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publication July 25, 2017

Strengthening Debt Management Capacity in Low and Middle Income Countries: An Assessment

ImageA new joint report by the World Bank Group and the IMF – The Medium-Term Debt Management Strategy (MTDS): An Assessment of Recent Capacity Building - looks at the 10 years of MTDS and how it has been adapted to function in a more complex international environment, heightened by increasing debt vulnerabilities. With newer opportunities emerging for countries to access non-concessional sources of financing, including access to international capital markets, the report notes that the MTDS has adapted to keep abreast of countries’ needs but suggests that it should consider additional risk factors and market risk metrics.

In several countries effective capacity building in MTDS was complemented by efforts to strengthen institutions and governance arrangement as well as proper recording of debt and cash management. Through the MTDS, the World Bank Group and the IMF have delivered technical assistance to several countries in the past 10 years and most of these countries have indicated that the MTDS helped them to introduce a structured and coherent approach to designing a debt management strategy.

The report documents the changes made to the MTDS framework and its associated toolkit and analyzes the value and effectiveness of capacity building efforts using qualitative and quantitative metrics and suggests that the modes of delivering the MTDS framework should continue to be updated and refined and emphasizes the greater use of on-line learning in addition to hands-on training to enhance effectiveness and efficiency.  

The Executive Directors of the World Bank Group and the IMF welcomed the progress made in strengthening debt management capacity in low and middle income countries and agreed on the increased importance of supporting sound debt management with an effective MTDS strategy, and endorsed the further enhancement of the MTDS framework.

To assist countries – particularly the low-income developing countries (LIDC) and emerging market developing countries (EMDCs) – in debt management, the boards of the World Bank Group and the International Monetary Fund (IMF) in 2007 endorsed the development of the Medium-Term Debt Management Strategy (MTDS) framework. The MTDS framework consists of a methodology and an associated analytical tool (AT) to strengthen debt management capacity.