Debt Management Performance Assessment DeMPA...
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Debt Management Performance Assessment DeMPA upgrade and implications June 4, 2015 Debt Management Facility Annual Forum Manila, Philippines The World Bank
Transcript of Debt Management Performance Assessment DeMPA...
Debt Management
Performance Assessment
DeMPA
upgrade and implications
June 4, 2015
Debt Management Facility
Annual Forum
Manila, Philippines
The World Bank
Debt Management Performance Assessment (DeMPA)
1. Revised DeMPA Methodology
2. Links with lifecycle of a loan
3. Implementation and implications
What is the Debt Management Performance
Assessment (DeMPA)?
DeMPA is a methodology for assessing public debt management
performance through a comprehensive set of performance indicators
spanning the full range of government debt management functions.
It reflects sound practice in public debt management.
It is grounded in the Public Expenditure and Financial Accountability
(PEFA) methodology and offers a more detailed drill down” on debt
management
It is applied in developing countries : LICs, MICs
Covers all Central Government DeM and connected activities
DeMPA
Objective
• Assess public debt management performance capacity
• Monitor performance overtime
• Enable design of reform program
• Fosters donor harmonization based on common understanding of priorities
Methodology coverage
• 14 Debt Performance Indicators (DPI)
• 33 Dimensions
• Covers five core DeM functions
• Complemented by a Guide – provides background material, rationale, indicative questions
Implementation
• Assessment missions
• Performance Report
• No conditionality
• Report is released at the authorities’ discretion
• Demand-driven
What is the Debt Management Performance Assessment
(DeMPA)?
Scoring methodology (adapted from PEFA)
Quantifiable letter scores (A to D), where
Minimum requirement = Score C
Important for effective debt management
Absence of minimum requirement = Score D
Signals an area of priority attention
Sound practice = Score A (B intermediate for more granularity)
Not rated – if process/system does not exist (e.g., derivatives)
Meeting all criteria for the minimum requirements is important for effective DeM
No aggregation across indicators and no weights assigned to scores
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Features of DeMPA
DeMPA Indicators Standardized metric – help to measure DeM
performance
Highlights strengths and weaknesses
Indicators are outcome-based not input-based (except HR)
Based on “sound practice”
Neutral regarding institutional arrangements for DeM in country
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Debt Management Performance Assessment (DeMPA) 2015
Structure of DeMPA: 2015 vs 2009
DeMPA 2009 DeMPA 2015
Governance and Strategy Development Governance and Strategy Development
DPI-1 Legal Framework (1dimension) DPI-1 Legal Framework (1 dimension)
DPI-2 Managerial Structure (2 dimensions) DPI-2 Managerial Structure (2 dimensions)
DPI-3 Debt Management Strategy (2 dimensions) DPI-3 Debt Management Strategy (2 dimensions)
DPI-4 Evaluation of Debt Management Operations (1
dimension)
DPI-4 Reporting and Evaluation (2 dimensions)
DPI-5 Audit (2 dimensions) DPI-5 Audit (2 dimensions)
Coordination with Macroeconomic Policies Coordination with Macroeconomic Policies
DPI-6 Coordination with Fiscal Policy (2 dimensions) DPI-6 Coordination with Fiscal Policy (2 dimensions)
DPI-7 Coordination with Monetary Policy (3
dimensions)
DPI-7 Coordination with Monetary Policy (3
dimensions)
Borrowing and Related Financing Activities Borrowing and Related Financing Activities
DPI-8 Domestic Market Borrowing (2 dimensions) DPI-8 Domestic Borrowing (2 dimensions)
DPI-9 External Borrowing (3 dimensions) DPI-9 External Borrowing (3 dimensions)
DPI-10 Loan Guarantees, On-Lending, and
Derivatives (3 dimensions)
DPI-10 Loan Guarantees, On-lending and Derivatives
(3 dimensions)
Structure of DeMPA
DeMPA 2009 DeMPA 2015
Cash Flow Forecasting and Cash Balance
Management
Cash Flow Forecasting and Cash Balance
Management
DPI-11 Cash Flow Forecasting and Cash Balance
Management (2 dimensions)
DPI-11 Cash Flow Forecasting and Cash Balance
Management (2 dimensions)
Operational Risk Management Debt Recording and Operational Risk
Management
DPI-12 Debt Administration and Data Security (4
dimensions)
DPI-12 Debt Administration and Data Security (4
dimensions)
DPI13 Segregation of Duties, Staff Capacity, and
Business Continuity (3 dimensions)
DPI-13 Segregation of Duties, Staff Capacity, and
Business Continuity (3 dimensions)
DPI14 Debt Records (2 dimensions)
Debt Recording and Reporting
DPI-14 Debt Records (2 dimensions)
DPI-15 Debt Reporting (3 dimensions) discontinued
Potential impact to score C – 30 % of all dimensions
DPI Description Upgrade/down
grade
Likeliness
DPI2-1 Managerial structure for borrowing Downgrade* ★★
DPI3-1 Quality of DeM strategy Downgrade ★★★
DPI4-2 Quality and timeliness of debt statistics
bulletin
Upgrade** ★★★
DPI5-1 Frequency of external audit Update ★★★★★
DPI5-2 Commitment to address audit results ★★★★★
DPI6-2 Debt sustainability analysis Upgrade ★★★
DPI8-1 Market-based domestic borrowing Downgrade ★★★
DPI11-1 Frequency of cash balance forecast Upgrade ★★★
DPI11-2 Cash balance management Downgrade ★★
DPI13-
1
Segregation of duties Upgrade ★★★★
DPI14-
2
Complete government security records Downgrade? ★★
* This means if score C is met under the current tool, the revision may give rise to downgrade.
** This means if score C is not met under the current tool, the revision may give rise to upgrade
to C.
DeMPA Indicators Link with Lifecycle of a Loan
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Evaluates all processes of government debt management:
Planning Contracting Servicing Reporting
Planning
Contracting
Servicing
Reporting
Middle Office
Back Office Front Office
Back Office
Borrowing and Related Financing Activities (DPI 8, 9, and 10)
Co-ordination with Macroeconomic Policies
(DPI 6 and 7)
Cashflow Forecasting and Cash Balance Management
(DPI 11)
Operational Risk Management
(DPI 12 and 13)
Governance, Accountability and
Reporting (DPI 1, 2, 4, and 5)
Debt Records (DPI 14)
Strategy Development (DPI 3)
DeMPA: Implementation Process
Assessment – Country-team led initiative
– Evaluation of existing and available evidence
– Regional training providers participate in missions
– In-country assessments, based on both qualitative and quantitative data
– Meetings with stakeholders, including on the ground donors, TA providers
Performance Report: – Evaluates debt management performance based on indicators
(around 20-30 pages)
– Assessment developed and finalized with country authorities
– Highlights strengths and areas for improving performance in debt management
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Implementation and Implications
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DeMPA Missions
Examples of published reports: Armenia,
Ethiopia, Madagascar, Central African Republic, Nigeria, Mali, Sao Tome and Principe, Comoros, Kazakhstan, Mauritania, Burkina Faso, Djibouti, Papua New Guinea, Togo, Gambia, Guinea, Sierra Leone, Maldives, Solomon Islands
Preliminary Results
91 DeMPAs (first and second) conducted
between 2007-14:
72 different countries over
7 regions
18 countries had benefited
from a second DeMPA
The Gambia benefited from
three DeMPAs
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52
9 10 8
10
2
0
10
20
30
40
50
60
AFR EAP LAC SAR ECA MNA
Breakdown of DeMPAs by geographical region
Country Coverage
The 72 countries exhibit different economic
characteristics:
17
30 31
8
2
0
5
10
15
20
25
30
35
Low income Lower middleincome
Upper middleincome
High income
Breakdown of DeMPAs by Income Level
0
10
20
30
40
50
Float Non-float
XR REGIME
0
5
10
15
20
25
30
35
40
Non HIPC HIPC Post-CP Interim Pre-DP
HIPC STATUS
Overall Scores
Based on the latest DeMPAs:
More than 50% of the scores are rated D;
Regional comparison: results are relatively homogeneous and D remains the
dominant score in majority of regions.
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Breakdown of Scores (using the results of the
latest DeMPAs performed)
Breakdown of Scores by Geographical Region (using the results of the latest
DeMPAs performed)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
AFR EAP LAC SAR ECA MNA Total
N/R
D
C
B
A9% 6%
19%
54%
12%
0%
10%
20%
30%
40%
50%
60%
A B C D N/R
Performance-tracking reveals remaining challenges
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Breakdown of scores C and higher by Debt Management categories (using the results of the latest DeMPA performed)
54% 60%
23%
44%
11%
62% 62%
45%
34%
19% 25% 22%
16%
44%
22%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
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