Public debt has become a topical issue of discussion among policy makers, international financial institutions and analysts due to rising debt levels and the associated costs. Public debt has increased significantly across all regions over the past decade, with gross government debt in advanced economies increasing from 71 percent of GDP (US$29,543 billion) in 2007 to 104 percent of GDP (US$50,301 billion) in 2017. In Sub-Saharan Africa, public debt was estimated at 46 percent of GDP (US$703 billion) in 2017 from 25 percent of GDP (US$248 billion) in 2007 while in Latin America and the Caribbean countries, it increased from 46 percent of GDP (US$1,744 billion) in 2007 to 60 percent of GDP (US$3,323 billion) in 2017. This is happening about a decade after most developing countries, including those in the MEFMI region, received substantial external debt relief under the Heavily Indebted Poor Countries (HIPC) and Multilateral Debt Relief Initiatives (MDRI).

The structure of public debt has also changed considerably in low income countries, both in terms of the mix of external-domestic debt and the composition of foreign debt. There has been a rapid increase in the proportion of domestic debt compared to foreign debt as governments in the low income countries continue to look within to cope with the decline in foreign grants and concessional loans. For example, domestic debt in SSA nearly doubled from 14 percent of GDP in 2007 to 25 percent of GDP in 2016.

Given the rising public debt levels and the associated costs and risks, the World Bank and the European Commission jointly organized the Ninth Annual Stakeholders Forum of the Debt Management Facility (DMF) from 28 to 29 May 2018 at the Thon Hotel in Brussels, Belgium. Held under the theme of “Rising Tide of Debt: Risks, Resilience and Responsibility”, the main objective of the Forum was to provide a platform for participants to discuss contemporary debt management challenges faced by developing countries and proffer solutions to minimise the associated costs and risks. The Forum targeted policy-makers and government debt managers, international and regional technical assistance providers, representatives of civil society organizations, as well as bilateral donors and multilateral development banks.
Director of the MEFMI Debt Management Programme, Mr. Stanislas Nkhata, was among the 46 speakers who made presentations at the Forum.  Mr. Nkhata presented the achievements, challenges and lessons of implementing debt management activities funded by the World Bank’s Debt Management Facility in the MEFMI region in the period 2008 to April 2018.
Delegates expressed concern about the substantial increase in public debt over the past decade, noting that this could lead to unsustainable debt burden in developing countries going forward. In this regard, they reiterated the need for coordinated efforts by all stakeholders in order to ride the rising tide of public debt. The key messages of the Forum were:
• There is need to enhance the role of Parliaments in developing countries on the debt management processes, including building their capacity to scrutinise borrowing operations more effectively.
• Governments in developing countries should invest the proceeds of borrowing into projects and programmes that add value to countries. In this regard, Rwanda was cited as an example that other countries should emulate.
• Delegates urged creditors to adopt responsible lending policies and practices to ensure that borrower countries benefit from foreign loans.
• Governments in developing countries should ensure transparency of debt management operations by disclosing debt statistics through comprehensive and regular debt reports.
• There is need for governments in developing countries to ensure that public debt management is anchored on sound macroeconomic policies.
• Donors and international financial institutions were urged to continue providing foreign grants and concessional loans to fragile countries and those with high debt vulnerabilities.
• Governments in developing countries should endeavour to develop domestic debt markets, which have the potential to lower the cost and risks of borrowing.
• There is need to build the capacities of Ministries of Finance on issuance of international sovereign bonds to ensure that governments get maximum benefits from such financing while also minimising the associated costs and risks.
• Providers of debt management services such as MEFMI, WAIFEM and international financial institutions should continue monitoring and reporting on the impact of their interventions. Continued donor assistance will be based on achievement of goals instead of outputs.