Improving Public Debt Management
In the OIC Member Countries
4
explained by the larger share of official creditors in lowincome countries. Consequently, the
average maturity of new contracts is largest in the African group.
The average share of domestic debt in total public debt in OIC member states has slightly
increased since 2006 and stands at around 41.5% in 2015 (a share above the worldwide
average). Lowincome countries have a lower share of domestic debt (31%) than middleand
highincome countries (41.9%). In highincome countries, the share of domestic creditors has
increased since 2008 and stands at about 77.7% in 2015. However, OIC member countries
differ considerably in their shares of external debt.
The largest share of external public debt in OIC countries was denominated in U.S. Dollars
(51.3%), followed by Euro (15.4%), Special Drawing Rights (6.6%) and Japanese Yen (3.2%) in
2014. The share of external public debt denominated in U.S. Dollar and Special Drawing Rights
(SDR) has increased between 2006 and 2014 while the share of external public debt
denominated in Euro has been relatively constant. The share of external public debt
denominated in Japanese Yen has decreased.
The average interest rate on public debt has been relatively stable and low in OIC member
countries over the last decade (the average interest rate was about 1.9% in 2014). Many OIC
member countries borrow from official creditors at preferential rates (on average about 1.2%
in 2014). The average interest rate for private credits was about 3.9% in 2014, a rate being
higher than the worldwide average. Lowincome countries face lower interest rates than
middleincome ones presumably because they have access to concessional lending. Average
interest rates in the Arab and Asian group have decreased over the last years, while average
interest rates in the African group have increased since 2006.
Islamic finance has become an important part of the financial systems in several OIC member
countries. Governments in OIC countries use Islamic sovereign bonds (sukuk) in public debt
management. Sukuk are financial certificates commonly referred to as " sharia compliant"
bonds, which do not pay interest. The investor rather acquires a share of the underlying
project that the sukuk bond is linked to. Several OIC member countries plan to increase the
share of Islamic finance instruments in the next few years.
In most OIC member countries a Public Debt Management Office (DMO) at the Ministry of
Finance is responsible for public debt management. In some countries, a department at the
central bank also carries out debt management operations. Only few OIC member countries
have established independent debt management offices. In several countries, there is not one
single entity responsible for public debt management but several departments at the Ministry
of Finance and the central bank and in some cases also in other institutions.
Among the OIC member countries, 62% countries have established a formal debt
management strategy (similar to the worldwide average of 60%). Among the OIC member
countries with a formal public debt management strategy, 78% have published this document.
Among the OIC member countries with a formal public debt management strategy, 68% use
strategic targets and benchmarks (a share being lower than the worldwide average of 77%).
Among the OIC member countries with a formal public debt management strategy, 63% have
set strategic targets for currency risk, 58% have set targets for refinancing risk, and 53%
have set targets for interest rate risk. In contrast, on a global view, it is most common to set
strategic targets for refinancing risk (66%), followed by interest rate risk (56%) and currency
risk (50%). Targets used for currency risk include the share of foreign currency debt in total
debt; targets used for interest rate risk include the share of fixed interest debt in total debt and