The Bank and the IMF are developing a toolkit to support technical assistance (TA) for country-led Medium-Term Debt Management Strategies (MTDS). The toolkit includes a guidance note on the process of designing an implementing a debt management strategy in a low-income country (LIC) context, a template for strategy documentation, and quantitative cost-risk analysis tools. The Bank and the IMF have undertaken to provide TA to 4-6 LICs before reporting back to their Boards in late 2008.
An MTDS operationalizes country authorities’ debt management objectives - e.g. ensuring the government’s financing needs and payment obligations are met at the lowest possible cost consistent with a prudent degree of risk-, expressing the government’s preferences with regard to cost-risk tradeoffs in the form of the desired composition of debt, and by describing the plan that the government intends to implement to achieve this composition. An MTDS will have a strong focus on managing the risk exposure embedded in the debt portfolio - specifically, potential variation in the cost of debt servicing and its impact on the budget - and in particular identifying how cost and risk vary with the composition of the debt.
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