Improving Public Debt Management

In the OIC Member Countries

steadily to 33.9% in 2014. The share of all other currencies increased from 9.8% to 54% in

that period. Recently, the importance of Special Drawing Rights (SDR) has risen, while the

Swiss Franc and the Japanese Yen disappeared completely in 2011. The share of Eurodenominated debt shows also a negative trend and equaled 8.7% in 2014.

The high share of

external debt denominated in foreign currencies exposes Togo to exchange rate risks (IMF

2015b).

C) Policy Recommendations

Togo is advised to strengthen and improve public debt management in particular data

collection, disclosure and risk analysis. Furthermore, the role of the DDP and the CNDP may

well be strengthened. Staff is recommended to be trained adequately to increase the efficiency

of debt and treasury cash management. Apart from that, it is important to improve public

disclosure of debt data and relevant strategic. For instance, the annual debt management

strategy is currently not publicly available. TBonds and arrears should be included in the

government’s classification of public debt (IMF 2015b). Domestic arrears ought to be cleared.

To reduce the debt level, Togo is recommended to implement key reforms to improve the fiscal

balance. Reforms include reducing fuel subsidies and increasing the efficiency of public

investment expenditures. The underdevelopment of the financial sector such as the relatively

lax single large exposure limit and the large amount of illegal financial institutions engaged in

microfinance activities also need to be addressed (IMF 2015b).

Togo faces several risks considering the structure of public debt. The large share of foreign

currency debt exposes Togo to exchange rate risks. The increasing use of domestic borrowing

instruments with shortterm maturities increases Togo’s refinancing risk. These issues should

be addressed within a prudent debt management framework. The government is therefore

recommended to develop a mediumterm debt management strategy following international

guidelines. The current annual debt management strategy lacks some important elements. The

strategy does not take into account outstanding TBills and risks that may result from prefinancing agreements (PEFA 2016).