Description:
The magnitude of the public liabilities
incurred as a result of the unprecedented government action
in the wake of the financial crisis of 2008-2009, and the
consequences of exiting from the projected high debt
scenario, have become a major source of concern about a
future sovereign debt crisis. As Low-Income Countries (LICs)
face unique challenges in debt management (DeM) due to their
more limited financing sources and higher capacity
constraints, their ability to successfully manage their
public debt burdens effectively through a crisis of this
magnitude is far from assured. Therefore, the challenges of
the last two years will require a re-evaluation of existing
DeM strategies in LICs, focusing on the identification of
institutional weaknesses and the assessment and mitigation
of potential risk. It is in this context that this paper
examines the application of two global public goods in LICs:
the Debt Management Performance Assessment (DeMPA) and the
Medium-Term Debt Management Strategy (MTDS) tools. The
results of the application of these tools from 2007-2009
provide valuable information to policymakers and other
stakeholders on the development of sound public DeM
practices and analytical capacity, with the goal of
strengthening the public balance sheet and reducing
vulnerability to financial crises.