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addddrreesssseeddttoo Ms. Oona Mcaleese (tel.: +33-1-45257859; e-mail [email protected] and to Jocelene Fouassier (tel.: +33-45247831; e-mail: [email protected]), both from the OECD.
2
Day 0: Tuesday, December 5
19h00 – 20h30: Welcome Reception hosted by the OECD (held at the conference venue)
Forum Chairman: Mr. Ove Sten Jensen
(Chairman of the OECD Working Party
on Public Debt Management)
Day 1: Wednesday, December 6
08:00- 09:30 Registration for:
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First OECD Forum on African Public Debt Management (Contact: Ms Jocelene Fouassier)
09:30 - 09:45: Welcome and Overview of Programme: Dr. Hans J. Blommestein, Head of
the Public Debt Management and Emerging Financial Markets Programmes, OECD
Session 1 (9:45- 13:00)
“Recent trends and developments on public debt management
in emerging markets”
This session, organised jointly with the International Monetary Fund and World Bank, focuses on “Recent trends and developments in public debt management in emerging markets“. The topic will be introduced by speakers from the IMF, World Bank and OECD by indicating key problems and policy issues from a global perspective. This will be followed by a panel discussion with debt managers from emerging markets. The panel will comment on the introductory overview by making references to the developments in their respective jurisdictions. The panel discussion is followed by a general discussion involving also other debt managers. The moderator of the session will summarise the discussion in the form of policy conclusions/recommendations.
09:45 – 10: 45: Introductory Overview (“Trends and developments in debt
management in emerging markets from a global perspective”)
Udaibir Das (IMF ) and Gloria Grandolini (World Bank), Recent Trends in Emerging Market Debt, Challenges Facing Debt Managers, and Country Experiences
Hans J. Blommestein (OECD), The growing importance of transparency in debt management and government securities markets
10:45 – 11.30: Panel Discussion: Phakamani Hadebe, (South Africa, MoF), Ivan Luís de Oliveira Lima (Brazil, Bank), Naek Tigor Sinaga (Indonesia, Bank)
11:30 – 12:00: Coffee Break
12:00 – 12:45: General Discussion
12:45 -13:00: Policy conclusions by moderator Ove Jensen (Denmark, Head of Debt Management)
13:00 – 14:30: Lunch (hosted by the OECD)
Session 2: (14:30-18:00) “The role of retail instruments in
4
This session will explore and discuss the role of retail instruments in issuing strategies of
governments. To that end, the session will first review the experience of a number of OECD debt managers. Key questions will include: How important is meeting the needs of retail investors an essential part of the overall strategy to develop a more diversified investor base for government securities? How cost-effective is selling directly to retail investors in view of high administrative and information technology costs? Has the INTERNET made selling retail instruments
significantly cheaper? Is it advisable to develop and sell special non-tradable retail instruments? Secondly, a panel of debt managers from emerging debt markets will be invited to comment on these OECD views. The panel will also be asked to address specific obstacles faced in emerging financial markets. Emerging markets need to give a high priority to government market
development. What are the consequences of this view in terms of developing efficient
mechanisms for delivering either standard securities or special non-tradable instruments to retail clients? Emerging markets are characterised by structurally higher volatility than more advanced markets. Should retail investors therefore be an important part of strategy of debt managers from emerging countries since they contribute to a more stable demand for government securities that, in times of higher volatility, can cushion the impact of sales from institutional and foreign investors? In many emerging markets, the administrative and information technology costs of going directly to retail investors have been prohibitive. Can new technology (via Internet and wireless communication systems) change this picture? It has also been argued that utilising such new technology to access a broader set of potential investors could also have implications for the design and functioning of the primary market, and will put typical bank dominance in emerging markets in the retail end of the market under pressure. Is new technology also a better option than using the existing (perhaps modernised) network of post offices?
The panel is invited to comment on these questions and issues. During the final general discussion other debt managers are also invited to contribute to the discussion of these key policy issues.
14:30 – 15:00: Introductions:
Phillip Anderson (World Bank ), Retail government debt programmes: practice and challenges
Adi Rivlin (Head of Debt Management, Israel) Introducing a retail programme: what are the key questions for a debt manager?
15:00 – 15:45: Panel Discussion 1: Maria Cannata (Italy, MOF), Phillip Anderson and Adi Rivlin
16:15 – 16:30: Coffee Break
16:30 – 17:00: Panel Discussion 2 Audrius Zelionis (Lithuania), Hungary (András Réz), Marek Szczerbak (Poland, MOF)
17:00 – 17:45: General Discussion 2
6
Day 2: Thursday, December 7
Session 3: (09:00-13:00) “Risk management of government
debt”
This session focuses on modern risk management as an integral part of achieving strategic debt targets. The specification of strategic benchmarks requires governments from OECD countries and those from emerging markets to specify their risk tolerance and other portfolio preferences concerning the trade-off between expected cost and risk.
However, in designing and implementing strategic benchmarks, debt managers operating in emerging markets are generally facing greater challenges than their counter-parts managing sovereign debt in the more advanced markets. The structure or composition of the outstanding debt in emerging markets is in most cases much more complex, while volatility in the macro environment is usually much higher than in advanced markets. An increasing body of research shows that emerging market economies lack the natural stabilising structural characteristics that allow the use of effective counter-cyclical policies. Moreover, emerging debt managers are facing original sin (the situation in which it is difficult or impossible to borrow in nominal terms in the domestic currency). At the same time, many emerging markets are not in the position to benefit from international or domestic efficient risk-sharing.
Emerging debt managers are therefore facing greater and more complex risks in managing their sovereign debt portfolio and executing their funding strategies. This perspective raises a number of urgent policy questions. Can debt managers from emerging markets use the cost-risk
(modelling) approach developed by their colleagues from the OECD area? And what are the implications of these challenges for the composition of the debt portfolio of emerging markets? For example, what can one say about the proportion of foreign currency debt? Is the desired share of foreign debt so far below current proportions in most countries that it is not necessary to formulate quantitative targets? Should governments from emerging markets therefore simply announce plans for annual amortisations? What about the role of inflation-linked debt? What can one expect from the quantitative results from simulation models, for example when analysing the difference (in terms of costs and risks) between nominal and inflation-linked domestic currency debt? If a modelling approach cannot be expected to yield reliable quantitative targets, then what can be said in general about the desirability to increase the share of inflation-linked debt in emerging markets (in the longer term)? The choice of maturity involves a trade-off between costs and refinancing risks. Can this trade-off be seen as a policy choice in emerging markets or is it largely imposed on debt managers from emerging countries as a market outcome?
The panel is invited to comment on these questions and issues. During the final general discussion other debt managers are also invited to contribute to the discussion of these key policy issues.
09:00 – 09:30: Hans J. Blommestein, Overview Risk Management of Government
Debt (OECD)
09:30 – 10:00: Lars Boman, The Evolution of the Risk Management Strategy, (Sweden, SNDO)
10:00 – 10:30: Emre Balibek, Establishing a Risk Management Function: Notes from
Turkish Experience (Turkey)
10:30 – 11:00: Coffee Break
11:00 -12:15: Panel Discussion: C.H. Siahaan Scenaider (Indonesia, Risk Manager, Ministry of Finance), Vilnis Lindemanis (Latvia), Ove Jensen (Denmark, Head of Debt Management, Bank), Andras Rez (Hungary, DMO) and speakers
12:15 – 12:45: General Discussion
12:45 – 13:00: Policy Conclusions by Moderator Jan Hamers (Deputy Agent, The Netherlands).
