DMS Newsletter_September2010

8/7/2019 DMS Newsletter_September2010

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September 2010

Inside:

EMERGING MARKET DEBTNEWS

3

SUPPORTING MTDS INGHANA

4

CS-SAS INSTALLEDINTHESOUTH PACIFIC

6-7

MEETING REPORTINGSTANDARDS

8

HOT TOPICS 10

PLANNED ACTIVITIES 12

The Debt Management Section (DMS) is an arm of the Special Advisory Services Division

Our key objective

is to promote

prudent debt

management

practices in member

countries. We do so

by providing

advisory support in

developing sound

debt management

policies, strategies

and operations in

line with best

practice, backed up

by state-of-the-art

software

C o m m o n w e a l t h S e c r e t a r i a t

Debt Management Section

NEWSLETTER

I

n 1985, Sri Lanka became the first

country to install and use the

Commonwealth Secretariats Debt

Recording and Management System(CS-DRMS). The software was developed

after a bout of economic instability resulted

in numerous countries in Latin America and

Africa defaulting on their debt repayments.

CS-DRMS has now been installed in 60

countries but, at its 25th anniversary, the

world finds itself in the midst of a similar

period of economic uncertainty.

The nature of this crisis is different and the

debt problems are mostly in the more

advanced countries. Many of the

Commonwealths poorest countries have

fared reasonably well, benefitting not only

from strong growth but also improved debt

and macroeconomic management that the

Secretariat has supported through its Special

Advisory Services Division, which provides

substantial technical assistance and capacity

building in debt management in addition to

providing CS-DRMS.

Working Where it is Needed Most

In Papua New Guinea - a Commonwealth

small state - a combination of prudent fiscal

and monetary policies supported by high

global prices for mineral commodity exports

has underpinned the country's recent

macroeconomic stability. The country has

been using the CS-DRMS software since1987 to record and manage its debt.

Gibson Gotaha of Papua New Guineas

Department of Treasury said that the

implementation of CS-DRMS enabled the

country to keep an up to date and concise

database on its borrowing.

He added that the introduction of the

software has made it easier to monitor the

debt service payments of the multi-island

state and avoid penalty fees. It is also being

used to assist in the formulation of a medium

-term debt strategy and in formulating its

borrowing policy.

Kenya also started using the software in

1987 and is now able to accurately record all

its debt. According to Felister Kivisi of the

Debt Management Department, the 1980s

crisis was a wakeup call for her government

to manage its debts more efficiently.

It was difficult, given that before CS-DRMS

only basic recording was done without any

analytical reports being produced. The

system was cumbersome and not all

agreements were recorded, but we now

know the extent of our indebtedness, she

said.

Assisting Francophone Countries

In 1990, the Commonwealth Fund for

Technical Cooperation partnered with the

Canadian International Development

Research Centre to extend CS-DRMS to

French speaking countries. As a result, the

software was translated into French and

deployed in Benin, Mali and Cameroon and isnow used in eight countries.

(Continued on page 2)

CS-DRMS: 25 Years of Helping CountriesManage Debt

Over 25 years since it was first developed, the Secretariats debt recording system

continues to aid countries


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D e b t M a n a g e m e n t S e c t i o n

Newsletter

Bruno Iboklene, the Director

of Cameroons Debt

Operation Department,

commented that, the

permanent and fruitful

cooperation between the

Commonwealth Secretariat

and the Autonomous Sinking

Fund of Cameroon [theadministrative body in

charge of public debt

management] has made CS-

DRMS the reference software

in the Central African sub-

region. Today, with the use

of CS-DRMS, Cameroon is

carrying out its debt policy

more efficiently.

He added that CS-DRMS has

assisted in determining

Cameroons financing needsand its future payment

obligations, while at the

same time contributing to

the emergence of the

countrys national and sub-

regional capital markets.

Reaching Beyond theCommonwealth

Non-Commonwealth

countries can acquire CS-

DRMS for a modest price

through the official

distributor to non-

Commonwealth countries,

Crown Agents (UK). They

have extended the use of CS

-DRMS across Europe, Asia,

Africa and Latin America. It

has been cited as a key

component in helping

countries such as

Afghanistan and Liberia

receive debt relief and in

improving debt managementin emerging countries such

(Continued from page 1)

as Suriname and Bhutan.

Kosovo is one of the most

recent countries to have

acquired the software. As

the dust settled in its war-

torn capital in 1999, thecountry was left in a fragile

state and near economic

ruin. Struggling to finance

its debt repayments, Kosovo

was required by the World

Bank and the IMF to create a

professional debt

management unit to record

and manage the countrys

mounting debt. CS-DRMS

was introduced to allow the

debt unit to be more

effective in its duties.

Arbnor Hasani of the Debt

Management Division said,

We can clearly see the

benefits of generating future

transactions and calculating

total debt service.

He added that the software

has enabled the Government

to analyse its debt portfolio

and support its domestic

debt market.

ContinuousDevelopment

A recent independent

evaluation of the

Secretariats debt

management programme

showed that it is highly

regarded by member

countries, where it has

improved debt management.

According to the findings, CS-DRMS is an invaluable tool

and it has greatly increased

efficiency where it is in

operation.

However, the evaluation also

stressed the need for

continuous development to

ensure that it remains a

relevant tool for user

countries in the future.

Given that the currentgeneration of CS-DRMS was

released in 2001, the

Secretariat is planning to re-

engineer it to incorporate

functional improvements and

capitalise on the advantages

offered by the latest

technologies. This will help

enhance the effectiveness of

the software, maintain its

competitive edge and extend

its useful life, said Sanjay

Lollbeharree, Head of IT

within the Debt Management

Section.

Arindam Roy, who heads the

Debt Management Section,

reaffirmed the Secretariats

commitment to continually

improving the software.

Next year, the software

suite will be expanded to

include a new product, the


Public Debt Analytical Tool

(CS-PDAT). This tool will

help countries to formulateand implement medium-

term debt management

strategies and reposition the

Secretariats software at the

centre of borrowing

decisions.

The process for

re-engineering the system

has commenced and will

continue with substantial

user engagement throughout

2010 and 2011.

In 2009, Liberia becamethe 60th country to use CS-

DRMS, and subsequently

received debt relief

CS-DRMS, the brainchild

of the Debt ManagementSection at the

Secretariat, is available in

both English and French

and has been used in 60

countries to date,

including 15 countries

and territories outside

the Commonwealth.

Coincidentally, Liberia

became the 60th country

to adopt the software in

2009, the year in which

the Commonwealth

celebrated its 60th

anniversary.

Gibson Gotaha from PapuaNew Guinea, which has

used CS-DRMS since 1987


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Newsletter

July saw close to

record debt issuance

by emerging

countries. According

to ING Bank,

issuance in July

reached $35bn,

marginally less than

the record high in

April ($40bn)

Uncertainty in the

euro zone is likely to

continue investors

interest in emerging

Following large concerns about the fiscal sustainability of a number of European countries earlier this year, market sentiment

improved in the quarter that ended in September 2010. However, sovereign bond yields in major markets fell as weaker than

expected USA macroeconomic data casted doubt on the sustainability of global economic recovery.

The publication of stress test results for European banks boosted market confidence, which was reflected in strong

performance of stock markets across the globe (see chart 1). In general, the market sentiment towards the credit risk of

emerging countries remained relatively stable (see chart 2). By contrast, the fall in credit default swaps for European

sovereigns following the publication of banks results was offset by fresh concerns about the fiscal status of some European

countries and their banking sectors.

Debt Management News

News from the Commonwealth

Cyprus Responsibilities for public debt management were transferred from the Central Bank of Cyprus to the

Ministry of Finance on 1 August 2010.

India The government is to establish a debt management office to manage its domestic debt in 2 years time. At

the moment this function is carried out by the Reserve Bank of India (RBI).

The government focused on deepening the debt market and lengthening the maturity of its portfolio in line

with its policy of issuing up to 30 years to develop and create liquidity at the long-end of the yield curve.

Nigeria Approved bond issuance of 88bn Naira ($585m) to finance current budge, while the Central Bank of Nigeria

is to float US$1.4bn to assist the automobile industry.

The debt market in Nigeria continues to deepen, with the government accounting for 95% share of the

market. The government issues bonds on a monthly basis to lengthen the maturity of its debt profile.

Pakistan The government is seeking some kind of debt relief on its foreign debt repayments to give it respite over

the financial challenges it faces following the worst flood in its history.

Sri-Lanka Bond issuance of US$1bn with 10 year maturity saw strong demand ($6.33bn), which was priced at 6.25%

(only 100bps above Australia's 10 year bond).

Other Emerging Countries

Brazil Public debt falls as repayments exceed new issuances.

China Yields on bonds fell for much of July but began to rise on news of new stress test on banks,

Other News

Part 2 of the Handbook on Securities Statistics was published in September by the Bank for International Settlements, IMF

and European Central Bank. This covers the holdings of debt securities and follows on from part 1, published in 2009.

The World Bank reported a surge in demand for its expertise in mitigating currency and interest rate risk in fiscal year

2010. Its Treasury arranged US$11.8 billion in hedging transactions on behalf of clients, including interest rate and cur-

rency hedges.

In September, debt managers agreed the Stockholm Principles for effective debt management at an IMF consultation co -

hosted by the Swedish National Debt Office. These encompass the framework and operations for debt management, the

importance of sound market communication strategies and the need for cautious portfolio risk management.


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Newsletter

line with the structural

benchmark under the IMF

Extended Credit Facility.

The team worked with the

authorities to analyse the

cost and risk implications of

a range of debt strategies.

These strategies were

assessed under a set of

agreed assumptions on the

macroeconomic environment

and a set of market risk

scenarios. Further

sensitivity analysis of the

preferred strategy was

carried out based on a morepessimistic macroeconomic

outlook to assess its

robustness.

In addition to the core set of

cost and risk indicators, the

size of borrowing by

instrument under each

strategy was also reviewed

to assess the feasibility of

At the request of the

Minister for Finance of

Ghana, the Commonwealth

Secretariat and the WestAfrican Institute for Financial

and Economic Management

(WAIFEM) accompanied a

joint IMF-World Bank team

to provide technical

assistance on the IMF-World

Banks Medium-Term Debt

Strategy (MTDS) toolkit in

August. There were 24

participants from the

Ministry and the Central

Bank.

As one of the MTDS pilot

countries, Ghana has been

using the tool since 2008

and this mission provided

further assistance. Miriam

Tamene, an economist with

DMS, participated in the

mission, with the objective

of helping the authorities to

develop a formal MTDS in

implementation and the

potential consequences for

the development of the

domestic debt market.

Towards the end of the

mission the team spent a

day training participants,

taking smaller groups

through the tool in detail.

The model was run from the

very beginning and each

step was explained before

spending a considerable

amount of time on

interpreting the results.

By the end of the mission,

the authorities had gained a

deeper understanding of the

tool. The baseline

macroeconomic

assumptions, proposed

budget figures and GDP data

will be revised before the

MTDS is presented to the

Ministers and published.

Supporting the MTDS Process in Ghana

Using CS-DRMS for On-Lending in Kenya

view to it using the on-

lending module in CS-DRMS.

Following the assessment, it

was agreed that the on-

lending module would meet

DGIPEs needs and a mission

from the Secretariat visited

DGIPE again in September.

The objective of this mission

was to work with DGIPE totransfer its existing database

into the on-lending module

and upgrade its system with

the latest service pack.

A number of changes were

made to the database to

ensure that DGIPE was able

to start using the module as

soon as possible. In

addition, a link was

established to the external

debt database to allowDGIPE to associate on-

In April 2010, the


carried out a needs

assessment of the

Department of Government

Investment and Public

Enterprises (DGIPE) of the

Ministry of Finance in Kenya.

At the time, DGIPE was

considering procuring a

system to manage its

lending and on-lending

operations so the

assessment focused on

understanding the lending

operations of DGIPE with a

lending agreements with

their parent loans. Finally, a

number of user-defined

fields were added to allow

DGIPE to customise the

loans for reporting purposes.

By the end of the mission,

the Investment Secretary

(DGIPE), Ms Esther Koimett,

reiterated their commitmentand support to CS-DRMS.

The findings from this work

have since been integrated

into the development of

Service Pack 2, which will

include a number of specific

on-lending reports. The

findings from the analysis of

lending operations and

business processes have

been recorded to inform the

further enhancement of the

CS-DRMS on-lending

module.

The Ministry of Financein Ghana

Whilst the Kenyan finance

ministry hasresponsibility for

managing the

Governments debts usingCS-DRMS, DGIPE is now

using CS-DRMS to recordand manage its own loans


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Newsletter

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increased from over 6% of

GDP to more than 14% and,

with deficits expected to

persist in the medium-term,the government has

recognised the need for

better informed borrowing

decisions and clearer

responsibilities and lines of

accountability.

To support this process, the

government requested

assistance from the

Commonwealth Secretariat.

In September 2010, John-

Paul Fanning and MiriamTamene (economists in

DMS) were accompanied by

Mike Williams (consultant) to

advise on how the existing

governance and operational

structures for debt

management could be better

aligned to internationally

agreed good practice. In

particular, the team focused

on how the dispersed

functions across the finance

Prudent macroeconomic

management has enabled

Botswana to reap the

benefits of its rich resource

base and minimise its need

to borrow. Driven by well-

managed diamond revenue,

the economy has grown at

8.7% per year on average

since independence and

budget surpluses have been

routinely saved.

The global economic crisis

hit the economy hard, with

diamond revenue falling by

20% and GDP contracting by

3.7% in 2009. Borrowing

ministry and central bank

could be brought together to

enhance information flows

and provide the context fordeveloping a strategy to

guide future borrowing.

The team also advised on

how the finance ministry

could take a greater role in

determining the size and

composition of domestic

issuance to meet future

shortfalls whilst supporting

market development

objectives. Finally, the team

provided recommendationson how the debt

management function could

coordinate with other parts

of the ministry and support

better cash management.

The Commonwealth

Secretariat will continue to

work with the Government

to identify further areas for

support, once it has

considered and agreed the

team's recommendations.

Review of the Institutional Arrangements for Debt Management in Botswana

Statistics from the ECCB,

Mrs Juletta Jeffers.

The course was presented by

Nick Cusk, a Systems

Development Officer from

the Commonwealth

Secretariat, accompanied by

Elliot Williams from St Kitts

and Craig David from the

Ministry of Finance, Nevis.

It built on similar courses

delivered in the UK and

provided a practical

understanding of a number

of administrative and

support tasks including

installing and upgrading the

system and customising

reports using the in-built

Report Writer.

The Deputy Governor of the

In collaboration with the

Commonwealth Secretariat,

the Eastern Caribbean

Central Bank (ECCB) ran an

eight-day training course on

IT Administration for CS-

DRMS in Basseterre, St Kitts

and Nevis, in August.

The course was attended

primarily by officials from

government IT departments

from the members of the

Eastern Caribbean Currency

Union (ECCU) including

Anguilla, Antigua and

Barbuda, Dominica,

Grenada, Saint Lucia, St

Vincent and The Grenadines

and St Kitts and Nevis. The

strong representation from

the region was commended

by the Deputy Director of

IT Training Workshop for ECCU Countries

ECCB, Mr Trevor O B

Brathwaite, opened the

course and re-iterated the

importance of having an

efficient and well-maintained

debt management system:

Because of the high level of

debt in the region, it has

become a hot topic...Hence,

the debt system has become

an important system in the

government financials.

The DMS team alsoprovided refresher

training to staff on debt

and cash management

The IT workshop was

hosted at the ECCB

headquarters in StKitts


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Over the last

decade, many

Commonwealth

countries have

been meeting their

budgetary financing needs

by borrowing an increasing

amount from their domestic

financial markets. This has

been compounded more

recently by a fall in the

availability of international

credit, since the onset of the

global economic crisis. In

many cases, borrowing more

domestically is also being

done with a view to optimise

foreign currency exposureand also to develop the

domestic debt markets.

CS-SAS was developed by

the Commonwealth

Secretariat to assist

countries in the process of

issuing and managing the

auction of Treasury bills and

bonds. It allows debt offices

including central banks, or

other entities with

responsibility for auctioning

government securities, to

manage the end-to-end

auctioning process for the

issuance of securities in the

primary market.

It assists in allocating

securities to various bidders

at a market clearing price

based on the auction

procedures of the issuing

country. The system also

allows debt offices to record

securities issued through the

auctioning route and

comprehensively analyse all

types of bids, whether

competitive or non-

competitive.

End-to-End Auctioning

Samoa and the Solomon

Islands are the first

countries to use CS-SAS,

which is based on a workflow

system to help countries

handle end-to-end auction

processing: from

notification, through bid

processing to electronic

generation of allotment

letters for successful

bidders. Its rich analytical

Samoa and Solomon Islands Using CS-SAS

In September, two countries in the South Pacific started using the Commonwealth Secretariat-

Securities Auction System (CS-SAS) to help them manage the auction of Treasury bills and bonds.

Samoa and Solomon

Islands are the first

countries to fully use

CS-SAS

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Newsletter

capabilities, along with a

user-friendly graphical

interface, allow users to

carry out quick and easy

analysis.

Mr Daniel Haridi, Chief

Manager at the Currency and

Banking Operations

Department in the Central

Bank of Solomon Islands,

said the new system has

proven to be of much benefit

to the country.

Prior to the installation of

CS-SAS, we used a local

system simply for capturing

the data and most of this

was done manually and

there was no analysis. Now

that we are using CS-SAS,

we are able to perform a lot

more functions because of

the amount of information

we are able to capture and

maintain. We now have a

comprehensive database and

it allows us to do more

analytical work, Mr Haridi

said.(Continued on page 7)


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He also noted that CS-SAS

has improved the efficiency

of the Central Banks

operations in terms of

managing the auctioning of

securities.

It certainly helps us to

reduce cost and it is very

effective. After a few weeks

of implementing we found

that we were able to

effectively analyse the

auctions. It really assists us

in making decision faster.

Ms Lea Collins, Assistant

(Continued from page 6)

Section, said that CS-SAS

significantly improves

operational efficiency for

countries involved in issuing

securities. He noted that thesystem is specifically

beneficial to small states,

many of which have not yet

invested in software to

computerise their auctioning

process.

StreamlinedImplementation

Like CS-DRMS, CS-SAS has

been designed for ease of

use. One weeks training is

typically sufficient to allow

debt managers to start using

the system. Although the

system is principally

designed to be compatible

with CS-DRMS, it can also be

used with other debt

management applications.

Online Bidding

The Secretariat is currently

developing a supplementary

product that would allowcentral banks to post

notifications of securities

issuance online and for

dealers to submit bids

electronically. This facility,

the Online Securities Bidding

System (OSBS), is the first

web-based software from

the Secretariat and can be

used as an alternative to

paper-based bidding. It will

be available in 2011.

CS-SAS and other

services offered by the

Commonwealth

Secretariat are provided

free of charge by the

Secretariat to

Commonwealth

countries. Other

countries can procure the

software through the

Crown Agents (UK) which

is the official distributor

of the Commonwealth

Secretariat debt

management software

outside the

Commonwealth.

Manager for Banking and

Corporate Services at the

Central Bank of Samoa

(CBS), said: The system, by

offering a range of reports

and analytic features, helps

the Central Bank to operate

more efficiently in the

auctioning of CBS securitiesand government bonds.

Ms Collins believes that

CS-SAS will help the Central

Bank to significantly reduce

the time spent on processing

these auctions. CS-SAS has

been especially useful in

performing its function as

the repository for

information on CBS

securities and government

bonds, by providing a singlesystem to record the

different auctions.

To a wider extent, the

capability of exporting data

from CS-SAS to CS-DRMS

will also enable the [CBS] to

provide domestic debtinformation to the Ministry of

Finance, Ms Collins said.

Accurate, Transparentand InformedManagement Decisions

Arindam Roy, Head of the

Debt Management Section at

the Commonwealth

Secretariat, commented that

the software is a useful

decision support tool to

countries. It has been

designed to help debt

managers make more

accurate, transparent and

informed management

decisions in processing bids

for issuance of government

securities. It not only

ensures the best price forthe government based on

the auctioning rules adopted,

but also ensures that such

securities are allocated in a

fair and transparent manner

which is crucial to instil

confidence among investors

and broaden the domestic

debt market as a source of

sustainable finance for

governments.

Sanjay Lollbeharree, Head ofIT in the Debt Management

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Newsletter

CS-SAS is designed to beuser-friendly and

training can take as little

as one week

The Central Bank of Samoa has found that CS-SAS has made itsoperations much more efficient


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As the global financial

system has evolved, the

scope of debt management

and reporting needs have

also changed. This has

prompted the

Commonwealth Secretariat,

along with other members of

the international Task Force

on Finance Statistics (TFFS),

to revise the guide forcompilers of debt statistics.

To ensure that compilers of

debt statistics are able to

use their debt management

system to comply with new

international statistical

reporting standards, MEFMI

organised a workshop in

Tanzania in July in

collaboration with the

Commonwealth Secretariat.

The workshop highlightedthe latest developments in

statistical reporting

standards in anticipation of

the forthcoming Public

Sector Debt Statistics

Guide for Compilers and

Users and was attended by

32 participants from 12

countries in east and

southern Africa.

Representatives from the

IMF and UNCTAD joined the

presenters.

Sanjay Lollbeharree, Head of

IT in DMS, showed how data

can be validated in

CS-DRMS. He also

demonstrated the new and

improved data export tools

for the MTDS, DSA/DSF,

QEDS, a new version of the

World Bank Debtor

Reporting System and the

Secretariats public debtbulletin template.

It was emphasised that

officials need to keep up-to-

date with the latest

developments and ensure

they possess the skills

needed to carry out their

jobs effectively. To this end,

the Secretariat informed

participants about its

eLearning programme that

has been developed, whilst

MEFMI is also planning

e-learning programmes.

Officials from the MEFMIregion were shown how to

make the most effective useof CS-DRMS to meet

reporting standards

Debt Reporting Workshop for East and Southern Africa

frameworks for debt

analysis, such as the

Medium-Term Debt Strategy

(MTDS) tool and the debtsustainability framework

(DSF).

As many countries are

carrying out more analysis

and developing periodic debt

bulletins, the workshop also

showed how CS-DRMS can

be used to generate relevant

reports and analysis.

In his opening remarks, the

Director of the DebtManagement Department in

the Kenyan finance ministry,

Mr John Murugu, reminded

participants that good

database management is

critical for enabling informed

decisions in economic and

financial management. He

urged the participants to

take advantage of the

The Kenya School of

Monetary Studies in Nairobi

was the venue for a

workshop in September ondebt reporting using CS-

DRMS. The workshop was

arranged by the

Macroeconomic and Financial

Management Institute for

East and Southern Africa

(MEFMI) and the


The workshop was attended

by 17 participants from

Malawi, Swaziland, Lesotho,

Kenya and Tanzania andfocused on the new features

in the latest version of CS-

DRMS. Refresher training on

important concepts in debt

management was given and,

based on this, hands-on

training was provided in

using the new data links in

CS-DRMS to meet reporting

standards as well as

workshop to fully understand

how they can make best use

of CS-DRMS to improve debt

recording in their respective

countries.

Raphael Otieno, MEFMIs

Director of Debt

Management, and Carilus

Odumbe, an economist in

DMS commended the

continued collaboration

between the Commonwealth

Secretariat and MEFMI,

especially in the area of

capacity building.

Meeting New Statistical Reporting Standards

Participants from fiveMEFMI countries

participated in the

regional workshop inNairobi


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Review of Public Debt Management in Mauritius

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Newsletter

The interaction between

CAA and other

stakeholders in debt

management CS-DRMS database

operations, management

and system maintenance

Capacity building,

particularly in analysis and

strategy formulation

Implementing new

modules for recording

other types of debt

One particular observation

was that the institutional

arrangements for

maintaining the database in

the CAA were sub-optimal.

The mission proposed that

CAA identifies a CS-DRMS

supervisor to oversee the

In August, the Debt

Management Section fielded

a mission to Cameroon to

review the status of the debtmanagement and CS-DRMS

project. The mission worked

closely with personnel of the

Autonomous Sinking Fund of

Cameroon (CAA) and met

with senior officials and

several key players involved

in the debt management

process.

The review discussed a

number of areas of potential

support, including:

The institutional and legal

arrangements for debt

management

maintenance of the database

and be able to carry out

some middle office functions,

such as developing a debtstrategy based on cost and

risk analysis. In essence,

the CS-DRMS supervisor

would support the decision

making process of CAA in

debt management issues.

A report has been submitted

to CAA that includes a

comprehensive list of

findings and

recommendations for

consideration andprioritisation. Thereafter, an

implementation plan will be

agreed upon between CAA

and the Commonwealth

Secretariat.

Review and Needs Assessment in Cameroon

The DMS review teampresented their findings to

senior management from

the CAA in Cameroon

The authorities in Mauritius

are facing two major

challenges related to public

debt management. Firstly,

due to the impact of global

economic crisis on its fisc, it

is struggling to contain the

stock of public sector debt

within the limits as

stipulated in its debt

management act. As per

legal obligation, its level of

borrowing must be within

60% of GDP in 2010 and

reduced to 50% by 2013.Secondly, the finance

ministry has been unable to

put in place a debt

management strategy for

2009-10 after initiating one

the previous year.

Against this background, the

Government invited the


to attend its annual business

plan (ABP) meeting in

September, along withvarious other multilateral

and bilateral organisations,

to discuss assistance on debt

management and other

economic areas.

The Secretariat mission also

consulted with the agencies

responsible for public debt

management to develop a

detailed plan of assistance in

coordination with other

institutions such as the

World Bank and African

Development Bank. As part

of this, the mission provided

comments on the terms of

reference for a public debt

expert to be provided by the

African Development Bank.

The focus of the mission was

on understanding the

existing arrangements for

public debt management,

the nature of assistance

required, and carrying out a

high-level gap analysis of

the policies and institutional

framework across the

finance ministry and central

bank. The mission also

stressed the need for a core

unit to be established within

the finance ministry to focus

on public debt analysis andmanagement.

At the end of the mission, it

was mutually agreed that

the Secretariat should

prioritise assistance in

interfacing the Auctioning

system (Book Entry System)

held at the Bank of Mauritius

with CS-DRMS to reduce

duplication and free up

resources for strategic issues

in debt management. In

addition, training will be

The review of debtmanagement

operations in Mauritius

identified a number ofareas of potential

collaboration with the

Commonwealth

provided in generating

reports for domestic

reporting and reporting to

the Quarterly External Debt

Statistics and Debtor

Reporting System. A more

detailed institutional and

policy review is planned for

early 2011 that would spell

out the key areas of

reforms required for

moving to strategic debt

management.


10/12

Page 10


Newsletter

Calculating Average Time to Maturity Using CS-DRMS Data

recording modules.

You could run the reports in

Management Tools through a

scenario with no

disbursements (NODI), but

the reports only cover 12

years so you would need to

run them several times,

shifting the start date

forwards until there are no

more principal payments.

A simpler way is to use the

MTDS export facility, which

was developed for the World

Banks Medium-Term Debt

Strategy tool and included in

Service Pack 1. This

provides a longer stream of

principal payments (50

years*) without future

disbursements.

To run the MTDS bridge, go

to Data Export and select

MTDS Data Export. Youcan choose data by calendar

or financial year for different

categories of borrowing

(government external loans,

guaranteed etc.).

The facility generates an

Excel file for each category

of borrowing. The output

contains a number of

columns, with principal

payments starting under the

first column that is headedby a year. You will see that

after 50 years, the years

start again - this data is

interest payments.

Note that all data are in

tranche currency. You will

need to convert the data into

local (or other) currency,

using the exchange rate data

in the spreadsheet.

Once you have done this,calculate the total principal

payments in each year. Do

this for all categories of debt

you wish to calculate ATM

CS-DRMS enables users toanalyse the cost and risk

characteristics within debt

portfolios, including through

analysing the portfolio under

different scenarios. But

there are some indicators

like average time to maturity

which CS-DRMS does not

generate automatically.

These risk indicators will be

made available shortly in the

next release of CS-DRMS in

mid-2011.

Here, we highlight how you

can calculate average time

to maturity (ATM) using

CS-DRMS.

What is ATM?

ATM is a measure of

refinancing risk since it

indicates how long, on

average, until loans mature.

The lower the ATM, the

for and add them together toget total principal payments.

Calculating ATM

Create a new Excel

spreadsheet with one row for

the year and a row below

that for the number of years

until maturity (t). Then

create another row for

principal payments (Pt) and

paste in your principal

payments data from the

MTDS output. Create

HOT TOPICS

Did you know?MacaulayDuration

CS-DRMS reports the

Macaulay Duration on

an instrument and

portfolio basis. It is

based on yield at issue

and can be found in

reports 750 and 751 in

the domestic debtmodule.

sooner debt will need to be

rolled-over or refinanced and

therefore the more the

portfolio is exposed to risk.

It is calculated using the

following formula:

Ptis principal repayments in

period t, and tis the lengthof time until the next

principal payment. Nom is

simply the nominal value of

outstanding principal.

Exporting Data for theCalculations

The formula indicates that

from CS-DRMS, you only

need aggregated annual

principal payments until all

principal has been repaid.

For ATM we also assume no

further disbursements, which

means that you cannot use

the reports in the main

We will show how to

calculate average time

to interest rate

re-fixing in the next

issue.

Contact us if you would

like support in carrying

out cost and risk

analysis.

another row and calculate the

total of all principal payments

(Nom).

To complete the calculation (see

also the Excel screenshots):

1.Multiply the principal payment

in each year by its associated

time until maturity to give you

Ptt. Then divide this by

Nom. Do this for each year.

2. Sum the calculations you

made in step 1 for each year

to calculate ATM.

Limitations

The MTDS export facility cannot

be used to calculate mid-year

ATM. You will have to use the

reports in Management Tools for

this.

Finally, CS-DRMS will only

report what is in the system. If

you have data outside of CS-

DRMS, be sure to add the

principal payments to yourspreadsheet before making the

final calculations.

1. Derive (Ptt)/Nom

2. Calculate ATM by summing

the answers to (Ptt)/Nom

* If there are loans that

mature in more than 50years, you will need to create

reports from the 51st yearuntil maturity using a NODI

scenario in Management

Tools


11/12


12/12

sustainability analysis using

the DSA-DSF framework,

The Gambia

CS-DRMS interface review,

The Gambia

CS-DRMS training, review of

database and interfacing in

Barbados

CS-DRMS training and Book

Entry System interface,

Mauritius

Discussion of use of CS-DRMS for recording public

sector debt, South Africa

December

Debt expert group meeting

on CS-DRMS re-

development, UK

Advisory mission on

reorganising the Debt Unit,

Jamaica

Developing a debt bulletin,

Dominica

October

Publication of, GovernmentDebt Management: A

Guidance Note on the Legal

Frameworkby Arindam Roy

and Mike Williams

Release of CS-DRMS Service

Pack 2

WAIFEM regional workshop

on debt bulletins, Sierra

LeoneWorld Bank sovereign debt

management forum, USA

Sub-national debt

management review, India

Review of the use of CS-

DRMS and CS-SAS, Nigeria

November

Strengthening middle office

capacity, Kenya

Installation of CS-SAS in

Central Bank of GuyanaTraining on debt

Planned Activities

Debt Management SectionSpecial Advisory ServicesDivisionCommonwealth SecretariatMarlborough HousePall Mall

LondonSW1Y 5HX

: +44 (0)20 7747 6430

: +44 (0)20 7747 6450

: www.csdrms.org

: [email protected]

C o m m o n w e a l t h S e c r e t a r i a t

Debt Management Section

CS-DRMS User Countries

In 2009, Liberia became the 60th country to acquire CS-DRMS to record, monitor and ana-

lyse its debt position since it was first deployed in Sri Lanka in 1985.

The DMS team is:

Arindam Roy (Head)

Systems Development

Sanjay Lollbeharree (Team Leader)

Mac Banda (Business Analyst)

Nick Cusk (Systems Development Officer)

Alain Fofeh (Systems Development Officer)

Vikas Pandey (Systems Development Officer)

Andrew Hargreaves (Programmer)

Dipti Mathur (Technical Writer)

Kieran Smart (Programmer)

Brian Taylor (Programmer)

Damodar Thejaswee (Tester)

Mohammed Zamir (Programmer)

ohn-Paul Fanning (Economist)

Walton Gilpin (Economist)

Carilus Odumbe (Economist)

Miriam Tamene (Economist)

n November, Sanjay Kumar (India) will be

oining the DMS team as an economist.

January

OECD global forum on publicdebt management, France

Interfacing domestic debt

data in CS-DRMS, Tanzania

Review of policies and

institutional framework,

Mauritius


data in CS-DRMS and project

review, Sri Lanka


data with CS-DRMS and use

of CS-SAS, MaldivesFebruary

Meeting of IMF Government

Finance Statistics Advisory

Committee, USA

March

Debt management

programme: stakeholders

and user group meeting, UK

DMS Newsletter_September2010

Documents

Transcript of DMS Newsletter_September2010