Growing need for debt management support
In 2021, the work of the Debt Management and Financial Analysis System (DMFAS) Programme was again largely driven by its response to countries’ needs for support in debt management resulting from the COVID-19 crisis.
The stronger reliance on public borrowing to meet pandemic-related public spending demands has been accompanied by rising public debt, increasing debt repayment burdens and higher risk of debt distress.
In addition, major concerns remain about problems with debt data transparency in a number of countries.
In this context, effective management of public resources and liabilities – including public debt – has become even more necessary to reduce poverty reduction and boost development, transparency and good governance.
The main priority of DMFAS was to assist developing countries to build and sustain the appropriate human and technical capacity to effectively handle public resources and liabilities.
Also important was to make sure that comprehensive, accurate and timely information on public debt is available to support policy decisions and risk management.
The DMFAS provided ongoing support and guidance to 60 user-countries on ensuring that public debt records are accurate and complete; and that the reporting is comprehensive and timely.
Most of the supported countries are low- or lower-middle-income economies. Three of them are already in debt distress and 11 at high risk of debt distress.
The programme also provided technical advice on debt restructuring and debt relief. One example was to support the G20’s Debt Service Suspension Initiative by preparing relevant information for decision-making and recording the results of the process in the database.
Key results in 2021
The DMFAS conducted technical assistance in 32 countries, remotely or in-person, and trained 430 officers, 46% of whom were women.
Among the key indicators of achievement, there’s improved debt coverage – 91% of the participating countries developed comprehensive databases on government and government-guaranteed external debt; 71% of them used DMFAS to record their domestic debt.
On debt transparency and reporting, 95% of DMFAS-client countries effectively reported to the World Bank Debtor Reporting System in 2021; 36 countries produced debt portfolio reviews – an increase of four compared to 2020.
Overall, the DMFAS helped countries strengthen their capacity to effectively record, monitor and report public debt, which was crucial to mitigating financial vulnerabilities and debt distress risks of the developing world – particularly the poorest.
The DMFAS community
In 2021, 60 countries were users of the DMFAS software