Tanzania Receives MEFMI Technical Assistance in Designing a Medium Term Debt Management Strategy

Tanzania is one of the few countries in the MEFMI region with legislation that requires the Ministry of Finance to prepare a medium term debt management strategy annually. A debt strategy is a key element of sound practice in public debt management because it helps governments to execute debt management operations in a professional manner and thus facilitate attainment of debt management objectives of mobilizing financing at minimal cost and acceptable degree of risk. Lack of a comprehensive debt management strategy can lead to expensive mistakes, including failure to raise the desired amount of resources to fund government operations as well as higher funding costs.

Pursuant to the Government Loans, Guarantees and Grant Act (2003), the Ministry of Finance in Tanzania invited MEFMI Secretariat to assist in the design of a debt management strategy to guide debt management operations in the period 2016-2020. In response, a MEFMI mission visited Tanzania from 7 to 18 December 2015. The workshop to design a debt management strategy took place at the Ministry of Finance Board Room in Dodoma, Tanzania.

The objectives of the mission were to:

• Assist the Ministry of Finance in Tanzania to prepare Medium Term Debt Management Strategy (MTDS); and

• Impart knowledge and skills on the use of the IMF/World Bank MTDS Analytical Tool to formulate a debt management strategy.

Participants in the workshop were drawn from the relevant departments in the Ministry of Finance, including the Debt Management Department, Accountant General’s Department, as well as from the Bank of Tanzania. The workshop targeted junior, middle to senior officials responsible for debt management and macroeconomic forecasting and analysis. A total of 24 participants attended the workshop, of which 7 were female, representing 29% of the total. 

The workshop was facilitated by Mr. Stanislas Nkhata, MEFMI Programme Manager in the Debt management Programme. The participants were trained on how to develop a debt management strategy using the excel-based MTDS Analytical Tool.

The workshop covered the following areas:

o Introduction to the IMF/World Bank MTDS;

o Debt data preparation and manipulation using excel;

o Setting objectives and scope of debt management;

o Assessment of the existing public debt portfolio, including the costs and risk characteristics;

o Assessment of the potential sources of funding;

o Determining the baseline macroeconomic projections;

o Assessment of the main structural factors that may have a bearing on the chosen borrowing strategy; and

o A plenary discussion on the Government future borrowing plans.

The main output of the workshop was a draft debt management strategy that was prepared by participants. In addition, participants gained knowledge and practical skills for designing and analyzing alternative debt management strategies using the MTDS Analytical Tool. It is envisaged that these skills would enable them to update Tanzania’s debt management strategy going forward.