With foreign debt one of the most critical issues for the developing world, good debt management is of increasing importance. UNCTAD’s ongoing contribution to this field is its Debt Management and Financial Analysis System (DMFAS) programme, which for 20 years has been providing technical cooperation services to more than 50 developing countries and economies in transition (see attached list).
The main component of this assistance is the DMFAS software, a computerized debt management system designed to strengthen the technical capacity of developing countries to record, monitor and analyse their external debt.
Three events taking place over the next two months under the aegis of UNCTAD’s DMFAS programme represent its most recent response to developments in the debt crisis:
First of these is its organization of the second Interregional Debt Management Conference (3-5 April). Its objective is to take stock of the challenges faced by debt managers in the twenty-first century and to propose solutions. Recent events, such as the Asian and Russian debt crises, the Heavily Indebted Poor Countries (HIPC) initiative, the introduction of the Euro and Ecuador’s default on its Brady bonds, have had both short- and long-term consequences for debt managers. At the same time, the institutional machinery for effective debtmanagement continues to be a problem for debt managers all over the world. In addition, the development of sophisticated integrated computer systems opens up new possibilities and challenges that affect the institutions where they are used. Accordingly, the conference will address the debt management functionin today’s economic environment; financial tools and risk management; and financial management systems.
Secondly, UNCTAD is organizing the constitutional General Assembly of the World Association of Debt Management Offices (WADMO), to be held in Geneva on 6 April. UNCTAD has played a prominent role in the creation of the association, which will provide debt management professionals with a forum to discuss technical matters of common interest. The idea for such a grouping was first proposed by the Philippines in 1997 at the first Interregional Conference on Debt Management, where participants agreed there was a great need for the regular exchange of experience, know-how and information on debt management at the international level.
Thirdly, UNCTAD this month launched the latest version of its debt management software, DMFAS 5.2, which features an interface with the World Bank’s Debt Sustainability Model-Plus (DSM+), a specialized software for debt analysis. Under a partnership agreement between UNCTAD and the Bank, the software will be distributed to countries participating in the DMFAS programme and training will be provided to users. DSM+ has been developed to assist in formulating debt-restructuring strategies that are sustainable and consistent with long-term macroeconomic policies. Users can analyse the impact of a set of restructuring options on short-term cash flows, long-term borrowing costs, and the overall indebtedness of a country. The software provides the tools needed to input country data; project, analyse and report results of various debt relief options; and link to other debt management systems.
DMFAS 5.2 will be unveiled in Geneva on 7 April, just after the first meeting of WADMO. The DMFAS debt management system is usually installed in central banks and/or ministries of finance. Its installation and training are normally carried out within the framework of a technical cooperation project, funded by the United Nations Development Programme (UNDP) and other sources, including governments themselves. The project typically addresses the institutional and administrative environment within which the DMFAS is required to operate, as well as the hardware and training requirements needed to run the system.
The DMFAS programme consists of a Geneva-based core team, which is financed by extrabudgetary resources. Current donors are Belgium, Denmark, Finland, Ireland, the Netherlands, Norway, Sweden and Switzerland.
