The Government of Maldives' desire to build its debt management capacity and strategy became even more urgent after the Asian tsunami when it faced dramatically increased borrowing requirements to fund reconstruction and development.
To develop this capacity, we installed the latest version of the Commonwealth Secretariat Debt Recording and Management System (CS-DRMS 2000+) into the Ministry of Finance. This system allows the Ministry to record, forecast, monitor and analyse government debt commitments in depth. It also integrates these processes into the Government's overall financial management, so the Ministry can see immediately how the debt portfolio impacts on other areas of its responsibility.
With software installed, we built the Ministry's skills to consolidate the external debt database, interpret loan agreements, review the debt portfolio and conduct debt sustainability analysis. In order to build longer-term capacity in debt management, we helped the Ministry develop a comprehensive manual in Debt Operations and Training. They will now use this to train their own staff.
While good data is the cornerstone of effective debt management, we also helped the government to strengthen the overall institutional environment in which it the work is conducted. We reviewed the existing legal and institutional framework and helped Government develop its debt policy. One main policy initiative was integrating management issues into government decision-making by introducing senior debt management participation in Budget Committee meetings.
With an up-to-date database and staff trained in the latest debt management techniques, the government is now actively using CS-DRMS 2000+ to manage its debts. Having identified the financing gap for the post-tsunami national recovery programme, it has made informed decisions about future borrowing requirements. Using the new debt management system, it has at its fingertips the resources and skills it needs to assess different borrowing plans, taking into account costs and risks, and projecting 15-20 years ahead.
Whilst this project mainly dealt with external debt, we are now supporting the Government to use this new capacity to manage its domestic debt as well.