OECD Working Papers on Sovereign Borrowing and Public Debt Management
OECD Working Papers on Sovereign Borrowing and Public Debt Management provide authoritative information on technical and policy issues in the area of public debt management (PDM) and government securities markets. Studies track closely structural issues, trends and challenges in government debt policies and markets. Topics include pressing government debt policy issues such as the measurement of sovereign risk; how to contain the cost of government borrowing operations; the use of electronic systems; sovereign asset and liability management (SALM); liquidity of markets in government debt; advances in risk management; the role of derivatives in PDM; linkages between PDM and monetary policy and the role of debt managers in pricing and managing contingent liabilities.
These studies are prepared for dissemination among sovereign debt managers, financial policy makers, regulators, financial market participants, rating agencies, and academics. By providing information on this highly specialised field of government activity and policy, papers aim to stimulate discussions among a wider audience as well as further analysis.
The role of public debt managers in contingent liability management
Contingent liabilities are major sources of fiscal risks due to the uncertain financial commitments they involve. Their effective management, therefore, is essential for increasing stability and predictability in public finance.
This paper explores the role of public debt managers in contingent liability management based on the results of a background OECD survey and the information provided by seven task force countries. The results indicate that there are certain roles and responsibilities assumed by the public debt managers in this field, while the degree of involvement differs widely across countries. We also observed that the debt management offices’ (DMOs) involvement is more prominent in the management of government credit guarantees, while contingent liabilities arising from Public Private Partnerships (PPPs) and government sponsored insurance programmes appear to be outside the domain of public debt managers in most cases. Drawing on leading country practices and lessons from the past, this paper advises public debt managers on possible motives and areas of involvement.
Keywords: government insurance programmes, fiscal risk, contingent liabilities, public private partnerships, public debt management, government credit guarantees
G18: Financial Economics / General Financial Markets / General Financial Markets: Government Policy and Regulation;
H63: Public Economics / National Budget, Deficit, and Debt / National Debt; Debt Management; Sovereign Debt;
H81: Public Economics / Miscellaneous Issues / Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts