Improving Public Debt Management in the OIC Member Countries
Project period: July 2016 - March 2017
Research Areas:
Tasks
The main purpose of the project is to examine public debt developments and public debt management practices in the member countries of the Organisation of Islamic Cooperation (OIC) and to develop appropriate recommendations for improving public debt management.
Methods
Using statistical data, official documents, reports from international organizations and surveys, public debt management practices worldwide, and in particular in the OIC member countries, will be examined. Detailed case studies for OIC member states will be provided. Selected case studies will be accompanied by field visits.
Data and other sources
Literature, documents from national and international institutions, international data-bases, surveys and expert interviews.
Results
The study was presented and discussed at the 8th meeting of the COMCEC Financial Cooperation Working Group in Ankara / Turkey (March 30th 2017) with delegates of the OIC member countries, as well as representatives of the World Bank, the OECD and the Islamic Development Bank.
The global best practices of strategic and operational public debt management were examined and put in the specific context of Islamic countries. The importance of medium-term debt management strategies and a centralised debt management office were discussed.
Using time-series data, the refinancing, exchange rate and interest rate risks as the main challenges for public debt management were quantitatively analysed on the global level as well as specifically for the OIC country group. Practical policy recommendations regarding the public portfolio management of government debt under consideration of appropriate market operations were listed.
Suggestions for developing or strengthening domestic debt markets were, made .In addition to compliance with transparent good governance practices, these recommendations included the empowerment of a suitable legal framework and coordination with other macroeconomic policies.
The regulatory structure of Islamic finance products, and especially Islamic sukuk bonds, was explained. The study discussed the opportunities and challenges of implementing these financial instruments in public debt management in the OIC member countries, taking the strengths and weaknesses of these products into account.
Detailed statistics for 15 selected OIC member states from the African, Arab and Asian regions were calculated and evaluated, and country-specific policy recommendations were drafted with the input from regional and international experts. The case studies of Iran, Oman, Kazakhstan and Indonesia were supplemented by on-site field visits.
Finally, the role of macroeconomic risk management strategies, especially for the natural resources-rich OIC member countries, was addressed.