The importance of effective debt management
Effective public debt management is the cornerstone of financial stability and sustainable fiscal policy. A government's debt portfolio is often the largest in the country and can generate substantial risk to its fiscal policies, with potential to undermine key development objectives.
Strengthening debt management policy, capacity and analytical tools for debt management in low and middle-income countries therefore must remain a priority. It requires up-front country ownership, political will, as well as commitment from donors and technical assistance providers, such as the Commonwealth Secretariat.
Introducing Commonwealth Meridian
Our brand-new debt public management system was introduced to the Commonwealth family at the Secretariat’s Debt Management Forum in London this June.
Meridian replaces Commonwealth Debt Recording and Management System, fondly known as CSDRMS.
I like to think it was the great introduction and launch that sparked a lot of interest because we have been inundated with requests from member countries to migrate to our new system.
Naturally, everyone wants to know what is new in the system. While there are many features to tell you about, I would like to mention the ones that I think have the biggest impact.
Features of Commonwealth Meridian
Understanding the importance of proper management, the Secretariat has invested in developing a modern debt management system that can hopefully make a huge difference in the day-to-day operations of debt offices when recording, analysing, and reporting on new and increasingly sophisticated debt instruments and financing arrangements.
I am particularly excited that our new system is web-based with very granular and robust access controls on both a functional and data level.
This feature opens the door in terms of more accessibility to a central data repository for the various debt management stakeholders. For example, besides the ministry of finance or debt management office, public entities or the line ministries that they report to can now directly input changes to their debt stocks and flows. And project implementing units for infrastructure projects can more easily report on forecast and actual drawdowns from loans.
Meridian also has alerts via the system or email to prompt for inputs that are overdue.
We have recently been engaging with two central banks who use our current debt management system to monitor external debt. They are very keen to explore using Meridian to obtain data directly from agencies and/or large private sector organisations that currently report via surveys, which then still require capturing into the debt management system.
Meridian has come just at the right time, when debt transparency is attracting global attention.
Countries are being encouraged to put in place systems and processes to promote greater transparency across all debt transactions to improve the flow of information and reduce the risk of adverse shocks arising because of undisclosed public liabilities appearing in central government liabilities.
Those who transition to using Meridian will find it fosters accountability and transparency and is a system built on meeting the demands from both borrowers and creditors/lenders.
To elaborate, it caters for comprehensive recording of public and publicly guaranteed debt, lending portfolios as well as private sector external debt.
It also has functionality to record and monitor a wide range of financing products including any future financing products, using instrument templates. This too assists countries to record, manage and report more comprehensively and transparently on their debt. Moreover, the strict operational controls that have been introduced should help significantly in improving data quality.
Notwithstanding a tool is only one part of the equation, countries will hopefully take advantage of these features to improve on their current recording and management in terms of coverage and timeliness because implementing a strategy to move towards debt sustainability depends on first knowing your full current and changing debt position.
We have also introduced a policy and planning module that assists countries to monitor their debt in terms of borrowing, lending and guarantee mandates or legislated acts. It is coupled with a very sophisticated dashboard that allows debt managers and senior officials to monitor their debt limits, composition and debt indicators at a glance through gauges and graphs. Underlying data can easily be accessed through the dashboard as well.
There are many more features that I can share with you and I hope that I have piqued your curiosity so that you contact us to find out more. We’ll gladly brag about our new addition to the Commonwealth family.