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Formulation of public debt management strategies: An empirical study of possible drivers

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  • Melecky, Martin

Abstract

A well-designed public debt management strategy can help countries reduce their borrowing cost, contain financial risks and develop their domestic markets. Using survey data on debt management strategies, this paper studies whether the probability that a country has a formal debt management strategy, publishes the strategy document, and uses quantitative benchmarks to formulate its debt management strategy is affected by democratic accountability, institutional quality, past debt crises/defaults, official development assistance, and participation in debt management programs. We find that countries located in Latin America and the Caribbean are less likely to have developed a debt management strategy and, if they have, are less likely to publish it. In contrast, countries located in the Middle East and North Africa are less likely to use quantitative benchmarks in the formulation of their debt management strategies. A country is more likely to have developed a debt management strategy if it has the experience of a past debt crisis, but not of repeated debt crises. Institutional quality and democratic accountability could significantly contribute to the emergence of more transparent and accountable debt management strategies in developing countries. IFIs’ technical assistance on public debt management could be enhanced by IFIs conducting their own, prior diagnostic reviews.

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  • Melecky, Martin, 2012. "Formulation of public debt management strategies: An empirical study of possible drivers," Economic Systems, Elsevier, vol. 36(2), pages 218-234.
  • Handle: RePEc:eee:ecosys:v:36:y:2012:i:2:p:218-234
    DOI: 10.1016/j.ecosys.2011.08.001
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    Cited by:

    1. Pedersoli, Silvia & Presbitero, Andrea F., 2023. "Public debt management and private financial development," Economic Systems, Elsevier, vol. 47(1).
    2. Melecky, Ales & Melecky, Martin, 2014. "The Checks of Czechs: Optimizing the Debt Portfolio of the Czech Government," MPRA Paper 57604, University Library of Munich, Germany.
    3. Tal Sadeh & Yehuda Porath, 2020. "Autonomous agencies and relational contracts in government bond issues," Regulation & Governance, John Wiley & Sons, vol. 14(4), pages 741-763, October.
    4. Malešević Perović, Lena, 2015. "The impact of fiscal positions on government bond yields in CEE countries," Economic Systems, Elsevier, vol. 39(2), pages 301-316.
    5. Aleksandras Vytautas Rutkauskas & Viktorija Stasytytė & Nijolė Maknickienė, 2014. "Government debt as the integral portfolio of assets and liabilities generated by debt," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 15(1), pages 22-40, February.
    6. Siti Nurazira Mohd Daud & Jan Podivinsky, 2014. "Government debt and economic growth in Malaysia: the role of institutional quality," Applied Economics Letters, Taylor & Francis Journals, vol. 21(17), pages 1179-1183, November.
    7. Mindaugas Butkus & Janina Seputiene, 2018. "Growth Effect of Public Debt: The Role of Government Effectiveness and Trade Balance," Economies, MDPI, vol. 6(4), pages 1-27, November.
    8. Yehuda Porath & Tal Sadeh, 2022. "National Debt Management Autonomy and National Debt Maturity at Issue," Bank of Israel Working Papers 2022.14, Bank of Israel.
    9. Angela Mucece Kithinji, 2021. "The Effect of Public Debt Composition and Government Expenditure on Economic Growth of Kenyan Government," International Journal of Science and Business, IJSAB International, vol. 5(8), pages 202-213.

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    More about this item

    Keywords

    Public debt management strategy; Cross-country survey; Institutional factors; Regional location; Debt crises; Development assistance;
    All these keywords.

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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