MEFMI Member Countries trained on developing debt management strategies

The COVID-19 pandemic has elevated public debt vulnerabilities in most Sub-Saharan African countries. According to the IMF African Economic Outlook of April 2021, the ratio of public debt to GDP increased to 58% in 2020, representing an increase of 6% from 2019; the highest in 20 years. Out of the 23 SSA countries that are eligible under the IMF’s Poverty Reduction and Growth Trust, four (4) countries were reclassified from a low to moderate or high risk of external debt distress. Although regional debt levels are expected to ease to about 56% of GDP in 2021, most countries will continue to face debt service difficulties in the medium term due to limited fiscal space. It is therefore imperative for governments to adopt and implement debt management strategies that help to minimise the cost and risks arising from existing debt portfolios and new borrowing operations.

Against this background, MEFMI in collaboration with the World Bank and IMF, conducted a virtual training on Medium Term Debt Management Strategies from 12 to 23 April 2021. The workshop aimed at developing the capacity of participants on the use of the IMF/World Bank MTDS Analytical Tool, to design a medium term debt management strategy and the associated annual borrowing plan. A total of 68 officials from ten (10) MEFMI member countries participated in the workshop, of which 33 were females and 35 were males. Participants were drawn from Central Banks and ministries of Finance, Planning and Economic Development. The participants were trained on various topics such as description of the revised Analytical Tool (AT); identifying the objectives and scope for a debt management strategy; implications of macroeconomic framework (fiscal policy, monetary policy, balance of payments, real sector) for debt management, including challenges induced by COVID-19; market rates (interest rate and exchange rates); financing  sources  in an environment constrained by COVID-19; designing and analysing alternative strategies using the analytical tool; annual borrowing plan; and processes for review and approval of debt management strategy.

The workshop was facilitated by Mrs. Kay Chung, Mr. Moustapha Mama, and Mr. Juan Carlos Vila Nova of the IMF; and Mr. Leandro Puccini Secunho, Mrs. Jessie Kilembe and Mr. Alessandro Scipioni of the World Bank; and Ms. Cristina Dimande of the MEFMI Secretariat.

MEFMI expects the trained officials to use the knowledge gained from the workshop to design or review their country strategies and champion their implementation.

By Cristina Dimande