Strengthening Debt Management- Challenge Ahead. The Gambian Experience. Mod K. Ceessay Republic of The Gambia. DMF Stakeholders Forum 2011.

Transcription

1 Strengthening Debt Management- Challenge Ahead The Gambian Experience Mod K. Ceessay Republic of The Gambia DMF Stakeholders Forum 2011 Outline Introducing the Gambia Debt Management practices in The Gambia b4 DeMPA DemPA pilot Phase reform plan Implementation status & Challenges 2 nd DeMPA & Reform plan Challenges Suggestions on the way forward 1

2 The Gambia Population: 1.7 million (UN, 2010) Capital: Banjul Area: 11,295 sq km (4,361 sq miles) Independence: 18 th February 1965 System of Govt: Democracy Headed by a President Major languages: English (official), Mandinka, Wolof, Fula Major religions: Islam (about 90%), Christianity Life expectancy: 56 years (men), 59 years (women) -(UN) Monetary unit: Dalasi (dalasi = 100 bututs) Main exports: Peanuts, fish, cotton lint, palm kernels GNI per capita: US $440 (World Bank, 2009) 2

3 Key Macroeconomic indicators GDP growth rate in 2010 was 5.5%, 2011 projected at 6% o/w Agriculture account for only 12 percent but employs 60% of the labour force Tourism accounting for the biggest share of GDP at 25% Recent economic performance has been relatively strong, but growth slowed down in and currently picking up again with strong growth forecast to support the PAGE Fiscal deficit slightly worsen and exceeded program target by 2% The widening deficit resulted in increased domestic borrowing which now stood at 15% of GDP Average inflation rate remained within single digit in 2010 however price hikes in the 3Fs - food, fuel and financial crisis trended inflation upward HIPC and MDRI reduced nominal public debt from 60% of GDP in 2006 to below 30% in 2008 Performance under PRGF-supported td program has been generally positive: quantitative performance in 2010 met except for fiscal target. Generally improved public financial management, and introduction of IFMIS has led to improved budget reporting and reduction in backlog of financial reporting. Vulnerable to external shocks. The country s economy is relatively undiversified and limited by a small internal market, with exposure to weak recovery global economy, bad weather conditions Strengthening DMP in The Gambia Objective subject our practice & policies to what ought to be? what we are doing and is substandard & how to bring it to standard? what we are doing and can do better We W we are doing di and can be of excellence Develop a strategy and plan Ultimate objective: Having identified the problems what are the solution What does it take? Where help can come from Sustainable debt managed by a credible and robust institutions, systems and policies at par with any best practice DMO Capble of monitoring and managing risks Compliance with statutory and other reporting and unpublished 3

4 Pre-HIPC CBP Debt management functions not centralized Resulted to fragmentation, undefined role & uncoordinated Weak institutions Adhoc borrowing policies, i strategies t and guidelines Reporting by Statistics Bureaus Statute old and found in various pieces HIPC CBP - oversaw capacity development in DSAs for debt relief computation - Reduced debt thr. Debt relief - Institutional development However the programme one size fit all approach missed some key country specificities Target institutions - ROs DeMPA pilot FY 2007 Recall that The Gambia was one of the Pilot countries of DeMPA -- Conducted DeMPA mission in FY 2007 Built on previous efforts thr. Evidence based comprehensive Upstream diagnostic exercise Reform plans development Mission findings & Recommendations: Fragmented Legal Framework Greater involvement of fiscal authorities in domestic debt decision-making Separation of monetary policy from debt management lack of comprehensive debt management strategy for a medium term borrowing plan absence of national aid policy & a borrowing plan lack of analytical & comprehensive debt reports - non incl. non-financial public sector debt; on-lending lending, guarantees & contigent liabilities; Risk identification, monitoring and management Broaden debt statistical coverage and reporting in compliance with statutory and other obligations; weak cash & treasury mgt & debt creation Liquidity & cash forecasting (reduces need to borrow) 4

5 Findings & Recommendations: Narrow domestic debt market requiring concrete strategy for domestic debt restructuring & market development Needs strengthened domestic debt capacity in MoFEA and closer contact with the market; T-bill Committee (or a Debt Management Committee) should be chaired by MoFEA Operational risks issues Enhance greater transparency through publication & sensitisation Implementation status: All the pieces of legislation put together in one publication in 2010 to ease referencing of debt laws in The Gambia and to guide investors MOFEA set up domestic debt management unit; participate at the T-Bills auction and decide on the amount to be issued; have set up machinery to develop domestic debt market start issuing bonds. (already met stake holders ) We are now strengthening domestic debt management capacity of MOFEA MOFEA now publishes DSA reports, (both hard copies and in the website) publishes quarterly debt management report with greater coverage and inform the parliament etc Cash management committee comprising of MOFEA, Accountant General, CBG, office of the president ) set up and now meets regularly. ----The issues raised in cash flow forecasting help Gambia to better understand multiple dimensions of the issue of cash management -provide new approaches or techniques that you were not previously aware of; Issues of on-lending/guarantees raised at the DeMPA reports now allow us to make better informed decisions on on-lending; learn a new technique / approach that we would now apply to the management of debt - MTDS; improve government s efforts to implement the specific reform: staffing of DLDM, training of staff etc; We have addressed issues of operational risks by having functional specialization in DLDM, we are writing procedure manual & have institute disaster recovery plan and offsite back up of debt data. Going forward: June 13-17, 2011 regional MTDS training in addition, June 20 24, 2011 The Gambia National MTDS mission will take pace. The outcome is expected to address new emerging issues(borrowing opportunities, need for infrastructure investment and need to ensure prudent debt management and maintenance of debt sustainability) 5

6 2 nd review in Jan 2010 DeMPA mission & preparation of reform plan Objective was to help the Government of Gambia design a Reform Plan for strengthening public debt management. The reform plan made a number of recommendations and sequenced the reforms in order of prioritization. The reform plan is centered on three main pillars, namely: 1) Capacity bldg - Consolidate the Directorate of Loans and Debt Management (DLDM), which will contribute to the unit s capacity for design and annual review of the Medium-Term Debt Management Strategy (MTDS) and the corresponding Financing Plan; 2) Reform the legal and inter-institutional framework for public debt management; 3) Design and implement a strategy for development of the domestic market for government securities. Challenges: Financing & TA support is critical for sucess -At moment, the momentum of reform is high, Government of The Gambia remain committed -However resource available is limited both internally & from DPs -Coordination of support interventions - reforms plans are long-term needing sustained support and in particular downstream support to implement the plans Updating the Public Debt Laws to include new instruments and practices This will require external consultant Developing domestic debt market - restructuring?? - Institutions bldg - modernization/automation - investor sensitisation Staff retention: serious due to low salary(civil service reform) 6

7 Way forward Continue to conduct DeMPA missions to be conducted every 3 years Continue MTDS training and partnership with capacity building institutions To retain capacity Mobilize additional donor support Thank you for your attention 7