Background

Domestic debt in developing countries has been increasing partly due to the need for funding during the COVID-19 pandemic, the reduction in new foreign loans and grants amidst tight external financing conditions and limited access to international markets. The IMF estimates this increase to be about 6.5 percentage points of GDP after the pandemic.

While domestic debt can offer some benefits, it also poses risks. Such risks include, among others, the refinancing and interest rate risks. Therefore, there is need to build and enhance capacity of member countries in domestic debt management to ensure that governments obtain the best domestic financing terms while also minimising the associated risks with the use of LMOs. Further, the LMOs can be used to facilitate the implementation of a country’s debt management strategy.

Against this background, MEFMI organised this training to address the capacity gap in managing domestic debt portfolios. The course will equip participants to use market-based measures of risk to build a risk management framework, which is the base for applying LMOs on debt portfolios to attain a desired debt structure.

Objectives

The course aims to equip participants with liability management operations to help them secure funding, affect the debt portfolio profile and address domestic debt portfolio risks.

Course Content

The course will cover the following:

• Overview of domestic debt markets (importance, benefits and recent developments)

• The role of domestic debt markets in economic resilience

• Debt portfolios risk indicators

• Introduction to LMOs

• The role of LMOs in managing domestic debt portfolios risk

• Institutional frameworks to support effective domestic debt management

Target Group

Mid-level officials responsible for domestic debt management and financial markets functions in Ministries of Finance, Economic Planning and Development and Central Banks.