DEBT MANAGEMENT
Debt management refers to strategies state use to manage their debt. Effective public debt management is the cornerstone of financial stability and sustainable fiscal policy. A government's debt portfolio can generate substantial risk to its balance sheet, with potential to undermine key development objectives. States therefore need capable debt management offices to design medium-term strategies, which appropriately balance cost and risk, and execute financing transactions efficiently.
State governments should seek to ensure that both the level and rate of growth in their public debt is fundamentally sustainable, and can be serviced under a wide range of circumstances while meeting cost and risk objectives. Sovereign debt managers share fiscal and monetary policy advisors' concerns that public sector indebtedness remains on a sustainable path and that a credible strategy is in place to reduce excessive levels of debt. Debt managers should ensure that the fiscal authorities are aware of the impact of government financing requirements and debt levels on borrowing costs.
Indicators that address the issue of debt sustainability include