Debt management policy plays an important role in ensuring and maintaining long-term debt sustainability.
This paper:
• assesses the current status of external debt management in the heavily indebted poor countries (HIPCs)
• identifies the main weaknesses in external debt management capacity
• suggests priority areas for further improvement
• analyses the role of key international agencies involved in technical assistance and capacity building
The paper reveals that although almost all HIPCs have benefited from extensive external technical assistance, very important weaknesses remain. These findings should be considered with caution because needs and priorities tend to differ across countries, self-assessment is somewhat subjective and makes direct cross-country comparisons difficult. In addition, the paper highlights that full political support at the highest political levels is critical to the success of any efforts to strengthen debt management capacity and ensuring prudent external borrowing.
The paper concludes that:
• countries themselves and their development partners should give more importance debt management capacity building during the HIPC process
• functional debt units with adequate staff and equipment should be established
• the main needs and priorities for further capacity building should be identified
• the flow of information and co-ordination among international financial institutions, external providers of technical assistance and donors should be improved
• the Bank and the Fund could play a more prominent role in identifying weaknesses in the debt management capacity