Eighth UNCTAD Debt Management Conference
Geneva, 14 - 16 November 2011
Countries' Perspectives on Capacity Building Needs in
Debt Management
by
Mr. Caleb Rwamuganza
Deputy Accountant General, Ministry of Finance and
Economic Planning of the Republic of Rwanda
The views expressed are those of the author and do not necessarily reflect the views of UNCTAD
RWANDA’S PERSPECTIVE ON
CAPACITY BUILDING NEEDS IN
DEBT MANAGEMENT
GENEVA - SWITZERLAND
Caleb RWAMUGANZA-Deputy Accountant GeneralTreasury Management
Outline
3
Rwanda Debt Management – An Overview
Debt Management – Opportunities and Challenges
New Debt Management Requirements
Identified capacity gaps
Capacity Building Needs – Debt Office Level Specific
Conclusion
Ministry of Finance and Economic Planning – Office of the Accountant General
Rwanda Debt Management – An Overview
4
Legal
Framework
• PFM act – Organic Budget Law on State Property (OBL): provides
guidance on government borrowing, lending and debt management (art
54-65),
• Financial Regulations – Ministerial order implementing the OBL: providing
further guidance on authority to borrow and borrowing, local government
borrowing, guarantees and lending and equity participation (art 21-25).
•TMC and DMC – guide cash and debt management
Institutional
Arrangemen
t
• Front office – handled by the External Finance Unit under the office of the
Government Chief Economist at the Ministry of Finance,
• Middle office – Handled by the Macroeconomic Policy Unit under the office
of the Government Chief Economist at the Ministry of Finance,
• Back office – handled by the Treasury Unit under the Office of the
Accountant General at the Ministry of Finance.
Debt Levels
• Rwanda reached the HIPC completion point in 2005 – significantly reducing
the debt levels,
• Current debt levels are low compared to regional/SSA standards – total
public debt stock stood at less than 21 percent of GDP at end 2010.
Ministry of Finance and Economic Planning – Office of the Accountant General
Rwanda’s Experience
5
Rwanda Debt Stock (million USD)
1800
1600
1400
1200
1000
800
600
400
200
0
1
2
3
4
5
External Debt
6
7
8
Domestic Debt
Ministry of Finance and Economic Planning - Office of the Accountant General
9
10
11
Rwanda’s Experience
6
Rwanda Debt Stock (percent of GDP)
120.0
100.0
15.7
15.3
80.0
13.1
12.4
15.4
9.6
60.0
40.0
77.7
83.6
85.3
78.6
74.8
57.2
20.0
8.6
8.8
15.3
2006
6.0
6.0
6.7
15.2
14.5
14.1
14.1
2007
2008
2009
2010
0.0
2000
2001
2002
2003
2004
External Debt
2005
Domestic Debt
Ministry of Finance and Economic Planning - Office of the Accountant General
Debt Management – Opportunities and Challenges
7
Opportunities
Rwanda is at a moderate risk of
debt distress based on the latest
DSA,
Challenges
Capacity for macroeconomic
management and PFM is strong
(recent PEFA scores),
Debt Management Strategy (3
year rolling plan) soon to be
submitted for cabinet approval.
Dynamic changes in practices and
technology,
Linkages with PFM (cash
management) and Macro
framework (macroeconomic
policy),
Comprehensiveness of coverage of
debt (public and private debt),
Increasing demands on debt
managers,
Human and institutional
bottlenecks.
Ministry of Finance and Economic Planning – Office of the Accountant General
New Debt Management Requirements
8
Large Infrastructure needs calling for scaled up financing
Cross border investment projects - requiring non concessional financing and new more
complex approaches to financing , i.e. public private partnerships (PPP)
Diversification of debt portfolio
Publicly guaranteed loans to state owned enterprises
Less multilateral concessional financing and more of market based financing
Development of domestic debt market
More of domestic financing for the development of the domestic primary and secondary
markets
Concessionality requirements change
With lower debt vulnerabilities and higher capacity, shift from minimum concessionality
to minimum average concessionality on external public borrowing.
Ministry of Finance and Economic Planning – Office of the Accountant General
Available funding opportunities and capacity
challenges
9
PPP Arrangement to Finance key infrastructure projects
Challenge: complicated legal requirement , charges are not arranged in the same way to
the old loan-interest rate costs Countries were used to in the past
Sovereign bond issuance
Challenge: Country rating is key, Debt crisis has made it hard to raise funds. Staff need
to be well trained in risk analysis and modeling to avoid very high costs while raising
funds through bong issuance
Raising funds through domestic stock market
Challenge: Young domestic capital market and staff are not yet used to challenges of
the raising funds through stock market-More capacity building required
Acquiring loans at market terms
Challenge: Staff require to be well trained to negotiate such loans to avoid incremental
costs.
Ministry of Finance and Economic Planning - Office of the Accountant General
Identified Capacity Gaps
10
Institutional environment and human resources
Staff turn over
Inadequate staffing levels and lack of career paths
Linking debt management to macroeconomic and financial policies
Not yet interfaced debt databases application with existing IFMIS
Reporting and analysis
Lack of quality information and/or late availability of information hampering
reporting – more could be done on strengthening centralized data consolidation
points.
Weak analytical capacity and cost-risks evaluation capacity for complex financing
options
Developing the local market for government securities
Ministry of Finance and Economic Planning – Office of the Accountant General
Capacity Building Needs – Debt Office Level Specific
11
Ministry of Finance and Economic Planning – Office of the Accountant General
Conclusion
12
Rwanda made tremendous efforts in keeping debt levels at sustainable levels since the
achievement of the HIPC completion point, thanks to prudent fiscal and monetary
policies;
Remarkable improvements are ongoing in debt management, with the new debt
management strategy in place, upgrade of DMFAS to version 6.2, country own DSF
assessment (DSA) on an annual basis starting 2012 – BUT: the pressing infrastructural
needs require scaled up financing from diversified sources and through more complex
debt instruments that consequently require scaled up debt management capacity;
Bridging the identified capacity gaps and addressing all the debt management new
requirements calls for a capacity building approach that address the right needs at the
right time with the right solutions in the most effective and efficient way.
Ministry of Finance and Economic Planning – Office of the Accountant General
Thank You
Ministry of Finance and Economic Planning – Office of the Accountant General