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Views expressed in this document are strictly those of the authors and not those of
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Governance of Public Debt - International Experiences and Best Practices
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United Nations Institute for Training and Research (UNITAR)
Best Practices Series No. 10
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Contents
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Page
1. Introduction ………………………………………………………….. 5
2. Risk Management Framework for Public Debt …………………. 5
3. Institutional and legal set-up for public debt management …… 8
4. Governance: Legal Framework and Accountability…………….. 16
5. World Bank Survey on Debt Management Practices …………… 17
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Governance of Public Debt - International Experiences and Best Practices
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United Nations Institute for Training and Research (UNITAR)
Best Practices Series No. 10
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Introductory Note
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These Best Practices have been contributed by Dr. Tarun Das, Economic
Adviser, Ministry of Finance (India) and UNITAR Resource Person. UNITAR
thanks him for his contribution and commitment to our training
programmes as well as research activities.
Marcel A. Boisard
Assistant Secretary-General of the United Nations
Executive Director of UNITAR
Geneva, January 2006
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Governance of Public Debt - International Experiences and Best Practices
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United Nations Institute for Training and Research (UNITAR)
Best Practices Series No. 10
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1. Introduction
P
ublic debt management practices by leading debt offices bears
many valuable lessons for countries in the process of strengthening
their debt management capacity. As in other spheres, there is no
unique answer as to what constitute sound debt management practices at
all the times and at all countries. Selective discretion should be used while
ameliorating debt management practices based on international
experiences. More importantly, the country specific requirements should
be carefully analyzed so that the international best practices could be
grafted effectively. A country should own its system and develop it over
the years.
This report expresses personal views of the author and should not be attributed to the views
of the Ministry of Finance, Government of India or the UNITAR. The author would like to
express his gratitude to the UNITAR for providing an opportunity to prepare this report and
the Ministry of Finance, Government of India for granting necessary permission for that.
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Governance of Public Debt - International Experiences and Best Practices
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United Nations Institute for Training and Research (UNITAR)
Best Practices Series No. 10
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Governance of Public Debt - International Experiences and Best Practices
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Best Practices Series No. 10
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Governance of Public Debt - International Experiences and Best Practices
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The first four categories refer to a full-fledged debt office and could be
differentiated by the location and the degree of autonomy accorded to the
debt office. Table-2, which lists the institutional setting for public debt
offices in different countries, shows that the bulk of the debt offices are
located as a separate agency under the Ministry of Finance with sufficient
degree of operational independence (i.e. second category).
Advanced
Economies
Australia
Austria
Belgium
Canada
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Japan
Netherlands
New Zealand
Portugal
Spain
Sweden
Switzerland
United Kingdom
United States
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Emerging
Economies
Argentina1
Brazil 1
China1
Colombia
Hungary
India
Korea 1
Mexico
South Africa
Thailand1
Turkey
1: Establishment of sovereign debt management offices is currently underway in these
countries.
*: In many countries, although debt offices are under the Ministry of Finance or Treasury,
the debt office is set up as an autonomous entity with sufficient operational independence.
Source: “Sound Practices in Sovereign Debt Management”, FPS Department, The World
Bank, March 2000; OECD as mentioned in “Risk Management of Sovereign Assets and
Liabilities”, Working Paper, WP/97/166, IMF, December 1997 and national authorities.
Finance to review and assess the performance of the entity more easily.
This issue of geographical proximity is particularly important when a full-
fledged centralised debt office is being set up and management
competencies are unproven.
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Best Practices Series No. 10
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Few debt offices (e.g., Australia, Austria, Ireland, Portugal and Sweden)
have also been set up as an autonomous debt agency or corporation
outside the Ministry of Finance giving it a distinct institutional presence.
This was established with legislation (e.g. Ireland and Portugal) or without
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United Nations Institute for Training and Research (UNITAR)
Best Practices Series No. 10
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The degree of autonomy in such debt offices, vary from country to country
(Table-5). Although the debt offices are autonomous in nature, most of
them either report to the Minister of Finance or to the Parliament. Thus,
while the formulation of debt policy like level of the debt, limits on
domestic and foreign-currency borrowing is a political decision and
therefore should rest with the government, the actual management of
sovereign debt can be extracted from the political domain by assigning
such responsibility to an autonomous institution. Under this arrangement,
the Ministry of Finance, based on its objectives, risk preferences and
macroeconomic and institutional constraints of the country, defines the
medium-term strategy for debt management; while the debt office
implements that strategy and administers the issuance of domestic and
foreign currency debt.
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Governance of Public Debt - International Experiences and Best Practices
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Best Practices Series No. 10
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Autonomous
Agency
Australia Highly independent
Austria Highly independent
Ireland Independent in some broad guidelines drawn by the
MOF
Sweden Independent except for foreign exchange
Central Bank
Denmark Borrowing program is approved by the MOF
Source: OECD as mentioned in “Risk Management of Sovereign Assets and Liabilities”,
Working Paper, WP/97/166, IMF, December 1997.
for domestic debt management. Table-2 shows the split nature of debt
management responsibilities for some emerging market economies till
recently. Among the emerging market economies, some countries like
Colombia, Hungary, Mexico and South Africa have already established a
full-fledged debt office under the Ministry of Finance. Further more, some
countries like Argentina, Brazil, China and Thailand have started initiatives
to set up a debt office under the Ministry of Finance. To establish a public
debt office, the starting point for all these countries has been to strengthen
the capacity building of the debt office by establishing a middle office.
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Best Practices Series No. 10
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It is the final authority to approve all public debt- both domestic and
external.
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United Nations Institute for Training and Research (UNITAR)
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not send any reply. Therefore, the analysis is only indicative and may not
be true for the universe.
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Selected References
Das, Tarun (1999a) East Asian Economic Crisis and Lessons for External
Debt Management, pp.77-95, in External Debt Management, ed. by A.
Vasudevan, April 1999, RBI, Mumbai, India.
_______ With Raj Kumar, Anil Bisen and M. R. Nair (2002) Contingent
Liability Management- A Study on India, pp.1-84, Commonwealth
Secretariat, London
_______ And the World Bank (2003) Guidelines for Public Debt
Management: Accompanying Document and Selected Case Studies, 2003,
Washington D.C.
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United Nations Institute for Training and Research (UNITAR)
Best Practices Series No. 10
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• Dr. Das was the Country Co-coordinator for the IMF Government Finance
Statistics (GFS) and the Special Data Dissemination Standards (SDDS),
Country Coordinator for the World Bank's Global Development Finance
GDF), in charge of the Commonwealth Secretariat Debt Recording and
Management System for India and the World Bank IDF Project on Public
Debt Management. Dr. Das is empanelled as an Expert for the Government
Finance Statistics (GFS) for the Technical Assistance Assignment under IMF
(see Annex).
• Since 1989, Dr. Das has been working as Economic Adviser in the Ministry
of Finance, Government of India. He also worked as Adviser in the
Planning Commission (1987-1988), Chief Economist, Ministry of Steel and
Mines (1984-1986), and the Chief (Economic Division) in the Bureau of
Industrial Costs and Prices (1982-1984).
• Dr. Das was a part of High Level government delegations to the World
Bank, IMF, ADB, WTO, UNCTAD, ESCAP and UN Commission for
Sustainable Development (UN-CSD).
• Dr. Das has worked as Consultant to the World Bank (Washington), Asian
Development Bank (Manila), Economic Commission for Africa (Addis
Ababa), ESCAP (United Nations, Bangkok), UNDP (New York), and
International Labour Office (Geneva).
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UNITAR
UNITAR is an autonomous body within the United Nations which was established in 1965 to
enhance the effectiveness of the UN through appropriate training and research. UNITAR’s
programmes in the legal aspects of debt, financial management and negotiation are
among a wide range of training activities in the field of social and economic development
and international affairs carried out, generally, at the request of governments, multilateral
organizations, and development cooperation agencies. UNITAR also carries out results-
oriented research, in particular research on and for training, and develops pedagogical
materials including distance learning training packages.
UNITAR’s Training and Capacity Building Programmes in the Legal Aspects of Debt,
Financial Management and Negotiation are conducted for the benefit of over 35
partner countries mainly from sub-Saharan Africa and Vietnam. These programmes aim at
meeting the priority training needs of senior and middle-level government officials
through a wide range of seminars, workshops, and training of trainers workshops. In
parallel to training activities, the programme also assists in strengthening local capacities
of governmental and academic institutions through distance learning training packages,
up-to-date publications as well as networking activities.
A description of UNITAR’s latest activities and training programmes in the area of debt
and financial management is available on its website at : www.unitar.org/dfm.