Sovereign Asset and Liability Management



UNCTAD's project on Strengthening Capacity for effective Asset and Liability Management (ALM) in National Debt Management Offices (DMOs) aims to strengthen the institutional capacity at the national level in target countries in Africa and Latin America and the Carribbean to manage their public debt within an ALM frameowrk.

The project aims at increasing the capacity of policymakers in developing countries from the Africa and Latin America and Caribbean regions to better understand the risks to debt servicing emanating from joint shocks to government assets and liabilities. It also aims to evaluate whether the debt offices of the target countries from in the two regions have the analytical and operational capacity to start a process aimed at the eventual adoption of an integrated ALM framework.

The project aims to build the capacity of debt managers to minimize fiscal and financial vulnerabilities through the proper assessment of the assets and liabilities of the public sector and an efficient management of the risk exposure implied by such positions. Particular attention is given to the risks of contingent liabilities and the monitoring of local governments and public enterprises.

The project builds upon UNCTAD's considerable experience in assisting DMOs in both their data collection and reporting role (through the DMFAS programme) and risk analysis capacities (through the research and analytical activities of its Debt and Development Finance Branch).

It is expected that as a result of the project, the six selected countries will be able to kick-start a process which will eventually lead them to frame their debt management approach into an integrated ALM approach. This will allow them to reduce mismatches between funding sources and spending needs and thus reduce the probability of debt crises. Such a reduced probability of debt crises will increase the countries, creditworthiness and reduce funding costs liberating fiscal resources for increasing expenditure towards achieving the MDGs. Furthermore, it is expected that the increased capacity to analyse risk arising form both assets and liabilities will have beneficial side effects on the design and conduct of macroeconomic policies in beneficiary countries.

The work of the project has been organized in collaboration with the Inter-American Development Bank, the LAC Debt Group, ECLAC, the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI), the National Treasury of South Africa and the Ministry of Finance of Brazil, in addition to the Ministries of Finance in the target countries (Ethiopia, Uganda, Zambia, Argentina, Bolivia, and Chile).






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