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Blog: Helping countries to achieve debt sustainability

16 January 2017
Blog by Pamella McLaren, head of the debt management unit, Commonwealth Secretariat

In the past decade Commonwealth countries have been forced to manoeuvre through some choppy waters. From global financial crises to natural disasters the challenges have been persistent and daunting.

Indeed, battling to keep a steady and secure economy has been the constant preoccupation of many governments. Certainly one thing that has been at the fore of their minds is making sure that these challenges do not plunge their countries into unsustainable levels of debt.

What became crystal clear between 2007 and 2016 is the importance of prudent public debt management. If this is not a critical part of core government policy frameworks, countries will struggle to achieve debt sustainability and macroeconomic and financial stability.  


Despite the challenges of the last decade, both emerging and developing countries have made significant progress in strengthening public debt management policies, governance frameworks, institutional arrangements and capacity building.

With support from international financial institutions, such as the International Monetary Fund (IMF) and the World Bank, public debt management frameworks have evolved and improved significantly. Approaches to measuring and improving performance related to public debt management also progressed, promoted by the various initiatives of these institutions.

But many emerging and developing countries still face significant challenges, with the impact of current monetary policy cycles in advanced economies. We have seen increased and unsustainable debt burdens in some countries, eroded policy buffers such as savings and reserves, and a decline in commodity prices. These issues can quickly militate to worsen public debt portfolios.

Small states, many of which are members of the Commonwealth, remain particularly vulnerable with rising debt burdens. The IMF’s 2015-2016 Debt Sustainability Analysis of 22 low income Commonwealth member countries indicated that seven are at high risk of public debt distress, nine are facing moderate risk, five are low risk and one is in distress - meaning it is already experiencing difficulties in servicing its debt and is in arrears.

With increasing reliance among governments on guarantees to public sector entities and adoption of public-private partnerships to promote private investment, many remain exposed to significant contingent liabilities. This poses a great risk to sovereign balance sheets. Worryingly, in many developing countries the assessment of such fiscal risks remains limited.

All of these challenges underline the need for debt managers to continuously monitor and analyse macroeconomic and financial developments and the implication for debt portfolios and markets. Finally, despite the recent improvement in public debt management, substantial strengthening of debt management frameworks and capacity building remains a priority.

Commonwealth support

Bearing these challenges in mind, the Commonwealth Secretariat’s debt management programme has also evolved significantly during the past decade to support the changing and growing needs of countries. Currently, we provide assistance to more than 40 member countries, helping to strengthen their debt management policies and capacity.

Through the Commonwealth Secretariat’s Debt Recording and Management System (CS-DRMS), the institution is helping countries manage over USD 2.5 trillion of public debt. Through the years we made a series of wide ranging enhancements which have ensured the tool remained essential for debt managers in their day to day operations and strategic management of their public debt portfolio.

Achievements in 2016

During 2016 the Commonwealth’s debt management programme continued to provide policy advisory support in response to the growing demand from countries to strengthen and reform their policy framework. Members benefitted from support in a number of areas, including legal framework, debt management strategy formulation and the development of government domestic debt markets.

To strengthen technical capacity for public debt management, the Commonwealth successfully delivered eLearning courses in domestic and external debt management, and debt recording in CS-DRMS. A total of 62 participants across Africa, Asia, the Pacific and the Caribbean have benefited from these courses.

In February 2016 the government of Cyprus adopted CS-DRMS to manage the country’s public debt portfolio. The successful implementation of the system took effect in December 2016, making Cyprus the 62nd country to use this flagship programme.

Future vision

To deal with future challenges, the Commonwealth will continue to create innovative solutions to support its member countries to adopt prudent debt management frameworks.

The redevelopment of our debt management programme will substantively transform the maintenance and compilation of debt data as well as the generation of real-time information and projections. This will greatly enhance the management of public debt and contingent liability portfolios by supporting back office operations such as monitoring, analysis and reporting.  

This system will be implemented in member countries through a well-designed and sequenced deployment plan, backstopped with efficient migration of debt database and on-site and online support. It will also build capacity through comprehensive e-learning.

Policy advisory support will be targeted to clients depending on the evolving changes in the debt management landscape, and country-specific needs and priorities.  This will be anchored within the current framework of active coordination between various providers of technical assistance on public debt management, including the IMF, World Bank and other regional partners.

The Commonwealth will also engage in policy advocacy on emerging and sound practices of public debt management. Capacity building will be targeted to more country-specific activities, and will be complemented with generic training through the newly developed eLearning portal.

The aim, ultimately, is to help each Commonwealth country achieve a solid debt management strategy that takes into account their current opportunities and challenges and prepares them for any external shock, such as a global economic downturn or a natural disaster.

More about the Public Debt Management Programme