Background. 1 This Note has been peer reviewed by Phillip Anderson, Tomas Magnusson, and Leonardo Hernandez. Comments

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1 Measuring Performance in Public Debt Management: Key Findings from the Debt Management Performance Assessment (DeMPA) 1 by Abha Prasad and Malvina Pollock This note focuses on the status of public debt management (DM) performance in developing countries, primarily those classified by the World Bank as low- or lower-middle-income countries. 2 It describes how the Debt Management Performance Assessment (DeMPA) tool measures DM performance in individual countries, and draws on the findings from the 44 DeMPA reports that have been finalized to date to describe the current state of DM performance and highlight particular strengths and weaknesses. Equally important, it illustrates how the DeMPA tool may be used by policymakers to manage some of the operational, institutional and technical challenges they face in meeting the requirements of modern day debt management to ensure public debt is managed effectively. The arguments in favor of sound debt management are compelling. Empirical evidence supports the view that higher the quality of a country s policies and institutions, the better is its capacity to carry debt and withstand exogenous shocks. 3 Throughout history poorly structured debt in terms of maturity, currency or interest rate composition, and large unfunded contingent liabilities, have been an important factor in inducing or aggravating economic crises in many countries. Such crises, including the ones currently being experienced by some developed countries, underscore the need to be vigilant about borrowing levels and costs, and the DM framework within which these decisions are made and results monitored. Background The Debt Management Performance Assessment ( DeMPA) is a tool developed by the World Bank, with inputs from regional and international technical assistance providers in debt management, including the IMF in response to a growing concern within the international community about the adverse impact of passive or inadequate debt management practices in developing countries (ref May 2007 Board paper). This was further underscored by the World 1 This Note has been peer reviewed by Phillip Anderson, Tomas Magnusson, and Leonardo Hernandez. Comments and suggestions from Ian Storkey and Mike Williams are acknowledged. Inputs received from Signe Zeikate and William O Boyle on earlier drafts are gratefully acknowledged. Thanks to Ying Li for compiling the data. 2 The World Bank classifies countries by income groupings on their GNI per capita according to the Atlas methodology. For FY11 the classification is as follows: low income countries: $995 or less, lower middle income countries: $996-$3,945, upper middle income countries: $3,946-$12,195, and high income countries: $12,196 and above. 3 Kraay, A and Nehru, V, 2006, When is External Debt Sustainable? World Bank Economic Review, Vol. 20, No. 3, pp See also, WB-IMF (May 2007), Strengthening Debt Management Practices - Lessons from Country Experiences and Issues Going Forward - Background Paper (Chapter III prepared by A. Prasad and F. Rowe). 1

2 Bank s Independent Evaluation Group report pointing that although countries had been given debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI), most of them still had weak debt management practices and functions 4,5. Further, the lowered debt burdens on account of the HIPC and MDRI debt relief had made several post-hipcs attractive to non-traditional creditors that offered funds with terms and conditions with differing concessionality which could well lead to the re-accumulation of unsustainable debt burdens, if not managed prudently and effectively. While debt relief provided new borrowing space and the opportunity to diversify instruments and sources of financing to meet large scale investment needs, more options can add to the complexity, and cost, of the debt portfolio and increase operational risks. In addition debt management in these countries is often constrained by weak governance, lack of transparency, and shortage of skilled staff. In most low income countries, the government debt portfolio typically comprises the largest financial portfolio; on average, public debt accounts for over 60 percent of GDP. 6 If not properly managed, the structure of the debt portfolio may evolve in ways that could generate substantial risks to government balance sheets and affect the countries financial stability (Wheeler, ). Further, the economies of lower-income countries are less diversified than those at higher income levels: export bases are narrower, exposure to recurrent commodity price shocks is higher, and reliance on limited and unpredictable aid flows for budget support is often heavier 8. All these factors make lower-income countries highly vulnerable to exogenous shocks that can significantly, and rapidly, worsen debt dynamics. Such shocks can consist of sharp slowdowns in external demand and a contraction in export growth. As was the case in the current crisis, developments in advanced economies could precipitate fall in aid flows on which many lowerincome countries depend. Combined with a drying up of already limited external private sources of financing, lower-income countries can be left with large financing gaps, especially if the outlook for continued official flows remains uncertain. 9 The challenges faced by these countries highlights the need to identify and address weaknesses in debt management capacity. Moreover, some lower-income countries have already raised funds in international capital markets, and others are contemplating this step as market conditions improve. However, several developing countries place a low priority on strengthening their DM systems and formulating coherent debt management strategies. Until the development of the DeMPA, 4 World Bank, 2006, Independent Evaluation Group Report on the HIPC Initiative. 5 As of June 2011,thirty-two countries have qualified for irrevocable debt relief under the HIPC and MDRI. Four countries have qualified for interim debt relief under HIPC. 6 See Preserving Debt Sustainability in Low-Income Countries in the Wake of the Global Crisis (IMF and World Bank 2010) 7 Wheeler, Graeme (2004), Sound Practice in Government Debt Management, World Bank. 8 Some countries depend on donor flows for up to percent of budget support (e.g., Malawi, Rwanda) 9 See Dang, Knack, and Rogers (2010) for data on the effect of banking crises on aid flows from donor countries. 2

3 neither borrowers nor lenders had any tool to measure debt management capacity in a systematic, comprehensive and objective manner. How debt management performance is measured Proper DM requires the formulation and implementation of a strategy that enables a government to prudently meet its financing needs, its cost and risk objectives, and any other goals that the government may have set for itself, e.g., developing the domestic debt market. DM is a multifaceted process that encompasses the governance and managerial framework, institutional and staff capacity, coordination with macroeconomic policies (fiscal and monetary), the policies and procedures for borrowing from external, domestic sources and the issuance of loan guarantees, cash management, the management of operational risk and the availability of systems for debt data storage, compilation, analysis and reporting. 10 The overarching aim of the DeMPA framework is to guide countries in strengthening debt management policies and institutions so as to better manage their debt in an effective and sustainable manner over the medium to long term. It accomplishes this by assessing a country s debt management policies and institutions against a benchmark of internationally accepted sound practices that are presented in the tool. As a result of these assessments, the DeMPA provides a foundation on which to build an actionable reform program and serves as a tool to facilitate monitoring of performance over time. The focus of DeMPA is on central government DM and related functions, including the issuance of loan guarantees, on-lending, cash flow forecasting and cash balance management. The DeMPA tool presents a set of 15 debt performance indicators (DPIs) that are increasingly recognized as the international standards to evaluate strengths and weaknesses in DM performance in a country. The tool helps to benchmark countries and evaluate the extent to which a government s DM practices conform to the internationally recognized standards given in the DPIs (see Annex A). 11 The DeMPA tool presents a scoring methodology, adapted from the Public Expenditure and Financial Accountability (PEFA) tool, and is based on a A to D scale. To meet the minimum requirements of each dimension a score of C is required. Scores of A or B indicate sound practice or strength, respectively. On the contrary, a score of D indicates the minimum requirements of the dimension are not met, signaling the need for corrective action. The assessment is based on information provided by the national authorities and presented in a DeMPA report which is submitted to the country authorities 12. Each report is reviewed by an independent group of debt management experts to ensure cross-country comparability and objectivity. Transparency is strongly encouraged, but it remains the prerogative of the national 10 See DeMPA Tool and Guidance Note (World Bank 2009) for a full description DPIs are further broken down into 35 sub-indicators or dimensions that provide additional granularity on debt management performance. 12 If the views of the assessment team and the authorities differ, both opinions are reflected in the assessment report. 3

4 authorities to decide whether or not to disclose the assessment results. 13 No conditionality is attached to the assessment report and no recommendations are given as part of the DeMPA exercise. What the assessments tell us about strengths and weaknesses in public debt management The evaluation of debt management capacity set out in this note is based on the DeMPA reports for 44 countries finalized between February 2007 and end-january The sample countries differ in population size, geographic location, per capita income levels and, where relevant, stage of the HIPC process (see Annex B). 14 Three quarters of them have at some stage experienced severe debt crises and been forced to restructure obligations to external creditors, as evidenced by their recourse to the Paris Club and other restructuring fora. Chart 1: Countries Meeting Minimum Requirements on Number of DPIs Number of Countries Lower income countries are predominant in the sample, although the DeMPA indicators are equally relevant as a diagnostic tool for countries at more advanced levels of development. 15 The key finding of these DeMPA results indicates that most of the countries 0 assessed have several areas for priority More than 10 Between 5 and 10 Five or Less reforms in DM functions, practices and Chart 2: Percent Breakdown of Individual Scores systems. Only three countries met or surpassed the minimum requirement for 90% No. of As over two-thirds of the total DPIs, while 80% No. of Bs 70% over half of the countries (25) did not No. of Cs 60% No. of Ds meet the minimum requirements for 50% 40% one-third or fewer indicators (Chart 1). Strengths in DM practices, indicated by 30% scores of A and B were rather limited 20% 10% and primarily concentrated in the three 0% countries mentioned above that had the Top 3 Middle 16 Bottom 25 strongest overall performance. Taken as Source: Authors calculations from aggregated DeMPA results a group, these three countries met the minimum requirement for 78 percent of the dimensions assessed, had strengths (score B) in Nine countries assessed have disclosed their DeMPA reports: Burkina Faso, Maldives, Moldova, Mongolia, Mozambique, Sao Tome and Principe, Senegal, Solomon Islands, Togo; these are available at 14 The DeMPA product is demand driven so consequently there is no pre-defined target list of countries. 15 Four countries in the sample are countries classified as upper middle income. Of these three are small island economies which often display characteristics of countries at lower levels of GNI per capita. 4

5 percent and the capacity for sound practice (score A) in 16 percent. By contrast the remaining 41 countries met the minimum requirement for only 33 percent of the dimensions, had strengths in only 7 percent and the capacity for sound practice in only 2 percent, (Chart 2). The following paragraphs present a more disaggregated analysis of the findings from the DeMPA results, broken down by DPI, across the 44 countries. The analysis refers to data represented in Charts 3 and 4. Areas of effective performance were evidenced in the legal framework, coordination with fiscal and monetary policies, and in relation to the policies and practices for the issuance of domestic debt. Weaknesses were manifest in areas that required analytical capacity from staff, e.g., to develop the debt management strategy and forecast cash flows and manage cash balances prudently. Weaknesses were also apparent in the lack of mitigation strategies for operational risk and the auditing of public debt. The DPIs that displayed the lowest scores (with less than ten countries meeting the minimum requirements), were: Debt Management Strategy (DPI-3) Audit (DPI-5) Cash Flow Forecasting and Cash Balance Management (DPI-11) Segregation of Duties, Staff Capacity, and Business Continuity Planning (DPI-13) Debt Administration and Data Security (DPI-12) A DM strategy that is based on the longer-term DM objectives and set within the context of the government s fiscal policy and budget framework, helps to minimize the costs of the debt portfolio with prudent risk parameters. In order to formulate a DM strategy the debt manager must be able to: (a) determine the appropriate composition of the debt portfolio, taking into account the country s macro-economic indicators and the long term risk and return trade-offs of the market environment; (b) set the limits on deviations from benchmarks; and (c) perform due diligence assessment of new financing instruments. Country authorities frequently cited capacity constraints, specifically a shortage of skilled staff, inadequate and poor training and the lack of information technology necessary to perform these functions. Authorities also highlighted problems related to incentivizing staff and staff retention. Public sector policies often mandate staff rotation and well trained staff also frequently find attractive opportunities in the private sector. The assessments determined that most countries will require substantial support to strengthen human and technical capacity to enable them to independently produce coherent and effective debt management strategies on a regular basis. Only 6 out of the 44 countries had an effective debt management strategy that met the minimum standard in terms of quality; one country among them reflected strengths scoring B. 5

6 Accountability for government DM is strengthened by introducing regular internal audits and periodic external auditing in relation to (a) reliability and integrity of financial and operational information; (b) effectiveness and efficiency of DM operations; (c) safeguarding of public funds; (d) compliance with laws, regulations, and contracts; and (e) when applicable, compliance with the DM objectives and strategy. Evaluation and audits of debt management policies, activities and operations are important as this strengthen accountability and transparency. External audits of debt management activities, policies and operations were done in only 6 countries. This involves a performance audit of DM, which is considered difficult in most countries. The majority of countries also had weak cash management systems 8 met the minimum requirements in this area (DPI-11), of which one scored a B and lacked the analytical ability to forecast cash flows, despite the fact that this is an indispensible part of public expenditure management. In essence this means that governments are not optimizing the use of their financial resources or managing them in ways that ensure, with certainty, that they are always in a position to meet their financial obligations. Ideally, cash balances should be centralized within a single treasury account to optimize cash management and ensure the government is not accessing the capital market in order to finance its outlays while cash balances are available. The DeMPA results reveal that several countries had a large number of bank accounts and even those with a single treasury account did not actively manage the government s cash surplus. In many cases, information on the aggregate level of cash balances was not monitored and liquid funds neither invested nor properly taken into account against the government s financing needs. Instances of borrowing where government accounts had large cash cushions lying idle and earning no returns were common. Government debt management operations involve the processing and recording of all borrowing and debt-related transactions and maintenance of systems and procedures required for effective and secure debt administration. There should be strong controls and well-documented procedures for settlement of transactions, maintenance of the financial records, and access to the debt management system. The DeMPA results indicate that operational risks in most countries were high. Only 4 of the 44 countries assessed with regard to segregation of duties, adequacy of staff capacity, and on the availability of a business continuity plan (the requirements for DPI-13 on the DeMPA tool) met with the minimum requirements, while only 1 of those countries attained a score of B. Likewise on the indicator assessing the requirements for debt administration and data security, only 9 countries met the minimum requirements, of which 2 attained a score of B (DPI 12). Such deficiencies in operational risk management are potentially costly and pose both financial and reputational risks. Mitigating the risk of errors and fraud is critical where financial transactions of the size of those typically associated with sovereign debt operations are substantial. 16 Risks are further compounded by the absence of accurate and secure 16 See Magnusson, Prasad and Storkey (March 2010), Guidance for Operational Risk Management in Government Debt Management 6

7 debt records and transparent and regular reporting (assessed in the DeMPA indicators DPIs 14 and 15, respectively). The DPIs that showed a relative level of weakness, where more than 10 but less than 20 countries met the minimum requirements, are the following: Evaluation of Debt Management Operations (DPI-4) External Borrowing (DPI-9) Loan Guarantees, On-Lending and Derivatives (DPI-10) Debt Records (DPI-14) Debt Reporting (DPI-15) A policy-based DM framework that is steered by long-term DM objectives and a medium term debt management strategy must be complemented by an accountability process. Evaluation of debt management operations fosters accountability and helps to ensure that DM activities and outcomes are in compliance with the government s DM strategy. On this indicator, 19 out of the 44 countries achieved the minimum requirements of score C or above on this. For many developing countries, borrowing from external sources is primarily from multilateral and bilateral creditors. The debt manager must identify the most beneficial or cost-effective terms and conditions for external borrowing (including currency, maturity, interest rate, commissions and fees) and finalize all loan documentation. It is widely accepted that documented procedures and policies for external borrowing are critical for transparency and rules-based decision making as well as for the preservation of institutional memory that mitigates against the risks of high staff turnover. The relative weakness in this area suggests that the potential for countries to again accumulate an unsustainable debt burden is high. Comments of national authorities indicated that many do not believe they have borrowing choices and as a consequence the focus is on ensuring that external concessional loans have a grant element of 35 percent or more 17. While borrowing at concessional rates from multilateral sources was usually the optimal choice, it was often not the only funding option available. Scant regard is paid to other aspects of loan terms and conditions or trade-offs between alternate sources of financing. Despite the reliance of many low-income countries on external debt to meet financing requirements, the DeMPA results do not reflect high capacity to manage this (as assessed through the indicator DPI-9). Only 14 countries out of the 44 countries met the minimum requirements for this DPI, with 3 achieving a score of B and 1 achieving a score of A. The weakness in the indicators evaluating debt recording (DPI-14) and debt reporting (DPI-15) was an unexpected and disappointing finding. Less than half, i,e., 19 countries, met the minimum requirement for the indicator assessing debt recording, of which 6 countries attained a B and 5 countries attained an A. For the indicator assessing debt reporting, 15 countries met the 17 This level is in keeping with the requirements given the IMF. 7

8 minimum requirements, of which 7 scored a B. The results are surprising because these aspects of debt management were presumed to be strengthened given the long history of technical assistance and the ready availability of off-the-shelf software. All the countries assessed had either the UNCTAD s DMFAS or the Commonwealth Secretariat s CS-DRMS software system installed. For the most part the systems are operative, but in many countries these function primarily as an electronic database for external debt. Only limited use is made of the extensive data validation and report generation capabilities that the software offers. Data on domestic debt is typically stored elsewhere, resulting in the absence of a comprehensive database on public debt. The authorities explanation for the poor quality of debt recording centers on the turnover of key trained staff and inadequate systems training. The extensive availability of, and participation in, both external and country specific training programs, however, points to staff turnover as the determining factor. The remaining 5 indicators, representing the areas where over 20 countries met the minimum requirements, are: Legal Framework (DPI-1) Managerial Structure (DPI-2) Coordination with Fiscal Policy (DPI-6) Coordination with Monetary Policy (DPI-7) Domestic Borrowing (DPI-8) The legal framework (assessed through indicator DPI-1) sets out the authority to borrow (in both domestic and foreign markets), undertake debt-related transactions (such as currency and interest rate swaps), and issue loan guarantees. Stemming from its constitutional power to approve central government tax and spending measures, the parliament or congress has, as a rule, the ultimate power to borrow on behalf of the central government. The DeMPA evaluations showed that several countries had the primary and secondary legislation in place for effective debt management. 20 out of 44 countries met with the requirements for the score C, 3 met with higher scores B and 2 with A. Likewise the managerial structure must ensure a clear division between the political level (the parliament or congress, the cabinet or council of ministers, or the minister of finance) that sets the overall long-term DM objectives and strategy, and the entities responsible for implementing such strategy. The DeMPA results indicate that 28 countries met the minimum requirements of which 6 attained a B score and 2 an A score. The coordination of debt management and fiscal policy (assessed through indicator DPI-6) has been strengthened by the overall improvement in the management of public finances, particularly in countries that had reform programs supported by the IMF Poverty Reduction and Growth Trust (PRGT) and those that have completed the HIPC process. 25 countries met the minimum requirements in this indicator, with 8 attaining a B score and 2 achieving an A. The results show that the capacity to produce annual forecasts of aggregate debt and debt service payment that 8

9 include sensitivity analysis to interest and exchange rate shocks has also been improving; however, a parallel improvement in the capacity of the authorities to undertake debt sustainability analysis without external assistance has not occurred. An important aspect of the DeMPA is determining the degree of coordination between monetary policy and debt-related transactions (assessed through indicator DPI-7). This includes whether there are ceilings and tenor placed on governments access to funds from the central bank, whether monetary and debt management operations are separately maintained, and if information sharing on debt transactions and government cash flows is appropriate for implementing monetary policy. 28 of 44 countries demonstrated the minimum requirements in this dimension of debt management, of which 6 attained higher scores of B and 5 scored A. This result reflects, in part, the institutional strength of central banks, including in the poorest of the countries assessed. A number of countries benefit from membership in a regional monetary union, with a common regional central bank and the discipline such arrangements impose on borrowing from central banks. The assessments showed that regulated government access to central bank resources was widespread and regular information sharing mechanisms with the central bank on current and future debt transactions and government cash flow was also improving. The capacity to manage domestic borrowing is also an area of relative strength, with 29 countries meeting the minimum requirements, of which 8 attained a B and 2 an A (assessed through indicator DPI-8). This again reflects the institutional strength of central banks. Documented procedures for local currency borrowing in the domestic market, market based mechanisms for the issuance of debt, and the preparation and publication of annual borrowing plans were assessed to be appropriate for effective debt management in these countries. In addition, progress was being made in developing effective capacity to maintain a complete and up-to-date record of all holders of government securities in a secure registry system. 9

10 Chart 3: Number of Countries Meeting Minimum Requirements in 15 DPIs Debt Records Segregation of Duties, Staff Capacity and BCP Debt Administration and Data Security Debt Reporting Legal framework Managerial Structure Debt Management Strategy Evaluation of Debt Management Operations Audit Cash Flow Forecasting and Cash Balance Loan Guarantees, On lending Derivatives External Borrowing C or Higher Score Coordination with Monetary Policy Domestic Borrowing Coordination with Fiscal Policy D Chart 4: Breakdown of DeMPA Results by Score and DPI No. of N/R No. of Ds No. of Cs No. of Bs No. of As Debt Reporting Debt Records Segregation of Duties, Staff Capacity and BCP Debt Administration and Data Security Cash Flow Forecasting and Cash Balance Management Loan Guarantees, On lending Derivatives External Borrowing Domestic Borrowing Coordination with Monetary Policy Coordination with Fiscal Policy Audit Evaluation of Debt Management Operations Debt Management Strategy Managerial Structure Legal Framework Source: Authors calculations based on aggregated DeMPA results In most countries the DeMPA identified the need for far greater coherence in the overall debt management process and between the various dimensions of debt management. The capacity for domestic debt management, for example, far outstrips that for external debt management despite the fact that obligations to external creditors account, on average, for 80 percent or more of public debt. Coordination with fiscal policy and the accurate and timely forecasts of debt service payments included in that indicator are not reinforced by a robust management of the 10

11 government cash balances or comprehensive debt management strategies. The assessments also highlight the need for a far more rigorous application of policies and procedures for debt management. These may exist on paper but are frequently ignored in day-to-day practice and not used as the basis for a coherent debt management process. Although just over half of the countries assessed met the minimum requirement for the management of debt operations, including the issuance of government guarantees, many have fragmented institutional structures. Functions are often divided in accordance with the nature of the financing instrument, creditor type, or the sources of financing rather than on the basis of specific debt management functions. For example, borrowing from the domestic market is invariably within the purview of central banks and external borrowing typically the responsibility of ministries of finance. While the DeMPA is neutral on the question of whether a centralized debt management structure is optimal, assessments showed that countries with fragmented debt management structures focused primarily on front and back office functions (debt negotiations, debt servicing and data recording) at the expense of the analytical functions usually performed by the middle office. Concrete Steps towards Strengthening Public Debt Management Performance The DeMPA has a dual objective: to serve as a tool in the assessment of performance and, equally important, to support actionable reform programs. Thus, the assessments are in no way a one-off exercise, or end in themselves. Rather, they mark the start of the reform process and provide a roadmap to: (a) guide the authorities in the formulation of more robust debt management practices; (b) highlight areas where policy changes are required; and (c) monitor performance over time against internationally recognized benchmarks. Against this backdrop it is encouraging to see the catalytic impact the assessment process is having in the 44 sample countries under discussion. First and most important, policymakers in these countries are recognizing that reforming and strengthening debt management is central to ensuring that government borrowing generates maximum returns to the economy and takes place under terms and conditions that ensure that the debt burden remains at a sustainable level. They are also mindful of the urgency of the task given their evolving debt portfolios, with a wider diversification of loan instruments and creditors, and, going forward, increased reliance on nonconcessional financing. Seven countries have already taken advantage of follow-up assistance provided by the World Bank to developing capacity building programs. These programs set out in detail the reforms to be implemented, the expected outcomes, and actions to be taken, including sequencing and major milestones. Fifteen countries are benefitting from technical assistance provided by the World Bank and the IMF to develop medium term debt strategies using a cost-risk trade-off model developed jointly by the two institutions. Second, the DeMPA reports are serving to enhance the level of donor assistance and its effectiveness, through closer harmonization and coordination of capacity building programs and other technical support. Each country is unique and the scope and emphasis of reform programs 11

12 differs; however, as illustrated in the previous section, the commonality in areas of weakness is striking. By prioritizing around these findings, technical assistance providers can formulate training programs and capacity building initiatives better tailored to recipient country needs. Already, for example, UNITAR and the INTOSAI have developed a training program on public debt audits. Third, a dynamic process of peer learning is underway as countries share their experiences and look to each other for expertise and region-specific knowledge. Regional technical assistance providers are playing an important role in this process, and their responsibilities in missions and analytic work are increasing. Making assessments public, which an increasing number of countries are choosing to do, is also fostering a strong spirit of self-help, complemented by a wide range of targeted training events that familiarize participants with debt management tools and sound practices. 12

13 Annex A: Debt Management Performance Indicators Governance and Strategy Development DPI-1 Legal Framework DPI-2 Managerial Structure DPI-3 Debt Management Strategy DPI-4 Evaluation of Debt Management Operations DPI-5 Audit Coordination with Macroeconomic Policies DPI-6 Coordination with Fiscal Policy DPI-7 Coordination with Monetary Policy Borrowing and Related Financing Activities DPI-8 Domestic Borrowing DPI-9 External Borrowing DPI-10 Loan Guarantees, On-lending and Derivatives Cash Flow Forecasting and Cash Balance Management DPI-11 Cash Flow Forecasting and Cash Balance Management Operational Risk Management DPI-12 Debt Administration and Data Security DPI-13 Segregation of Duties, Staff Capacity and Business Continuity Debt Records and Reporting DPI-14 Debt Records DPI-15 Debt Reporting 13

14 Annex B: DeMPA Assessments and Country Characteristics Country 2009 GNI per capita Income HIPC Status Date of DeMPA Country 2009 GNI per capita Income HIPC StatusDate of DeMPA (Atlas methodology Classification Assessment (Atlas methodology Classification Assessment current US$) current US$) Africa (28) East Asia (4) Burkina Faso 510 low Post-CP May-08 Cambodia 650 low n.a Nov-09 Burundi 150 low Post-CP Apr-09 Mongolia 1630 lower middle n.a. Apr-08 Cameroon 1170 lower middle Post-CP Aug-08 Samoa 2840 lower middle n.a. Jan-10 Cape Verde 3010 lower middle n.a. Feb-09 Solomon Islands 910 low n.a. Feb-09 Central African Republic 450 low Post-CP Feb-08 Congo Dem. Rep. 160 low Post-CP May-09 Europe and Central Asia (2) Congo Rep. of 1830 lower middle Post-CP Jul-08 Albania 3950 upper middle n.a Apr-06 Cote d'ivoire 1060 lower middle Interim Period Jun-09 Moldova 1590 lower middle n.a. Apr-08 Djibouti 1280 Lower middle n.a. Apr-10 Gambia 440 low Post-CP Jan-10 Ghana 700 low Post-CP Mar-08 Guinea 370 low Interim Period Oct-08 Guinea-Bissau 510 low Post-CP Sep-09 Latin America and the Caribbean (6) Liberia 160 low Post-CP Aug-09 Antigua and Barbuda upper middle n.a Jun-09 Malawi 280 low Post-CP Sep-09 Grenada 5580 upper middle n.a Jun-09 Mali 680 low Post-CP May-08 Guyana 1450* lower middle Post-CP Apr-06 Mauritania 990 low Post-CP May-10 Mozambique 440 low Post-CP Mar-08 Honduras 1820 lower middle Post-CP Apr-08 Nigeria 1140 lower middle n.a. Sep-08 Nicaragua 1010 lower middle Post-CP May-07 Rwanda 460 low Post-CP Nov-08 St Kitts and Nevis upper middle n.a Apr-09 Sao Tome and Principe 1140 lower middle Post-CP Feb-08 Senegal 1040 lower middle Post-CP Aug-09 South Asia (4) Sierra Leone 340 low Post-CP Jul-09 Bangladesh 590 low n.a Feb-08 Swaziland 2350 lower middle n.a. Jun-08 Maldives 3870 lower middle n.a. Oct-09 Tanzania 500 lower Post-CP Apr-10 Nepal 440 lower n.a. Jan-10 Togo 440 low Interim Period Nov-07 Pakistan 1000 lower middle n.a Feb-10 Uganda 460 low Post-CP Apr-09 Zambia 970 low Post-CP Dec-07 Source: World Bank OP3.10, July 2010, HIPC Decision and Completion point documents *2009 data are not available and the figure shown is approximate. 14