Improving Public Debt Management
In the OIC Member Countries
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functioning and their public debt management. Public debt markets function best in North
America, Western Europe and Oceania whereas the worst assessment is attributed to
countries in African and CIS countries.
Figure 2-18: Functioning of Domestic Public Debt Market (in percent of individual responses)
Source: Ifo World Economic Survey (WES) IV/2016.There are various reasons for why domestic markets for public debt might be deficient. The
economy might be small and an investor base missing, a poor legal and regulatory framework
might be detrimental to investor confidence, market infrastructure in general might be poor,
macroeconomic risks might be prevailing and an unreliable public debt management strategy
might undermine the confidence in government bonds. WES experts were asked to rank these
problems as “most important”, “important” or “not so important”.
The survey results suggest that macroeconomic risks and a small economy with a missing
investor base are considered to be the most important problems faced by domestic public debt
markets (see Figure 219). Poor legal and regulatory frameworks, in turn, is the least
important problem among those listed. If country groups according to the level of income are
formed, two observations are striking. First, the assessment of all individual categories
worsens with a decreasing level of income. Second, the ranking differs markedly between
income groups: in highincome countries macroeconomic risks rank as the most important
problem, while the size of the economy and the investor base are considered least important.
In middleincome countries the ranking equals the average of the entire survey. While in lowincome countries poor regulations and weak legal systems are also considered to be the least
important impediments on public debt markets, the limited size of the economy and the
missing investor base are mentioned as most important. In OIC countries macroeconomic risks
are seen to play a rather minor role. More problematic on the domestic public debt market are
the poor market infrastructure and the missing investor base joint with the small size of the
economy.