Improving Public Debt Management
In the OIC Member Countries
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countries with such formal public debt management strategies, about a third has not yet set
numerical strategic targets.
In several countries endowed with natural oil resources, public debt management has not been
a particularly high priority in the past given their comparatively low public debt ratios.
However, the need to establish new sources for financing budget deficits in times of declining
oil revenues since 2014 has encouraged some of the national administrations to create
centralized debt management units and tap international debt markets. As these nations have
predominantly relied on domestic financing in the past, the establishment of a DMO may
support the preparation and execution of international bond sales.
Weak public debt management capacities may decrease the government’s borrowing
credibility, thereby resulting in high risk premia especially with regards to longterm funding.
Disseminating information on debt operations, adopting transparency in primary auctions and
developing secondary markets may improve the access to debt markets. Unifying treasury or
central bank securities to boost secondary market trading prospects and strengthening
monetary policy may improve funding possibilities, too.
All OIC member countries are encouraged to set up new or institutionally strengthen existing
public DMOs, and to develop formal debt management strategies following international
standards, including quantitative strategic targets. To support this transition process, OIC
member countries that have already professionalized public debt management practices can
advise other countries in establishing institutional frameworks for public debt management.
Existing institutional settings and public debt management documents might be considered as
examples by countries that are in the process of further implementing formal public debt
management. Often, countries have gained valuable experiences regarding public debt
management in the past, such as longterm strategy development, risk management,
monitoring or institutional coordination. Thus, these countries may be able to offer advice with
regards to a certain area of debt management, or present cases of challenging experiences
from which lessons can be learned.
The process of training specialized staff, developing administration capacities of the middle
office or the creation of risk quantification models could be accompanied by the advice of a
centralized institution. Given their commonalities, this especially opens the room for
cooperation among the OIC member countries. Therefore, it might be useful to bring OIC
member countries together for developing solutions for public debt management challenges.
Cooperation could be coordinated by COMCEC, for example by setting up workshops or online
training courses on public debt management. These activities could be conducted in
cooperation with the World Bank, the IMF and other international institutions.
(2) External borrowingSeveral lowand lowermiddle income OIC member countries at least partially depend on
external borrowing. The high share of external debt is often a result of underdeveloped
domestic debt markets. In addition, these countries may have difficulties in accessing
international capital markets. As a consequence, external public debt is often held by
multilateral or public creditors such as international organizations and governments. These
countries may benefit from concessional lending, targeted development aid programs or
preferential support for access to the international financial markets. However, the high share
of debt denominated in foreign currencies exposes these countries to significant exchange rate
risk.