DMF NEWSLETTER ISSUE 48 APRIL–JUNE 2022 I. Making Debt Work for Development Remarks by the World Bank Group President David Malpass IN THIS ISSUE at the 2022 Spring Meetings IN THIS ISSUE D ebt is a two-edged sword. For forward-moving developing country governments, debt financing can improve infrastructure and provide better services — in ways that substantially increase growth rates and median income. Transparent, responsible Making Debt Work for Development increases in government debt and investment are vital to development. DMF Steering Committee But debt used to finance unproductive spending and investment poses seri- ous risks to economic growth and stability. Government over-indebtedness can adversely affect economic development through many channel — debt over- The New DMF III hang, reduction in fiscal space, crowding out, expectations about future policy, and Program Manager increased risk during crises. Debt Management Monitor 2022 Staff Corner DMF Technical Assistance and Trainings Future Debt Events Recent Debt Publications World Bank Group President David Malpass  Photo: Jacek Waszkiewicz / World Bank Group If misused, debt can weaken long-term stability and growth even if interest rates are attractive and maturities are long. That's because debt proceeds are only available once — a future government may be able to roll over the debt, but it won't get the benefit of the proceeds a second time. Thus, sitting governments are faced with a giant conflict of interest — borrowing now brings material political benefits but deprives future governments. This makes the quality and transparency of current spending and investment decisions one of the biggest challenges facing development. Remarks continued here. II. Debt Management Monitor 2022 T he seventh edition of the Debt Management Monitor (DMM), which summarizes debt management developments in 86 DMF-eligible countries, was published in June 2022. The DMM presents stylized facts in five areas of debt management: governance and debt management strategy, fiscal and monetary policy, cash management, debt recording, and operational risk management. The publication also provides information on past and ongoing debt management reforms and advisory services financed through the Debt Management Facility (DMF) program. It offers a country-level overview of selected macroeconomic indicators, Country Policy and Institutional Assessments of debt (CPIA), published debt-sustainability ratings, composition and maturity of government debt, selected data on government debt issuances on interna- tional and domestic markets, portfolio risk indicators, average evaluation results from the Debt Management Performance Assessments (DeMPA) and implementation status of recent debt-management reforms, including in the area of debt transparency. This edition includes debt management profiles for all DMF eligible countries, with applied cutoff date as of December 31, 2021. More information here. III. DMF Steering Commitee O n June 23, 2022, the DMF held its fifth Steering Committee meeting under the third phase of the program, which was launched at the end of 2019. DMF donors, together with the World Bank and the IMF, discussed current state of debt management technical assistance and overall strategic guidance for the DMF activities for the fiscal year 2023. During the meeting, a new program management for the DMF III was introduced. IV. The New DMF III Program Manager Lilia Razlog in three Questions L ilia Razlog took over the management of the DMF program as the new Program Manager as of July 1, 2022. Lilia is a seasoned debt management expert, with vast experience in sovereign debt management, debt restructurings and a broader range of public finance management topics. She joined the World Bank in 2010 and currently works as a Senior Debt Management Specialist in the Macroeconomics and Fiscal Management Global Practice of the World Bank. Why are you interested debt management advisory? In my earlier career, working for the government of Moldova, I interacted with the World Bank and other international partners that were supporting the government reforms. The country was experiencing complex economic challenges when the public finance and debt Lilia Razlog, Senior Debt Management Specialist management were in very significant trouble. We had to go through debt restructuring, and painful fiscal reforms that were required for the country to transition to a more sustainable path with expertise and con- tinuous support from the international partners. After I joined the Bank, I aimed to bring and share my expertise to solve our clients' problems: the economists' viewpoint combined with the practitioner's know-how. In my current capacity, I truly enjoy interacting with the clients. When I see the drive of the experts, client government officials and the results on the ground, it makes all the advisory efforts worthwhile. What is your vision for DMF? Today, the DMF serves 86 client countries across the globe. Each client country has its own challenges. Some clients have sufficient capacity to move with reform implementation very quickly. Others have more limited resources or are sub- ject to challenging political economy environments. The Bank team understand those challenges and we are constantly pushing the envelope to expand our topics and methods of delivery to meet client's needs. I'm a big supporter of promoting and reinforcing our mission: Strengthening clients' capacity for managing govern- ment debt and improving debt transparency. The DMF has now over 14 years of experience and results under its belt. Our clients have gone collectively through two major global financial crises. We learned from those experiences to improve on building technical capacity through technical advisory, training and peer-to-peer activities. In the current challenging global environment and crisis, the technical assistance and training provided under the DMF is important to help countries maintain and improve their debt management capacity. 2 DMF NEWSLETTER | ISSUE 48 Your passion(s) outside of work? My family. I spend as much time as possible with family when I do not travel for work. It can some- times be difficult when business needs are overwhelming. And fortunately, I belong to those lucky group of experts for whom job is a great passion. V. Staff Corner Meet the Team M esfin has joined the EMFMD and DMF team in May 2022, after working for five years as Senior Economist at the Development Finance (DFI) unit of the Bank. He contributed to the IDA Replenishments as a focal point for the Climate Change Special Theme during IDA19 and Debt Cross Cutting Issue during IDA20. Mesfin joined the World Bank in 2003 and worked as a Country Economist for Ethiopia where he was responsible for several analytical and operational pieces of work, including debt sustainability analyses, non-concessional borrowing policy, a PER, tax policy studies, and economic updates. Before joining the Bank, he was a senior expert in the Research and Planning Department of the Ministry of Finance of Ethiopia He holds an MA in Economics from Indira Ghandi National University and BA degree in Economics from Addis Ababa University. Mesfin Bezawagaw, Senior Economist VI. DMF Technical Assistance and Training Debt Management Performance Assessments (DeMPA) TYPE National Subnational COUNTRY Cabo Verde, March 28–April 5, 2021 Bolivia, May 9–13, 2021 ORGANIZERS World Bank World Bank OBJECTIVE The mission applied the DeMPA methodology to The mission conducted a Subnational Debt assess public debt management practices in Cabo Management Performance Assessment (DeMPA) Verde. for the Autonomous Government of the Municipality of La Paz to identify the good practices and areas for improvement. HIGHLIGHTS The mission was undertaken to draw the baseline for The main counterpart was the Finance Secretariat of future work in debt management reforms and the the Municipality of La Paz (SMFIN). The evaluation authorities look forward to future engagements in the is expected to serve as a basis for the SMFIN design areas of debt reporting and guarantee's management. needed reforms on its debt management activities. DMF NEWSLETTER | ISSUE 48 3 Reform Plan COUNTRY The Gambia, April 11–14, 2022 ORGANIZERS World Bank OBJECTIVE The mission aimed at stocktaking of past reform plan implementation and developing updated reform priorities. The stocktaking was guided by the Reform Plan developed by a World Bank mission in 2014, which comprised actions on strengthening the Directorate of Loans and Debt Management (DLDM) functions, improving the legal framework, and developing the local currency bond market. HIGHLIGHTS Meetings were attended by staff from the Directorate of Loans and Debt Management (Ministry of Finance) and the Central Bank of The Gambia. In addition, staff from IMF and the US Treasury attended meetings on developing the local currency bond market. An updated debt reform matrix was prepared as a result, to guide further reforms' process. Medium-Term Debt Management Strategy (MTDS) and Annual Borrowing Plan (ABP) COUNTRY Liberia, May 23–June 3, 2022 ORGANIZERS World Bank/IMF OBJECTIVE The mission provided training on the WB-IMF MTDS AT and supported authorities to build alternative strategies for the period of 2023–2025. HIGHLIGHTS The mission helped authorities to prepare strategies and the authorities will review macro-fiscal and market projections and refine the simulated strategies. One strategy will be chosen and formally approved by Ministry's senior management before its publication. Medium-Term Debt Management Strategy (MTDS)—Integrating Arrears Clearance COUNTRY Democratic Republic of Congo, June 20–July 1, 2022 ORGANIZERS IMF OBJECTIVE The mission aimed to assist the Ministry of Finance in preparing details of the operational plan for executing the clearance strategy for legacy reconciled domestic arrears developed in November 2021 in the context of their debt management strategy. HIGHLIGHTS In the context of the authorities' debt management strategy, the mission helped the authorities to design an implementation plan in line with approved strategy, including reviewing the modalities for issuing and buying back the identical bond that will be provided to creditors. It also prepared and reviewed the communication strategy the authorities would use with creditors. 4 DMF NEWSLETTER | ISSUE 48 Domestic Debt Market Development (DDMD) TYPE Local Currency Bond Market (LCBM) COUNTRY Kyrgyz Republic, Uzbekistan, Sao Tome and Principe, June 8–17, 2022 April 18–29, 2022 May 16–22, 2022 ORGANIZERS World Bank/IMF World Bank IMF OBJECTIVE The mission aimed (i) to The mission assessed the cur- The mission aimed to follow-up undertake diagnostic of the rent development stage and on TA recommendations made local currency government key obstacles in further devel- in August 2019 to improve bond market based on the opment of the local currency government securities issu- LCBM tool jointly developed government bond market ance practices and to train the by the IMF and the World Bank (LCBM) in Uzbekistan. authorities on issuance calendar in 2021; and (ii) to provide the preparation and government MoF and its debt management securities pricing. office with recommendations on building and maintaining a robust efficient local currency government bond market. HIGHLIGHTS The mission conducted a com- The mission team also delivered The mission took stock of prehensive diagnostic to assess workshops on inflation-linked progress made since the end the stages of development of securities, participation of for- of the August 2019 TA mission, the domestic debt market in the eign investors in the domestic provided further guidance for Kyrgyz Republic and formulated market, primary market dealer the implementation of recom- an action plan. The mission framework and coordination mendations, and assessed the provided an assessment of the mechanisms between debt ability to introduce domestic current stage of the six relevant management and monetary bond issuance. It also provided building blocks: (i) money mar- policy. hands-on training on pricing ket, (ii) primary market, (iii) government securities and secondary market, (iv) investor issuance calendar preparation. base, (v) financial market infra- structure, and (vi) the legal and regulatory framework. TYPE Domestic Issuance Plan COUNTRY Central African Republic, May 23–June 2, 2022 ORGANIZERS IMF OBJECTIVE The mission aimed to improve the authorities' issuance planning and execution, and investor relations practices. HIGHLIGHTS The mission provided guidance on practices to improve the planning and execution of government securities auctions and investor relations. It also trained the authorities on government securities pricing and in the interpretation of auction results. DMF NEWSLETTER | ISSUE 48 5 Debt Reporting and Monitoring TYPE Bank Office (BO) and Debt Reporting Debt Reporting Tool COUNTRY Central African Republic, May 2–6, 2022 Rwanda, June 21–24, 2022 ORGANIZERS World Bank World Bank OBJECTIVE The mission aimed at assessing debt recording, The mission aimed to deliver a stock-taking of monitoring, and payment processes and infra- reporting practices in debt management, including structure; evaluating recording and transparency the scope of reporting and how these are published. products. In addition, a proposal for improving reporting was developed. The mission team applied the Debt Reporting Tool to provide guidance. HIGHLIGHTS The mission conducted a one-day training to help The mission analyzed the reports that are being local staff understand how to derive debt cash prepared by DDG, as well as the framework for flows from a stylized debt portfolio. A hands-on debt reporting, including legal requirements and exercise was undertaken with the team and mission the organization of debt management. members to calculate basic cost and risk indicators currently missing on published public debt reports. Debt-Related Contingent Liabilities and Fiscal Risks TYPE Assessing Credit Risk and Managing Sovereign Fiscal Risk Guarantees/on-Lending COUNTRY Cabo Verde, June 27– July 1, 2022 Kenya, June 7–20, 2022 ORGANIZERS World Bank IMF OBJECTIVE The mission aimed to help the government assessing The mission supported the Kenya National Treasury credit risk from the beneficiaries of loan guarantees (NT) to establish a Fiscal Risk Committee (FRC) to and on-lent credit, mostly state owned enterprises strengthen fiscal risk management. and municipalities. HIGHLIGHTS The mission also introduced a Credit Risk Scoring The mission provided recommendations for insti- Tool that could be used to charge risk-based fees tutional arrangements for the FRC and supporting on beneficiaries requesting guarantees and on-lent tools and frameworks for its operationalization. Draft credit. Terms of References (TORs), a Fiscal risk register template, guidance for operationalization, reporting templates and analytical techniques were provided through the mission report. Extensive consultation with the authorities took place during the mission, including a widely attended options workshop, a seminar on international experiences and technical workshops with NT officials. 6 DMF NEWSLETTER | ISSUE 48 Conducted Virtually 21 921 Training Opportunities Trained Participants Debt Management Performance Assessment (DeMPA) Regional Virtual Training COUNTRY West Africa and Central Africa (Francophone), Caribbean/Africa, May 2–6, 2022 May 31–June 3, 2022 ORGANIZERS World Bank World Bank OBJECTIVE The workshop presented the DeMPA methodology amended in 2021. Participants were trained on the interlinkages between the debt performance indicators, the use of evidence- based data for assessing debt management practices and the amended scoring methodology. The workshop also offered the opportunity to discuss country-specific debt management challenges, to be potentially addressed by future WB's TA and policy operations. PARTICIPANTS 37 participants from West Africa francophone The training was attended by 17 officials from the countries: Chad, Central African Republic, Congo, debt offices of the following countries: Dominica, DRC, Gabon, Haiti, and Madagascar. Eswatini, Grenada, Lesotho, Saint Lucia, St. Vincent and the Grenadines. Medium-Term Debt Management Strategy (MTDS) and Annual Borrowing Plan (ABP) TYPE MTDS ABP ABP COUNTRY Congo (RoC), May 9–13, 2022 WAIFEM Countries, MEFMI Countries, May 9–13, 2022 May 23–27, 2022 ORGANIZERS IMF World Bank/IMF World Bank/IMF OBJECTIVE The mission provided training on the use The workshop provided technical assistance on the design of the MTDS framework and the interpre- and implementation of an Annual Borrowing Plan building tation of the results of the Analytical Tool on the ABP tool recently jointly developed by the World (AT). It also addressed shortcomings in the Bank and the IMF. authorities' existing practices for design of their MTDS and provided guidance on the content of their 2023-25 debt management strategy (DMS) document. PARTICIPANTS About 15 officials from the debt man- The training was attended The training was attended agement office, the Treasury, Economy by 55 officials from Gambia, b y 5 7 of f i c i a l s f ro m Departments and the Minister of Finance's Ghana, Liberia, Nigeria and Botswana, Eswatini, Kenya, office and the Central Bank participated Sierra Leone. Lesotho, Mozambique, throughout the workshop. Namibia, Tanzania, Uganda, Zambia and Zimbabwe. DMF NEWSLETTER | ISSUE 48 7 Domestic Debt Market Development (DDMD) TYPE Local Currency Bond Market (LCBM) Development Virtual Training COUNTRY WAIFEM Countries, June 23–27, 2022 * ORGANIZERS World Bank/IMF OBJECTIVE The workshop was designed to familiarize participants with the key building blocks of LCBMs and enable them to populate the LCBM analytical tool, which is designed to help users identify country needs and formulate a plan for LCBM development. PARTICIPANTS 51 participants from The Gambia, Ghana, Liberia, Nigeria and Sierra Leone attended the training. International Bond Issuance (French) COUNTRY Regional, June 14, 2022 ORGANIZERS IMF OBJECTIVE The workshop familiarized participants with the green bond issuance process and the role of debt manage- ment offices in green bond planning, execution and reporting issues. PARTICIPANTS More than 70 participants from Burundi, Cameroon, Central African Republic, Democratic Republic of Congo, Chad, Republic of Congo, Sao Tome & Principe, Comoros and Madagascar. Designing Debt Management Strategies COUNTRY Global, April 4–8, 2022 ORGANIZERS World Bank OBJECTIVE The workshop guided participants through the processes of developing a public debt management strategy based on an analysis of financial cost and risk tradeoffs, through presentations, case studies, and interactive exercises. PARTICIPANTS 21 officials and 1 observer from the following countries attended the virtual training sessions: Albania, Armenia, Bhutan, Ethiopia, Ghana, India, Indonesia, Kenya, Nepal, Rwanda, Suriname, UAE. 8 DMF NEWSLETTER | ISSUE 48 Implementing Debt Management Strategies COUNTRY Global, April 11–15, 2022 ORGANIZERS World Bank OBJECTIVE The workshop aimed at building capacity for risk management and debt management strategy implementation through presentations, case studies, and interactive exercises, such as the generation of cash flows and calculation of risk exposure indicators, as well as preparing borrowing plans, designing auction calendars. PARTICIPANTS 23 officials and 1 observer from the following countries attended the virtual training sessions: Albania, Armenia, Bhutan, Cambodia, Ethiopia, Ghana, India, Indonesia, Kenya, Mozambique, Nepal, Rwanda, Suriname. Debt Sustainability Analysis (DSA) and Debt Sustainability Framework for Low-Income Countries (LIC–DSF) COUNTRY Caribbean, (Regional), April 25–29, 2022 Singapore, (Regional), May 16–20, 2022 ORGANIZERS World Bank/IMF World Bank/IMF OBJECTIVE The workshop familiarized the participants with the LIC DSF and introduced participants to (i) standardized forward-looking analysis of the debt and debt service dynamics under a baseline scenario and in the face of plausible shocks; (ii) the new tailored stress tests and realism tools introduced by the revised framework; (iii) the assessment of debt sustainability in relation to indicative country-specific debt burden thresholds; and (iv) the use of judgment to arrive at the final assessment of the risk of debt distress. PARTICIPANTS 22 participants completed the workshop, including 19 participants from Bangladesh, Bhutan, Cambodia, from Dominica, Grenada, Guyana, Honduras, St. Timor-Leste, Lao PDR, Nepal, and Vanuatu attended Lucia, St. Vincent and the Grenadines. the workshop. Sovereign Asset and Liability Management (SALM) COUNTRY Regional, June 27–July 1, 2022 ORGANIZERS World Bank OBJECTIVE The workshop aimed at presenting a SALM framework, with a particular focus on the practical solutions to identify, measure and mitigate the different types of risks that affect both sides of the sovereign balance sheet, and the World Bank financial products to manage balance sheet risks. PARTICIPANTS 46 participants completed the workshop, including from Afghanistan, Bangladesh, Benin, Bhutan, Bolivia, Cameroon, Congo (CNDP), Dominican Republic, Egypt, Ethiopia, Fiji Islands, Ghana, Ivory Coast, Kenya, Mauritius, Mozambique, Nepal, Niger, Senegal, South Africa, Sri Lanka, Tanzania, Zambia. DMF NEWSLETTER | ISSUE 48 9 Designing the Legal Framework for Debt Management COUNTRY Regional, June 28–30, 2022 ORGANIZERS World Bank OBJECTIVE The training provided an overview and practical aspects of sound legal frameworks for debt management obligations and legal agreements. It included theoretical and practical example of legal clauses used in different countries and by different lenders and aimed at exchange of experience among participant countries in these areas. PARTICIPANTS 18 officials from Honduras, Georgia, Moldova, South Africa, Kenya and Ghana attended the event. Managing Fiscal Risk COUNTRY Regional (JVI), May 2–6, 2022 ORGANIZERS World Bank OBJECTIVE The workshop aimed at helping government risk managers in identifying and classifying the key types of debt-related Contingent Liabilities (CLs) countries are exposed to and the key characteristics of a government's exposure to these fiscal risks. In addition to providing participants with a framework for CL risk management, the training will primarily focus on assessing and managing credit risk from the debt of public sector entities, with an implementation on government guarantees and on-lending. PARTICIPANTS 24 participants completed the workshop, including from Albania, Cabo Verde, Dominican Republic, Ethiopia, Gambia, Kenya, Kyrgyz Republic, Sierra Leone, and Zimbabwe. Debt Monitoring and Reporting COUNTRY WAIFEM Countries, June 6–10, 2022 MEMFI Countries, June 20–24, 2022 ORGANIZERS World Bank/IMF World Bank/IMF OBJECTIVE The workshops: (i) covered institutional arrangements of the fiscal risks that emanate from loan guarantees; (ii) provided an overview of the four most commonly used credit risk models, with the credit scoring model and its uses explained in depth; and (iii) presented FAD's analytical tools for discrete government guarantees, loans and guarantee schemes and highlighted their application to fiscal risk analysis, risk management and risk mitigation measures. PARTICIPANTS 52 participants from the following countries attended 54 officials from the following countries attended the workshop: Gambia, Ghana, Liberia, Nigeria, and the workshop: Angola, Botswana, Kenya, Lesotho, Sierra Leone. Malawi, Mozambique, Namibia, Rwanda, Tanzania, Uganda, Zambia and Zimbabwe. 10 DMF NEWSLETTER | ISSUE 48 Massive Open Online Courses (MOOCs) TRAINING PARTICI- DATE ORGANIZER OBJECTIVE ACTIVITY PANTS Medium-Term This Massive Open Online Course (MOOC) strengthened Debt Strategy capacity in analyzing the characteristics of a government January World Bank (MTDSx) Online debt portfolio and developing a medium-term debt man- 1–April 15, 33 IMF Course agement strategy. It explains the joint World Bank-IMF 2022 MTDS framework and provides comprehensive training on the accompanying analytical tool. Debt Sustainabil- This Massive Open Online Course (MOOC) provided an ity Framework overview of the World Bank–IMF LIC DSF, to help low-in- January World Bank for Low Income come countries achieve their development goals while 1–April 15, 32 IMF Countries (LIC– minimizing the risk of debt distress. It also familiarized the 2022 DSFx) Online participants with the LIC DSF tool, and the steps involved Course in its application. Public Debt, This online course, presented by the Institute for Capacity Investment, Development and the Research Department, explains how January and Growth: to analyze the relation between public investment, growth, World Bank 1–April 15, The DIG and and public debt dynamics using two dynamic structural 44 IMF 2022 DIGNAR Models models: the Debt, Investment, and Growth (DIG) model (DIGx) – MOOC and the Debt, Investment, Growth, and Natural Resources (DIGNAR) model. Public Debt This online course, presented jointly by the Institute for Dynamics Capacity Development and the Fiscal Affairs Department, Under provides an overview of how to assess public debt dynamics January Uncertainty World Bank under uncertainty. That is, the course discusses how to 1–April 15, (DDUx) 67 IMF think about public debt projections when we acknowl- 2022 edge uncertainty about the key variables that underly debt projections (GDP growth, interest and exchange rates, and primary balances). Projecting This two-module online course, presented by the Institute January Public Debt - for Capacity Development, explains how to project the World Bank The Public Debt evolution of public debt (i.e., government debt) over time 1–April 15, 164 IMF Dynamics Tool for a given set of projections of the relevant macro-fiscal 2022 (DDTx) variables. DMF NEWSLETTER | ISSUE 48 11 VII. Future Debt Events Upcoming Technical Assistance Missions, July–September, 2022 COUNTRY ACTIVITY NAME DATES Rwanda Technical Assistance MTDS Strategy July 2022 Chad Technical Assistance Annual Borrowing Plan July 2022 Senegal Technical Assistance Annual Borrowing Plan July 2022 Sri-Lanka Technical Assistance DeMPA TA August 2022 Vietnam Technical Assistance Unified DMO August 2022 Benin Technical Assistance Credit Rating Analysis Mission August–September 2022 Zimbabwe Technical Assistance Cash & Debt Management August–September 2022 Armenia Technical Assistance DeMPA TA September 2022 Togo Technical Assistance DeMPA TA September 2022 Congo REP Technical Assistance DMO back/m/f structure September 2022 Congo DRC Technical Assistance DeMPA TA September 2022 12 DMF NEWSLETTER | ISSUE 48 Upcoming Training, July–September, 2022 COUNTRY ACTIVITY NAME DATES E-Learning Regional Training LIC DSFx (MOOC French) July–September 2022 E-Learning Regional Training MTDSx (MOOC) July–September 2022 DIGx (MOOC) Public Debt, Investment and Growth E-Learning Regional Training July–September 2022 (DiG and DIGNAR Models) DDUx (MOOC) - Public Debt Dynamics under E-Learning Regional Training July–September 2022 Uncertainty E-Learning Regional Training DDTx Project Public Debt (Govt Officials) (French) July–September 2022 Regional (JVI) Regional Training Joint DMSABP July 2022 Regional (JVI) Regional Training DeMPA Training August 2022 Rwanda Bilateral Training LIC DSA Regional Training September 2022 WAIFEM Regional Training LIC DSA Regional Training September 2022 SSA Francophone Regional Training LIC DSA Regional Training September 2022 Vlll. Recent Debt Publications Enhancing Debt Transparency by Strengthening Public Debt Transaction Disclosure Practices Paper Improving debt transparency is critical for promoting debt sustainability and creditworthiness assessments, increasing the accuracy of public debt information, and protecting the interests of a diverse range of stakeholders. The importance of debt transparency, the costs associated with the lack of it, and its benefits, are extensively discussed in recent World Bank literature. One of the key factors that limits debt transparency as it relates to public disclosure and the sharing of public debt-related information, is transaction-level confidentiality and disclosure practices. More information here. DMF NEWSLETTER | ISSUE 48 13 When the Debt Crises hit, don't Simply Blame the Pandemic Blog E very debt crisis begins with unheeded warnings and ends with severe limits on investment in education, health, and infrastructure among other things. These crises often spark civil unrest and government collapse, delivering a lasting setback to the growth prospects of the affected country. In the wake of the COVID-19 pandemic, global debt has surged. Today, 58 percent of the world's poorest countries are in debt distress or at high risk of it , and the danger is spreading to some middle-income countries as well. More information here. Developing Economies Should Think hard About Taking on Resource-Backed Loans Blog R ising debt and record-high commodity prices are tempting many developing countries to pledge their natural resources to secure the financing they so urgently need. They should tread carefully: a renewed embrace of resource-backed loans could backfire on them. More information here. What Is the Role of Inflation-Linked Bonds for Sovereigns? Paper T his paper presents the main features of inflation linked bonds (ILB) as a funding alternative, which factors emerging economies need to consider when deciding to issue ILBs, which preconditions are needed, the benefits of ILBs and considerations for implementing a linkers program. More information here. Learning from Development Policy Financing Podcast D evelopment Policy Financing (DPF) is a major instrument of multilateral development banks and has played a prominent role in the World Bank's pandemic response. Also known as policy-based lending, DPF is a fast- dispersing instrument that provides non-earmarked funds to a country's national budget. How does DPF work and how successful has it been in achieving its various objectives? More information here. 14 DMF NEWSLETTER | ISSUE 48 Dollar Dominance and the Rise of Nontraditional Reserve Currencies Blog T he current Common Framework architecture relies on the application of the Paris Club's principle of comparability of treatment (CoT). However, CoT - in its current form – is not being enforced, does not distribute the burden of debt reduction equally among creditors, and does not guarantee compliance by private creditors, except for "light" restructurings. This note proposes two main reforms to address this challenge: (i) carrying out coordinated and simultaneous negotiations across creditors and (ii) using NPV reduction based upon a common discount rate as the only measure of CoT. More information here. Targeted Legislative Tweaks can Help Contain the Harm of Debt Crises Blog I t's a cardinal principle of private enterprise: A business that stumbles into the deep end on its debt deserves a second chance—an opportunity to “start afresh” after a financial misfortune. For more than a century, that tenet has enabled businesses to take the financial risks they need to succeed. Today, the right to a second chance is enshrined in the corporate bankruptcy laws of most leading economies. More information here. Restructuring Debt of Poorer Nations Requires More Efficient Coordination Blog L ow-income countries face fewer debt challenges today than they did 25 years ago, thanks in particular to the Heavily Indebted Poor Countries initiative, which slashed unmanageable debt burdens across sub-Saharan Africa and other regions. But although debt ratios are lower than in the mid-1990s, debt has been creeping up for the past decade and the changing composition of creditors will make restructurings more complex. More information here. Kampala, Uganda  IMF Photo/Esther Ruth Mbabazi DMF NEWSLETTER | ISSUE 48 15 DMF III Donors African Development Bank (AfDB) Austria - Federal Finance Ministry European Commission France - Ministry of the Economy, Finance and the Recovery Germany - Federal Ministry for Economic Cooperation and Development Japan - Ministry of Finance The Netherlands - Ministry of Foreign Affairs Norway - Ministry of Foreign Affairs Switzerland - State Secretariat for Economic Affairs - SECO United Kingdom - Foreign, Commonwealth & Development Office United States of America - Department of the Treasury Contact Information Debt Management Facility www.dmfacility.org The World Bank Group www.worldbank.org/debt 1818 H Street, NW dmf@worldbank.org Washington D.C. 20433 Debt Management Facility April–June 2022 Issue 48 The DMF Newsletter is published quarterly by the DMF Secretariat. The newsletter is distributed to debt management practitioners from developing countries, donors, DMF implementing partners, civil society organizations and private sector firms. The newsletter aims to share DMF work plans, lessons learned, and news and developments related to debt management.