Debt Management

Finance Division, Ministry of Finance

Debt Management
 Debt Management
Finance Division, Ministry of Finance

Outline
o Fiscal Deficit and its reasons
o Macro implications of fiscal deficit
o Debt and Debt Instruments
o Composition of public sector
o Interdependencies and Policy trade-offs
o Institutional structure of PDM in BD
o Sources of borrowing & their cost and risk factors
o Debt Portfolio of BD
o Debt management strategy and debt sustainability of
BD
o Challenges of Debt Management in BD

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 Debt Management
Finance Division, Ministry of Finance

 If Government spends more than it earns, called fiscal

Deficit

 Generally Fiscal Deficit takes place due to either

“Revenue Shortage” or major hike in “Capital
Expenditure”.

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 Debt Management
Finance Division, Ministry of Finance

Measuring Fiscal Deficit

Total Total
Overall Balance = Revenue – Expenditure

Total Non-Interest
Primary Balance = Revenue – Expenditure

Macro-Economic Implications
Budget Deficit = (Private S – I gap) + (BOP Current Account
Deficit)
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 Debt Management
Finance Division, Ministry of Finance

Reasons for Fiscal Deficit

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 Debt Management
Finance Division, Ministry of Finance

Debt Instruments
A debt instrument is a tool an entity can utilize to raise capital/fund. It
includes:
 Debt Instruments:
Special Drawing Rights (SDRs)
Debt securities
Loans
Insurance, pension and standardized guaranteed schemes;
and
Other accounts payable
 All Liabilities are debt liabilities, except
Equity and investment fund shares
Financial derivatives and employee stock option

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 Debt Management
Finance Division, Ministry of Finance

Composition of the Public Sector

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 Debt Management
Finance Division, Ministry of Finance

Public Debt Management (PDM)

• Public debt management is the process of
establishing and executing a strategy for
managing the public debt so as to -

 Raise the required amount of funding

 Pursue its cost and risk objectives, and
 Any other PDM goal, such as developing and
maintaining an efficient and liquid market of
gov. securities

Trade-offs among Fiscal policy, Monetary policy and Debt Management

Strategy- Need better coordination.

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 BudgetDebt Management
Management Specialist Course
Finance
Module-3: Division,
Budget Ministry of
Implementation andFinance
Monitoring

Debt Management Units (generic)

Resource Policy Record

Mobilization Support & Keeping &
(Loan) Coordination Debt Service

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 Debt Management
Finance Division, Ministry of Finance

Debt management Institutional Arrangements: Bangladesh

Front
Office

Middle Debt Management

Office
Branch, FD

Back
Office

Controller General of Accounts Office

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 Debt Management
Finance Division, Ministry of Finance

Debt Management Coordination

Strategic Coordination
CC/BMRC

Policy Coordination
CDMC

Technical Coordination
CDMTC

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