2014年-世界发展银行全球_Debt_Management_Reform_Plan___Madagascar_53页_1mb

Debt Management Reform Plan Summary for Madagascar

Core Content

The Debt Management Reform Plan (DeMPA) for Madagascar, developed in February 2014, outlines a strategic approach to improving the country's debt management practices. The plan is based on the findings of the 2013 World Bank Debt Management Performance Assessment and aims to enhance transparency, accountability, and the efficiency of government debt management in line with international standards.

Main Areas of Reform

The reform plan focuses on four key areas:

1. Improvement of the Legal Framework
2. Formulation of a Debt Management Strategy (DMS)
3. Improvement of Central Government Borrowing Policies
4. Operational Risk Management

1. Improvement of the Legal Framework

• Current Situation: The legal framework for debt management is fragmented and lacks clear provisions for issuing loan guarantees. The Ministry of Finance and Budget (MoFB) is responsible for assessing funding offers, and the Central Bank of Madagascar (CBM) is the main financial agent for the government.
• Main Weaknesses:
  • The legal framework for debt management is scattered among several laws and is incomplete.
  • No authority is provided for issuing loan guarantees.
• Proposed Actions:
  • Revise the draft debt management law to align with international sound practices.
  • Include clear definitions of debt and guarantees.
  • Specify borrowing purposes, such as financing budget deficits, refinancing existing debt, and supporting monetary policy.
  • Establish a legal basis for the Debt Management Committee and the Debt Management Strategy, ensuring that the process is aligned with government procedures.
  • Remove redundant provisions related to the CBM and external audit to avoid inconsistency with existing legislation.

2. Formulation of a Debt Management Strategy

• Main Weaknesses:
  • The existing debt portfolio lacks a risk assessment.
  • No formal debt management strategy has been developed.
• Proposed Actions:
  • Analyze the government debt portfolio and its associated risks.
  • Prepare and publish a medium-term debt management strategy document for 2015–2017.
  • Revise the strategy annually and ensure it is publicly available.
  • Include concrete guidelines for the strategy and update it based on the latest macroeconomic and market developments.

3. Improvement of Central Government Borrowing Policies

• Main Weaknesses:
  • Borrowing planning is weak.
  • Limited information on planned T-bill borrowing.
  • External loan analysis is limited to concessionality.
• Proposed Actions:
  • Identify potential external creditors and their financial terms.
  • Develop an aggregate annual cash plan on a monthly basis.
  • Prepare a quarterly auction calendar starting in 2014 and make it public.
  • Undertake a more comprehensive analysis of the terms and conditions of planned borrowing, including non-concessional aspects.

4. Operational Risk Management

• Main Weaknesses:
  • No integrated operational risk management framework.
  • Risks include incomplete segregation of duties, reliance on the DMFAS database, lack of MoUs with CBM, and absence of procedures manuals in the Public Debt Directorate (DDP).
• Proposed Actions:
  • In the short term, bring the DMFAS database into full operation and initiate a dialogue with the CBM to prepare a Memorandum of Understanding (MoU).
  • In the medium term, prepare procedures manuals within the DDP, appoint a risk champion, conduct a full risk identification and assessment process, and establish a regular risk monitoring process with mitigation priorities.

Key Information

• Debt Composition: As of December 2013, total public debt was 26.3% of GDP, with external debt at 17.7% and domestic debt at 6.5%.
• Currency Composition: The SDR (Special Drawing Rights) accounted for 51% of the debt portfolio, with a significant portion (37%) tied to US dollar fluctuations.
• Debt Service: In 2013, total government debt service was USD 896.18 million, representing 57.8% of total revenues, with domestic debt service being the largest share (54.5%).
• Debt Maturity: External debt had an average time to maturity of 17 years, while domestic debt had an average of 0.5 years.
• Refinancing Risk: Domestic debt posed a high refinancing risk due to the short maturity of T-bills.
• Interest Rate Risk: 99.9% of external debt was at fixed rates, while 24.7% of domestic debt was fixed rate, highlighting a significant interest rate risk for domestic borrowing.
• Exchange Rate Risk: The debt portfolio is highly exposed to exchange rate risks, particularly due to the large proportion of foreign currency-denominated debt.
• Debt Management Objectives: The plan includes objectives such as meeting the government's financial needs, minimizing debt costs, and keeping risks at acceptable levels. It also emphasizes the development of the domestic debt market.

Timeline and Implementation

• The reform plan is designed for a medium-term timeline, with specific activities to be undertaken in 2014 and 2015.
• Many activities can be implemented using existing capacities of the DDP without substantial external support.
• In areas like operational risk management, external consultants are recommended to support the establishment of risk identification and monitoring processes.
• The mission team is ready to provide input and feedback during the implementation phase and suggests a follow-up mission in 12 to 16 months to assess progress and provide further recommendations.

Conclusion

The DeMPA aims to improve Madagascar's debt management framework through legal reforms, strategy development, enhanced borrowing policies, and robust risk management. It emphasizes the importance of transparency, accountability, and alignment with international best practices to ensure sustainable debt management in the long term.