Unit 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