UNCTAD DMFAS programme – Strengthening debt management in support of good governance

Concerns regarding rising levels of debt and vulnerabilities in developing economies have drawn attention to problems with the transparency of debt statistics. There is broad consensus across the international community, including the G20 -—
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and the United Nations General Assembly -—
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, that enhancing information sharing could help to avoid new episodes of debt distress.

Mandated by the UN General Assembly -—
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and UNCTAD member States -—
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, the UNCTAD DMFAS programme -—
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advises developing and transition economies in debt management and helps them to record and report reliable debt statistics for policy making. UNCTAD work on the recording, reporting and monitoring of debt statistics (the ‘downstream’ areas of debt management) complements the work of the World Bank and the IMF who focus primarily on data sustainability analysis and medium-term debt strategies (‘upstream’ debt management). The DMFAS programme follows a four-year strategic plan, currently focusing on the Programme’s comparative advantages in technical assistance in the area of operational debt management, from debt data recording and statistical reporting up through basic debt analysis -—
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.

The Programme is funded through bilateral donor contributions, cost-sharing by beneficiaries, which has steadily increased over the past 10 years, and UNCTAD’s regular budget. The current donors include Germany, Ireland, the Netherlands, Switzerland and the European Union. Donors consider the DMFAS programme crucial for improving debt management:

We congratulate the DMFAS program and the DMFAS user countries for the successful implementation of the 2016-2019 Strategy and the positive evaluation findings which demonstrate the effectiveness and clear added-value of the Programme.

The DMFAS Programme provides a modern, effective and reliable system to register and store debt data, perform safe and accurate debt transactions and facilitate reporting and transparency. More importantly, the DMFAS program offers a comprehensive capacity development framework that accompanies users from the installation of the system up to the point of reporting and analysis.

Donor’s statement, November 2019
UNCTAD’s DMFAS system contributes to improvements in governance by increasing data availability”.“… DMFAS has contributed to more complete and transparent reporting on debt.Assessment of UNCTAD: MI 9.3. (MOPAN, 2019)

Sustainable debt is important for sustainable development

Timely and comprehensive statistics on the levels and composition of debt are a prerequisite not only for the effective management of public liabilities but also for identifying risks of debt crises and limiting their impact -—
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. Reliable debt statistics contribute to the formulation of financial policies and strategies, and consequently to improvement of financial stability and governance.

[The General Assembly] reiterates that timely and comprehensive data on the level and composition of debt are necessary for, inter alia, building early warning systems aimed at limiting the impact of debt crises, calls for debtor and creditor countries to intensify their efforts to collect and release data.United Nations (2020)

The DMFAS programme contributes directly to the achievement of SDG 17.4 of the 2030 Agenda as it assists “in attaining long-term debt sustainability through coordinated policies aimed at fostering debt financing, debt relief and debt restructuring”. Training workshops, capacity-development and software tools enable better debt management and reporting that help developing countries to improve their financial policies. The work also contributes indirectly to poverty reduction (SDG 1) as better debt management and debt relief can help to take steps towards economic recovery for heavily indebted poor countries.

[The DMFAS Advisory Group] appreciates that the Programme continues to be highly relevant for developing countries, bilateral donors and other organizations, that it is highly responsive to the needs of debt management offices and that it is making an important contribution to the achievement of the Sustainable Development Goals. UNCTAD (2017 para 2)

DMFAS offers software, training and advisory services

The DMFAS programme offers countries a set of practical solutions for the management of public liabilities and the production of debt statistics. These include:

  • DMFAS debt management and financial analysis software designed to meet the operational, statistical and analytical needs of debt managers and public debt strategies. This includes training in the installation, maintenance and use of the software.
  • Capacity development in debt management skills through modules on debt data validation, statistics, debt portfolio analysis and operational risk management.
  • Advisory services, including needs assessments and advice on technical, administrative, legal and institutional debt management. This includes assistance interfacing the DMFAS database with countries’ integrated financial management systems.

Currently, 58 countries and 84 institutions around the world use DMFAS software for debt management. The software has been continuously improved and is now in its sixth edition since 1982. The software is available in four languages (English, French, Russian and Spanish).

Map 1. Geographical distribution of active DMFAS countries, December 2020
Source: UNCTAD reporting.

DMFAS has trained experts from 64 countries in debt management

Table 1 shows the number of officers that have benefited from training in debt management procedures and best practices between 2011 and 2020. In total, between 2011 and 2020, 5 755 people from 64 countries were trained by DMFAS. In addition, on average 370 experts participated in each UNCTAD Debt Management Conference held every second year since 2011.

Table 1. Number of participants in capacity development events organized by DMFAS
 20112012201320142015201620172018201920202011 - 2020
Capacity development for debt officesTraining in debt validation, reporting and analysis90345195240138282184209200721 955
Functional training in using DMFAS324276192245120244134233159912 001
IT related training and advisory services100125807060152711324354887
Other advisory services5590969527739512395144912
Total5698365636503457514846974973615 755
UNCTAD debt management conference380-310-343-390-430-1 853
Source: UNCTAD reporting.

Since 2016, DMFAS has systematically recorded detailed statistics on DMFAS activities. In the five years from 2016 to 2020, 342 workshops have been provided, to 2 790 participants. These participants were from 64 different countries and 42 per cent were female (see table 2).

Table 2. Number of DMFAS capacity development events organized by UNCTAD and number of participants, 2016-2020
   Number of eventsTotal participantProportion female
Capacity development
for debt offices
Training in debt validation, reporting and analysisData validation (initial)2226352.5%
Data validation (follow-up)1019258.9%
Debt statistics (initial)913241.7%
Debt statistics (follow-up)21323.1%
Debt portfolio analysis (initial)811937.8%
Debt portfolio analysis (follow-up)34042.5%
Other debt related training1318834.6%
Functional training in using DMFASFunctional training in using DMFAS6984447.6%
IT related training and advisory servicesDMFAS Installation and other IT workshops4420427.0%
Interfacing DMFAS with other systems13324839.5%
Other advisory servicesImplementation in partnership with DMF22010936.7%
Workshops in coordination with partners3525340.7%
Expertise exchange study tours3516851.2%
Workshops relating to countries’ projects391947.4%
Total3422 79241.5%
UNCTAD debt
management conference
282033.2%
Source: UNCTAD reporting.
Notes:
1 Workshops in interfacing DMFAS with other financial management information systems
2 Debt Management Facility -—
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, including missions in DMFAS user countries for debt management performance assessment, medium-term debt management strategy and debt management reform plans

Increasing DMFAS debt coverage facilitates debt management

Debt data recorded with the DMFAS software are easier to manage and report transparently to support financial policy and stability. The DMFAS software facilitates the recording of both external and domestic debt. The DMFAS programme uses a 90 per cent threshold to determine whether a country has comprehensive coverage of their government external debt; i.e., if a country has at least 90 per cent of external debt instruments covered in the DMFAS system it is considered comprehensive. The same 90 per cent threshold is set for government domestic debt.

Figure 1 shows that over the last nine years, a consistently high proportion of DMFAS countries had comprehensive data on external debt. In 2020, 52 of the 57 countries using DMFAS had at least 90 per cent of external debt instruments recorded in DMFAS.

Figure 1 also shows an increasing number of countries using DMFAS to record domestic debt. The number of countries with comprehensive data on domestic debt also increased over the time period, but the figure shows that it takes some time for new DMFAS users to develop a more comprehensive debt database. In 2020, 41 institutions were recording domestic debt in DMFAS. Among these 41 institutions, 28 had at least 90 per cent of domestic debt recorded in DMFAS.

Figure 1. Number of countries recording debt using DMFAS
Source: UNCTAD reporting.

DMFAS helps to improve transparency and quality of debt reporting

The DMFAS programme also supports its clients to disseminate debt statistics and to perform debt analysis. The programme does this by offering initial and follow-up capacity development modules. For example, a first module helps countries to develop their first debt statistics bulletin; a second helps them to review and improve the content of the existing publications.

Both the number of DMFAS user countries that publish debt statistics bulletins and that publish debt portfolio reviews on a regular basis has increased during the last seven years (see figure 2). Countries publishing debt statistics have increased from 26 to 36 and countries publishing debt analysis have increased from 12 to 32. In 2020, some countries experienced a setback in publishing a debt bulletins due mainly to the disruptions related to the COVID-19 sanitary crisis.

Figure 2. Number of DMFAS-supported countries publishing debt reports on a regular basis
Source: UNCTAD reporting.

More integrated operation risk management with DMFAS

Several countries have asked that the DMFAS debt management operations be integrated with other financial management systems, such as those typically used by treasury departments and budget departments. The latest version of DMFAS software includes this facility, improving the accuracy and timeliness of debt service payments and debt data. As a result, the number of countries where DMFAS is integrated with other financial management information systems has increased from 8 countries in 2006 to 23 countries in 2020 (figure 3).

Figure 3. Number of countries with interfaces between DMFAS database and other financial management information systems
Source: UNCTAD reporting.

References

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