-strategy-analytical-tool-manual-46897
Content in this bundle
- Medium Term Debt Management Strategy: Analytical Tool Manual; May 15, 2019