Debt Management in a Dynamic World: Coping with Capital Flows and Hidden Risks

Transcription

1 DMF Stakeholders Forum 2015 Debt Management in a Dynamic World: Coping with Capital Flows and Hidden Risks Organized by the Asian Development Bank and the World Bank June 3-4, 2015 Headquarters of the Asian Development Bank Manila, Philippines The Sixth Debt Management Facility (DMF) Stakeholders Forum entitled "Debt Management in a Dynamic World: Coping with Capital Flows and Hidden Risks is scheduled to take place over June 3-4, 2015 at the Headquarters of the Asian Development Bank, Manila, Philippines. The objectives are to provide a forum for discussion of a policy-relevant agenda on debt management; to discuss current challenges faced by developing countries with respect to debt management; and to foster knowledge exchange among participants. The Forum is targeted toward policy-makers and debt managers from developing countries, international and regional technical assistance providers, representatives of civil society organizations, as well as bilateral donors and multilateral development banks. Draft Agenda DAY ONE June 3, :00 8:45 am Registration Welcome: Abha Prasad, Program Manager, Debt Management Facility 8:45 9:15 am Opening Remarks Mr. John Panzer, Director, Macroeconomics Fiscal Keynote Address Mr. Pierre N. Van Peteghem, Treasurer, Asian Development Bank

2 9:15 10:45 am Plenary Session 1: The Global Economic Environment: Policy Challenges Discussion will focus on three critical developments in the global environment and possible implications for debt management. Asynchronous monetary policies, tapering by the Fed and quantitative easing by the ECB--how might these affect liquidity, interest rates, and other conditions facing debt managers in developing countries? Compounding this is the plummet of oil prices that will affect fiscal outturns and financing requirements for exporters and importers differently. And geo-political tensions continue to impact sentiment in markets and could well exacerbate debt servicing costs and risks. This session will set the stage for the forum: deliberation on the impact of capital flows, and the importance of policy coordination and governance in shaping the levels and composition of debt that developing countries can manage. Chair: Mr. Mark Roland Thomas, Practice Manager, Macroeconomics and Fiscal Panelists: Mr. Shang Jin Wei, Chief Economist and Director General, Economic Research and Regional Cooperation Department, Asian Development Bank Mr. Odd Per Brekk, Director,Regional Office for Asia & the Pacific, International Monetary Fund McKinsey Global Institute (TBC) 10:45 11:15 am Coffee Break 11:15 am 12:45 Plenary Session 2: Policy Coordination: A Complimentary Approach? pm This session will flow from the first and pick up the issue of complementarity of fiscal, monetary and debt policy implementation. The global financial crisis elicited an unprecedented degree of policy changes among high-income and developing countries alike, centered on monetary and fiscal stimulus as well as measures to stabilize the financial system. In many cases, these policies led to a substantial increase in debt stocks. How have policymakers coped with this new environment? Did it lead to stronger coordination of policy implementation? And what are the possible implications of recent global trends in influencing policy coordination? Chair: Dr. Y. V. Reddy, Chairman Finance Commission, ex-governor Reserve Bank of India Panelists: Mr. David Lezhava, Deputy Minister, Ministry of Finance, Government of Georgia Germany (TBC) Mr. Peter Nicholls Portugal Korea 12:45 2:00pm Luncheon Address Venue: Executive Dining Room and Coffee Lounge 12:45 1:30 pm Luncheon Speaker: TBD 2:30 4:00 pm Breakout Session 1: Uses and Misuses of the DSF

3 Venue: Auditorium Zone C The World Bank and the IMF have jointly developed and adopted a debt sustainability framework (DSF) to evaluate the risk of debt distress in Low Income Countries (LICs). At the core of the DSF are empirically-based thresholds for each of five different measures of the debt burden (the debt threshold approach ). Debt sustainability analyses (DSAs) for LICs are conducted frequently by the organizations, and preparation of these by country authorities is also encouraged, supported by the IMF s on-line training program and DMF-funded hub trainings. There have been situations where the DSF indicators or discount rate, etc. been incorrectly applied or stretched and the session will aim to clarify that. Chair: ADB (TBC) Panelists: Mr. Reza Baqir, Division Chief, Strategy, Policy and Research Division, International Monetary Fund Senegal TBD Cambodia 2:30 4:00 pm Breakout Session 2: Coping with Commodity Price Fluctuations: Impact on Fiscal and Debt Management Venue: Auditorium Zone D The impact of commodity price shocks on fiscal outcomes remains a subject of considerable controversy. The observed volatility in commodity prices has intensified. The inelastic market for oil products and recent collapse of fuel prices are among the long list of similar exposures. They have led to increasing concern that commodity price shocks complicate the management of fiscal and debt policy significantly, by increasing budget uncertainty, encouraging a pro-cyclical fiscal policy, and threatening debt sustainability. The magnitude and direction of global capital flows may also be affected. Such concerns are especially acute in the case of low-income countries, which are relatively more exposed to commodity price shocks, and these effects may be expected to intensify as LICs continue to integrate into international markets. Chair: Bahrain,TBD Panelists: Chile Mongolia/Zambia/Ghana Mexico (TBC) Private sector 4:00 4:30 pm Coffee Break 4:30 6:00 pm Plenary Session 3: Contingent Liabilities: Calculated or Uncalculated Risks Contingent liabilities can generate fiscal risk that result in the possibility of deviations of fiscal outcomes from what was expected at the time of budget execution or other forecast. These risks could be direct liabilities that are explicit and calculated or implicit with a moral obligation reflecting public expectations for the government to pay. Cross country experience suggests that explicit CLs, especially loan guarantees, may be the most frequent type of indirect liability, but implicit CLs are often the most costly, including bailouts of SOEs, banks and local governments, as well as natural disasters. These

4 issues will be discussed in this session highlighting the ability of debt managers and fiscal policy advisers in mitigating such risks. Chair: Mr. Deepak Tarneja, Principal Treasury Specialist, Treasury Department, Asian Development Bank. Panelists: Mr. Olivier Mahul, Manager, World Bank Group Mr. Ian Storkey, Director, Storkey & Co. Ltd. MEFMI Country (TBC) Mr. Antonio Velandia-Rubiano, Financial Advisory, Banking and Debt Management Department, World Bank Group 6:00 pm Cocktail Reception Venue: Courtyard DAY TWO June 4, :00 10:30 am Plenary Session 4: Domestic Debt Markets The share of local currency government debt over total public debt has grown significantly and reached approximately 90%, on average, in the more developed Emerging Markets. Demand for local currency instruments from a broader set of developing economies has also been growing, but frequently limited due to the still incipient stage of market development in these countries and their capacity to absorb capital flows. As concessional sources of financing become scarce and developing economies seek to diversify funding channels, the development of domestic government bond markets is becoming increasingly important to support economic growth. This session will cover trends, challenges and the most salient features in the agenda to deepen domestic government debt markets in countries at still early stages of market development. Chair: [] Panelists: Ms. Alison Harwood, Practice Manager, GFMDR, World Bank Group Mr. Bernard Thiam Hee Ng, Senior Economist, Macroeconomic Research Division, Economic Research and Regional Cooperation Department, Asian Development Bank Mr. Juan A. Ketterer, Division Chief, Capital Markets and Financial Institutions Division, Inter-American Development Bank Mr. Charles Anderson, Office of Technical Assistance, the U.S. Treasury Department 10:30 11:00 am Coffee Break 11:00 12:30 pm Break-out Session 3: Subnational Debt and Fiscal Management Venue: Auditorium Zone C The session will present the choices and constraints faced by subnational governments in managing debt. Among the constraints are: tight intergovernmental rules for borrowings, lack of access to external sources of financing, dependence on central transfers, and the issue of automatic intercepts. However, some subnationals often bypass these through setting up special purpose vehicles, issuing guarantees and other forms of contingent liabilities,

5 and accessing loans from commercial banks. The choices and constraints faced by them are thus different from those facing the sovereign, and the session aims to present these through the experiences of Brazil, India and China. Chair: Ms. Abha Prasad, Lead Debt Specialist, World Bank Group, Panelists: Ms. Anna Hughes, Standard & Poor s China, TBD Poland, TBD Mr. Luiz Fernando Alves, Risk Management Unit, Brazilian National Treasury, Brazil 11:00 am 12:30 pm Chair: Break-out Session 4: Debt Management Transparency and Communication Venue: Auditorium Zone D Considering several events in Europe and the recent changes in the Guidelines for Public Debt Management, the issue of debt management transparency and communication is growing in importance. This session will discuss at two levels. First, at the high-level level how transparency of debt management operations is enhanced when the results of external audits are made available to the public, highlighting importance of reporting. Second, at the more operational level with publication of auction calendars, borrowing plans, etc. The IIF comprehensive score to evaluate transparency and communication on public debt will be a valuable starting point for this session. (TBD) Panelists: Mr. Karby Leggett, Head, Public Sector Development Organisation, Asia, Standard Chartered Bank Ms. Inese Sudare, Deputy Director of Financial Resources Department, The Treasury of the Republic of Latvia Mr. Iqbal Abdullah Harun, Joint Secretary, Finance Division, Ministry of Finance, Government of Bangladesh Mr. Ian Storkey, Director, Storkey & Co.Ltd. Mr. Luiz Fernando Alves, Risk Management Unit, Brazilian National Treasury, Brazil 12:30 2:00 pm Lunch Venue: Executive Dining Room and Coffee Lounge 2:00 3:30 pm Special Session: Revisions to the DeMPA tool Venue: Auditorium Zone C The DeMPA tool has been an internationally recognized and evolving methodology for assessing public debt management performance. Over the past 5 years it was applied across 60 countries. The objective of the recent review of the DeMPA was to update the tool and take into account lessons learned during the implementation, adjust the requirements to the changing global environment, and enhanced international practices for government debt management, while including feedback received from client countries. A key revision is combination of the DeMPA Tool and Guide into one unified methodological framework. This will be operational July 1, Chair: Mr. Tomas Magnusson, Chair, DMF Panel of Experts

6 Panelists: Ms. Lilia Razlog, Senior Debt Specialist, Macroeconomics and Fiscal Mr. Rafael Otieno, Director, MEFMI Mr. Baba Musa, Director, WAIFEM 2:00 3:30 pm Special Session: Government Securities Market Assessment and toolkit Venue: Auditorium Zone D The World Bank has developed a Toolkit to assess the degree of development of domestic debt markets in developing economies. Jointly with the IMF and under the scope of DMF II, assessments of government securities markets are starting to be conducted using both the toolkit and a building block approach where constraints and recommendations for market development are identified. This session will discuss the approach, techniques and tools used in those assessments and available for countries pursuing the objective of developing their government securities market. Chair: TBD Panelists: Mr. Anderson Silva Caputo, Lead Securities Market Specialist Debt Specialist, Finance and Markets Global Practice, World Bank Group Mr. Baudouin Richards TBD 3:30 4:00 pm Coffee Break 4:00 4:30 pm Closing Remarks Mr. John Panzer, Director, Macroeconomics Fiscal [ADB TBC]