Small island states are more vulnerable to economic shocks than most larger countries. The islands that make up the Eastern Caribbean Currency Union (ECCU) are also susceptible to natural disasters which cause substantial damage to infrastructure and livelihoods, as well as damaging tourism.
With such vulnerability, prudent management of public sector borrowing is vital. In November 2010, Crown Agents delivered a training course at the Eastern Caribbean Central Bank (ECCB) for eight countries across the ECCU on how to analyse and manage risks in the government's borrowing programme.
The course provided a practical approach to assessing the costs and risks of borrowing and showed how this analysis can be used to develop a borrowing strategy. In particular, it conveyed an understanding of the concepts that underpin analytical tools developed by the World Bank and IMF such as the Medium-Term Debt Strategy (MTDS) and Debt Sustainability Framework (DSF)
Debt is only one part of a government's financial management and the course demonstrated how borrowing decisions are linked to other aspects of macroeconomic management, such as asset management and revenue matching.
Crown Agents and the ECCB work together frequently to develop debt management skills in the region. Another workshop on evaluating and negotiating borrowing is scheduled for February 2011.