Improving Public Debt Management
In the OIC Member Countries
40
Figure 2-16: Assessment of Public Debt Management
Source: Ifo World Economic Survey (WES) IV/2016.As described in previous sections, the most important risks faced by public debt management
are foreign currency risk, interest rate risk and refinancing risk. The task of public debt
management consists in controlling those risks and in evaluating their effect on borrowing
costs to determine a costrisk portfolio that accounts for a country’s preferences. WES experts
were asked to assess the importance of these different kinds of risks in their country as “most
important”, “important” or “not so important”. In the entire sample, refinancing risk is
considered to be the most important risk, followed by foreign currency risk and interest rate
risk. However, this result is driven by highincome countries. In middleand lowincome
countries, foreign currency risk is ranked as most important.
Figure 217 compares the importance of risks in the different country groups. For high income
countries foreign currency risk is least important while interest rate risk and refinancing risk
receive almost equal attention of being less than important. This reflects the fact that highincome countries usually have access to financial resources denominated in their own
currency. In middleand lowincome countries interest rate risk receives the lowest rank in
importance. In these countries foreign currency risk is most important. OIC countries are