Improving Public Debt Management
In the OIC Member Countries
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B) Public Debt ManagementGovernance and Strategy Development
Legal frameworkThere is no legal framework concerning public debt management yet. However, the Ministry of
Economic Affairs and Finance (2016) signs responsible for the repayment of debts incurred by
ministries and state owned enterprises. A legal foundation steering fiscal policy is also not
established yet, as criticized by the IMF (2015a). The IMF suggests developing a legal
framework including the possibility to impose costs on policy makers who do not comply with
fiscal rules.
Managerial structure (incl. coordination with other policies)To improve debt management practices and strengthen transparency and accountability, Iran
created a debt management unit (DMU) in 2015 which is an integrated part of the Treasury
Department. As the central institution responsible for debt management, the DMU identifies all
government debt and associated risks (Shahriari et al. 2016). The DMU also develops a
mediumterm fiscal strategy and issues a welldeveloped range of Islamic debt instruments,
including sukuk, Islamic Treasury Bills or Islamic Settlement Bills (Shahriari et al. 2016). Other
institutions such as the Central Bank of Iran (CBI), the Money and Credit Council (MCC), the
Supreme Audit Court of Iran (SAC), the VicePresidency for Strategic Planning and Supervision,
the Iran Privatisation Organisation (IPO) and the Organisation for Investment, Economic &
Technical Assistance of Iran (OIETAI) support the DMU with their specific knowledge (Akrami
2014). Overall, The Islamic Republic of Iran adheres to good governance criteria.
Debt reportingThe information infrastructure and the public sector accounting and auditing procedures have
improved over the past, but do not fully meet international standards until now (Akrami
2014), which gives rise to incomplete debt data. A strategic document, which contains specific
objectives and indicators for debt and risk management, is not available (IMF 2015d). Formal
accounts for contingent liabilities do not exist.
The Iranian government took efforts to improve public debt management and reporting
practices. From July to August 2015, a Technical Assistance Mission by the Fiscal Affairs
Department of the IMF visited Iran and gave some advice to the Iranian government (Hansen
2015). In particular, the Iranian government intends to improve the quality of data which is
expected to be updated on a regular basis in the near future (IMF 2015b). Iran also
participated in the Tenth Debt Management Conference which took place in 2015 as part of the
UN Conference on Trade and Development in Geneva (UN 2015).
Debt management strategy (incl. risk management)The Ministry of Economic Affairs and Finance (MEAF) of Iran considers debt management as
an important part of their general strategy to reduce fiscal vulnerability and strengthen
financial systems.
Borrowing and Related Financial Activities
Operations (incl. Islamic finance)In 1983, the UsuryFree Banking Act abolished interestrate practices in Iran within three
years (Warde 2000). Apart from that, credit expansion and foreign exchange available to banks
were strictly regulated by the Central Bank and the Supreme Council of Banks. Due to these