DEMPA evaluations: Coordination of debt and cash management The World Bank DEMPA evaluations: Coordination of debt and cash management Lilia Razlog October, 2017 PEMPAL Treasury COP Chisinau, Moldova

DeMPA methodology The DeMPA is a methodology for assessing public debt management performance through a comprehensive set of indicators spanning the full range of government debt management functions.

Results-to-Date 112 DeMPAs conducted between 2007-16: 78 different countries across 6 regions In ECA, DeMPAs were conducted in: Albania Armenia Belarus Bosnia and Herzegovina Georgia Kazakhstan Kosovo Kyrgyz Republic Republic of Moldova Tajikistan

Main elements of the 2015 DeMPA revision

DeMPA methodology 2015 The 2009 Tool and Guide for DeMPA are combined into one unified 2015 DeMPA methodology In the revised DeMPA, the guidance for evaluation of each dimension of government debt management practices (DPI) consists of: Rationale and background (by dimension) Areas to be assessed Scoring criteria Supporting documentation Indicative questions to ask.

Scoring Methodology Scoring: Quantifiable Scores (from A to D) Meet minimum requirement = Score C Absence of minimum = Score D Sound practice = Score A (B intermediate for more granularity) Not applicable (N/A) – if the activity is not undertaken, e.g., loan guarantee is not issued in last five years Not rated (N/R) – if impossible to assess due to insufficient information

Structure of the 2015 DeMPA 2009 DeMPA 2015 DeMPA Six core areas Five core areas 15 Debt Management Indicators (DPIs) 14 Debt Management Indicators (DPIs) 35 dimensions 33 dimensions DPI 15 and its first two dimensions (DPI15-1 and 15-2) on statutory and contractual reporting are discontinued The third dimension (DPI15-3) on statistics bulletin is moved to DPI4 – Reporting and Evaluation. Both dimensions of revised DPI4 are related to the transparency and accountability of government debt management duties.

Structure of DeMPA DeMPA 2009 DeMPA 2015 Governance and Strategy Development DPI-1 Legal Framework (1dimension) Legal Framework (1 dimension) DPI-2 Managerial Structure (2 dimensions) DPI-3 Debt Management Strategy (2 dimensions) DPI-4 Evaluation of Debt Management Operations (1 dimension) Reporting and Evaluation (2 dimensions) DPI-5 Audit (2 dimensions) Coordination with Macroeconomic Policies DPI-6 Coordination with Fiscal Policy (2 dimensions) DPI-7 Coordination with Monetary Policy (3 dimensions) Borrowing and Related Financing Activities DPI-8 Domestic Market Borrowing (2 dimensions) Domestic Borrowing (2 dimensions) DPI-9 External Borrowing (3 dimensions) DPI-10 Loan Guarantees, On-Lending, and Derivatives (3 dimensions) Loan Guarantees, On-lending and Derivatives (3 dimensions)

Structure of DeMPA discontinued DeMPA 2009 DeMPA 2015 Cash Flow Forecasting and Cash Balance Management DPI-11 Cash Flow Forecasting and Cash Balance Management (2 dimensions) Operational Risk Management Debt Recording and Operational Risk Management DPI-12 Debt Administration and Data Security (4 dimensions) DPI13 Segregation of Duties, Staff Capacity, and Business Continuity (3 dimensions) DPI-13 DPI14 Debt Records (2 dimensions) Debt Recording and Reporting DPI-14 DPI-15 Debt Reporting (3 dimensions) discontinued

Debt and cash management - DeMPA DPI 11 Two core areas of assessment: Cash flow forecasting, commonly the responsibility of the Treasury unit Effectiveness of forecasting the aggregate level of cash balances in government bank accounts 2. Cash balance management, commonly the responsibility of the Debt Management unit or the Treasury unit Decision of an appropriate cash balance (liquidity buffer) and effectiveness of managing this cash balance in government bank accounts (including the integration with any domestic debt borrowing program, if required)

Performance-tracking reveals remaining challenges Breakdown of scores C and higher by Debt Management categories (using the results of the latest DeMPA report)

Results to-date in ECA

Web link: http://worldbank.org/debt www.DMFacility.org Thank you Web link: http://worldbank.org/debt www.DMFacility.org