Effective public debt management can reduce financial vulnerabilities, contribute to macroeconomic stability, preserve debt sustainability and protect a government's reputation. Volatility of interest rates, exchange rates, and debt flows require debt managers to properly assess possible risks and to mitigate them by relying on diverse range of financing sources, while maintaing borrowing costs at prudent levels. The current financial crisis has made the tasks of debt managers even more complex by increasing financing needs at a time when conditions in financial markets are severely constrained. Moreover, cost and risk characterisics of many financing options have changed, requiring a re-evaluation of existing debt management strategies.
The World Bank Group offers services and products, provides global expertise and supports countries in strengthening debt management capacity and institutions. The World Bank's Economic Policy and Debt Department assists, in particular low-income, countries in strengthening their debt management through the Debt Management Performance Assessment (DeMPA), the Medium-Term Debt Management Strategy (MTDS), the implementation of Debt Management Reform Plans, training and other outreach activities. The implementation of these activities is demand-driven and is financed for DMF eligible countries under the Debt Management Facility (DMF) for low-income countries.