Learning Objectives
5 objectives- Understand the fundamental concepts and types of public debt and their economic implications.
- Analyze the objectives and principles guiding effective public debt management.
- Evaluate methodologies for debt sustainability analysis and risk management strategies.
- Examine the processes involved in debt issuance, refinancing, restructuring, and market operations.
- Explore the international dimension and institutional frameworks governing public debt management.
Content Outline
PreviewUnit 1251: Public Debt Management
1. Introduction to Public Debt
- Definition of public debt
- Types of public debt instruments
- Domestic vs. external debt
- Short-term vs. long-term debt
- Marketable securities and non-marketable instruments
- Reasons for government borrowing
- Budget deficits
- Financing development projects
- Economic stabilization
- Impact of public debt on the economy
- Fiscal implications
- Inflationary effects
- Crowding out private investment
2. Objectives of Public Debt Management
- Ensuring fiscal sustainability
- Minimizing borrowing costs over the medium and long term
- Managing risks associated with debt portfolio
- Supporting macroeconomic stability and growth
- Maintaining investor confidence and market access
3. Principles of Public Debt Management
- Transparency and disclosure
- Predictability of borrowing and repayment schedules
- Affordability and cost-effectiveness
- Accountability and institutional responsibility
- Flexibility to adapt to economic conditions
4. Debt Sustainability Analysis (DSA)
- Concept of debt sustainability
- Indicators of debt sustainability
- Debt-to-GDP ratio
- Debt service to revenue ratio
- Methodologies and frameworks for DSA
- IMF and World Bank DSA frameworks
- Stress testing and scenario analysis
- Limitations and challenges in assessing sustainability
5. Debt Issuance and Market Operations
- Planning the debt issuance calendar
- Types of debt securities issued
- Debt auction mechanisms
- Competitive vs. non-competitive bidding
- Managing government cash flows
- Interaction with primary and secondary financial markets
- Role of primary dealers and underwriters
6. Debt Refinancing and Restructuring
- Concepts and objectives
- Strategies for refinancing maturing debt
- Negotiating terms with creditors
- Types of debt restructuring
- Debt rescheduling
- Debt reduction (haircuts)
- Debt swaps
- Implications for creditworthiness and fiscal health
7. Risk Management in Public Debt
- Identification of risks
- Interest rate risk
- Exchange rate risk
- Refinancing risk
- Inflation risk
- Risk measurement tools
- Techniques for risk mitigation
- Use of derivatives
- Diversification of debt portfolio
- Currency matching
- Establishing risk management frameworks
8. International Aspects of Public Debt Management
- External borrowing considerations
- Debt sustainability in the context of international markets
- Role of international financial institutions
- IMF
- World Bank
- Paris Club
- Impact of global economic changes on debt management
- International best practices
9. Legal and Institutional Framework for Public Debt Management
- Importance of legal frameworks
- Key legislation governing public debt
- Institutional roles and responsibilities
- Ministry of Finance
- Central Bank
- Debt Management Office
- Coordination among stakeholders
- Accountability and audit mechanisms
10. Case Studies in Public Debt Management
- Successful public debt management examples
- Country-specific strategies and outcomes
- Challenging cases and lessons learned
- Comparative analysis of different debt management approaches
- Best practices and recommendations
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