Trained Staff Vital For Effective Debt Management

The landscape for development financing has changed significantly over the last decade, with foreign grants and concessional loans to developing countries declining in the aftermath of the global financial and economic crisis. The domestic debt markets remain underdeveloped with limited instruments that are skewed towards the shorter end of the market. Yet, developing countries, including those in the MEFMI region, have large funding requirements to meet the infrastructure needs in order to achieve their development goals.

To meet the resource gaps, there has been a significant increase in the number of developing countries issuing sovereign bonds including, Zambia, Namibia, Rwanda and Kenya in the MEFMI region. While sovereign bonds can support economic growth and transformation, they carry considerable risks for borrowers, including currency risks, roll-over risks and greater macroeconomic volatility. For the debut issuers, there are hidden costs, including those related to legal and other consultancy expenses. Borrowers, therefore, need to factor these in their annual borrowing plans as well in the medium term financing strategies.

As part of its efforts to build debt management capacity, the Ministry of Economy and Finance in Mozambique conducted in-country workshops on Sovereign Bonds Issuance and Financial Negotiation Techniques and Skills with technical assistance from MEFMI from 15th to 23rd September 2016 in Maputo, Mozambique. Held back-to-back, the two workshops concluded the MEFMI Debt Management Programme’s capacity building support to Mozambique for 2016 following the training on Foundations of Debt Management and Debt Management Performance Assessment held in August 2016.

The workshops were officially opened by the by the Deputy Director of the National Treasury responsible for Public Debt Management in the Ministry of Economy and Finance in Mozambique, Mrs. Ester dos Santos José. In her remarks, Ms. José thanked MEFMI for accepting the Ministry’s request for technical assistance. She said that training aimed at enhancing the knowledge and skills of its national cadres to ensure efficient and effective debt management in line with international sound practices.

Speaking on behalf of MEFMI, the Director of the Debt Management Programme, Mr. Raphael Otieno, said that the Institute was pleased to be selected to deliver such a comprehensive capacity building, which indicated Mozambique’s confidence in MEFMI. He emphasized that the two trainings were relevant because they focused on the key issues facing debt managers in the region. 

The training covered the following areas: preconditions and strategic considerations for first time issuance; sovereign bonds issuance processes; post issuance activities; evolving financing sources for governments and challenges for negotiation; negotiation theory and practice; and loan negotiation strategies, tips and tactics.

The training targeted junior to middle level and senior officials in the Ministry of Economy and Finance, Bank of Mozambique and the Mozambique Stock Exchange. A total of 19 participants attended the training on Sovereign Bonds Issuance, of which 10 were female, representing 53 percent of the total. The training on Financial Negotiation Techniques and Skills was attended by 29 participants, of which 16 were female, representing 55 percent of the total.

The main outcome of the training was enhanced knowledge and skills of participants on sovereign bonds issuance and financial negotiation techniques. It is expected that participants would use this knowledge to obtain high quality new financing for the Government of Mozambique while minimizing the associated costs and risks.