Debt Monitoring & Investment

Brief History

The Debt Management and Monitoring was established in 2003.  Prior to the establishment of the unit, debt management was the responsibility of various units within the Ministry of Finance. The Unit is responsible for managing the domestic and external debt and raising government revenue through issuing government securities or bonds in the domestic, regional and overseas markets through Regional Governments Securities Market (RGSM), which is the regional body responsible for trading debt instruments.

Main Objectives

The main objectives of managing the Government's Debt Management and Monitoring Unit are as follows:

  • To provide Government with stable financing options at a minimum cost.
  • Attempt to maintain public debt at sustainable levels by providing appropriate policy advice.
  • Maintain prudent debt structure.
  • Continued diversification of GOSL debt portfolio.
  • Ensure that Government borrowings and guarantees are consistent with the legal and regulatory framework established by Parliament.
  • Increase transparency and predictability in the debt management process.
  • Negotiate loans with a view to obtaining most favourable interest rates and reducing GOSL to unnecessary exposure to foreign exchange losses.
  • Constant consultation with the regional debt market.
  • Search for suitable investments opportunities to increase GOSL investment income.
  • Monitor events in the international and regional environment that have financial implication with a view to informing the relevant authorities.
  • Diversify investment options in an effort to enhance diversification thereby reducing GOSL institutional exposure.
  • Minimize the volume idle cash held in the banking system.
  • Ensure that monies forming part of the Consolidated Fund are invested in accordance with the Finance Act and instructions from the Minister of Finance.

The Functions of Debt Management

  1. Coordinating and collaborating with the other departments (Economic Analysis, Fiscal or Budget Divisions and the Treasury) on establishing a borrowing programme. This may require the coordination and verification of the work done (as a form of due diligence) by the units/departments responsible for the economic and fiscal outlooks prior to the budget presentation. It will also require the regular updates of these as circumstances change during the year.
  2. Coordinating and collaborating with the Fiscal Agent - ECCB. Will involve liaising with counterparts at the ECCB on matters relating to the national and regional borrowing calendars, market information (issues on market trends, liquidity situation, and prospective investor demand), auction and subscription results.
  3. Undertaking liability management. This will involve establishing a strategy for optimising the portfolio structure (volume of issue, target markets and choice of instruments) and establishing a forward-looking new issuance and maturity ladder, a methodology to assess the capacity of various markets for financing and refinancing the national debts, and a detailed information system to:
  4. Plan for the meeting of future financial requirements so as to avoid crisis arising from unforeseen combinations of refinancing bunching and rising deficits;
  5. Measure the cost of possible financing alternatives;
  6. Formulate a long-term plan to establish a least cost/risk solution for borrowing through the application of the optimization model, cost risk analysis, and a time series on interest rates;
  7. Monitor, evaluate and refine plans as conditions change.
  8. Providing policy advice based on information obtained from the above mentioned functions to a Debt Management Committee or to the Financial Secretary. This input will be critical for the latter's advice to the Minister of Finance and to his participation on the Regional Debt Coordinating Committee (RDCC).
  9. Formulate a long-term plan for the management of the external debt of member countries, including the issue of foreign versus domestic borrowing, and least cost analysis using an optimisation model based on the forecast future value of different currencies.