The Role and Importance of Debt Management Offices-Conclusion
As mentioned in the two articles preceding this edition, debt management functions in Guyana are highly fragmented and shared among many agencies. The current legal framework does not provide clear guides for roles or coordination, and with the exception of the Debt Management Division (DMD), the agencies responsible for dent management functions lack formal Terms of Reference delineating their responsibilities.
This leads to a duplication of tasks, lack of information flow, and hinders the prior analysis of loan terms and the full assessment of on-lending arrangements.
According to Finance Minister, Winston Jordan, the government has worked to address the problem of coordination by increasing the flow of information among agencies. This was achieved through political commitment at high levels to establish procedures for information sharing.
However, Jordan said that these procedures have not been formalized in any way. While political will is critical to improving debt management capacity, Jordan opined that Guyana’s past experiences have shown that relying on political will alone, without formally codifying procedures in rules or regulations, creates a risk that the procedures will fall by the wayside when political will wanes.
The Finance Minister said that Guyana’s Debt Strategy Technical Working Group, which was first convened in 1999, suffered this fate. He said that the Working Group was initially successful, proving instrumental in creating Guyana’s first debt strategy, but subsequently fell away and ceased to meet.
To prevent the progress on coordination capacity from eroding, the Ministry of Finance intends to work with each agency to develop a clear Terms of Reference regarding debt functions. The government also plans to create a Public Debt Management Procedures Manual to specify the functions and linkages of all the institutions, including data and information flows, computer software applications and reporting requirements. These terms and procedures will give the DMD a mandate to monitor and coordinate all public debt.
A further step that will strengthen public debt management is to establish a high-level Debt Policy Committee that provides broad oversight of public debt management and steers debt policy and debt strategy formulation. Ideally, it would be envisaged that the work of the Technical Working Group – the group preparing the debt management strategy and other technical documents – would inform the Debt Policy Committee.
The Finance Minister also noted that building capacity in debt management has been a challenge for Guyana.
He said, “In recent years, the tertiary institutions in our region have not turned out enough graduates with quantitative and analytical skills, and high turnover in key positions has also made it difficult to retain the skills and knowledge. The DMD is quite small, currently with a staff of four, so even moderate turnover can quickly reduce its capacity. To address this, Guyana adopting a multi-faceted approach.”
In this regard, Jordan said that first, the Ministry of Finance continues to invest in a consistent and comprehensive capacity building plan to develop the skills-set that is required to understand public debt management and its inter-linkages.
Given the increasing complexity of public debt management, this is a policy imperative. So far, Guyana has benefitted from assistance provided by partners such as the Commonwealth Secretariat, Debt Relief International (DRI), CEMLA, the World Bank, IDB and the European Union to build capacity for analytical work, including workshops and training DMD staff to conduct Debt Sustainability Analysis and develop a Medium Term Debt Strategy.
“Second, we need to do more to retain and propagate knowledge and skills within the Debt Management Division, to reduce our reliance on training provided by our external partners. In this regard, the Ministry of Finance is exploring undertaking training for new staff on a semi-annual basis, with experienced staff serving as trainers,” the Finance Minister said.
He added, “Third, the Ministry of Finance is examining ways to attract and retain staff, including reviewing salaries at the national level, as well as developing clear succession plans, challenging staff to produce high quality technical work and, last but not least, using their outputs to inform and strengthen overall national economic policy.”
With regard to political will, the Finance Minister said that the challenges to improving debt management capacity are not new, nor are many of the proposals to address them.
He said, “Some, like the Public Debt and Aid Management Act, have languished for years. Governments must appreciate the importance of sound debt management. In Guyana’s experience, political will has been critical to improving capacity, such as in the case of improved information flow among debt management agencies.”
At the same time, the Finance Minister said that the lack of political will has allowed the debt management capacity to waste away, such as when the Debt Strategy Technical Working Group ceased to meet.
To meaningfully and sustainably build debt management capacity, he said, “We must be farsighted enough to make investments in our institutions today that could stave off crisis many years down the road.”
He noted however that the administration intends to lead through proactive action, so as to improve Guyana’s performance in sovereign debt management.