|Central Bank of Gambia (pix-Daily Observer)|
It is in this vein that the West African Institute for Financial and Economic Management (WAIFEM), the World Bank (WB) and the International Monetary Fund (IMF) jointly hold a week-long course on “Medium Term Debt Strategy (MTDS)” for Anglophone West Africa in Banjul, The Gambia from June 13-17, 2011.
The course is aimed at providing countries with the requisite skills for developing a “comprehensive debt management strategy”, to strengthen capacity in the methodology of MTDS.
It involves combine lectures and hands-on exercise using spreadsheet analytical tool to illustrate how a MDTS can be developed with emphasis where by it is possible for debt managers to quantify the political risk to the budget under alternative debt management strategies.
Professor Akpan H. Ekpo
Director General WAIFEM
In a statement read on his behalf by Mr Baba Y. Musa, WAIFEM Resident Representative in Banjul and Director of Debt Management, Prof. Ekpo explained that the MTDS is a framework developed by the WB and the IMF, providing guidance for formulating and implementing a debt management strategy for the medium term.
“It is a fiscal management tool that a country can use to evaluate its debt financing options given the dynamics of its macroeconomic situation. It is useful for assessing the performance of government’s cost and risk tradeoffs associated with alternative debt management,” he said.
“The benefits of MTDS includes: helping a country to avoid expensive mistakes by identifying the optimal way to meet government financing requirements at least cost with a prudent degree of risk measurement and management; it helps achieve an appropriate balance between short and long-tenors interest rate structure; and determines optimal level of government financing at the same time considering the achievement of other objectives, like domestic market development etc”.
Thus improving credit worthiness of these countries and opened up new borrowing opportunities and access to international capital market.
However, he warns that the situation, if not properly managed, could lead a country to a ballooning of its debt and debt distress, a scenario compounded by the emergence of new creditors such as china and India (who are willing to lend at less stringent conditionalities).
According to him, Gambia has up-scaled its debt management by facilitating a debt portfolio management through the maintenance of a reliable and accurate records of public debt and close monitoring of critical debt indicators.
While noting that there remain challenges as the country has not MTDS in place, Mr Colley said the Course came at a time when performance for The Gambia Country Policy and Institutional Assessment (CPIA) have just improved. “And the risk of debt distress has abated from high to moderate level”.
She commends the Gambia Government for supporting the training, saying without their support, the whole process will be in vain.
In fact, Togo said this was the case in Brazil, where the programme ended up failing because it was held in isolation (without the support of the Brazil Government). “We do not want this training to stop in this room. It needs to be a continuous process with a good avenue for networking. In two to three years, we want to see WAIFEM countries to be able to publish comprehensive debt management strategies” she said.
|Headquarters building of the International Monetary Fund, Washington, D.C.|
He recognises that investment opportunities are emerging daily, but warns that while harnessing these opportunities – there is a need for institutions to avoid expensive mistakes.