Public Debt Management in Emerging Market Economies : Has This Time Been Different?

Despite the scale of the global financial crisis, to date it has not resulted in a sovereign debt crisis among emerging market countries. Two significant factors in this outcome are the improved macroeconomic management and public debt management in these countries over the past decade. This paper reviews the improvements in macroeconomic fundamentals and the composition of public debt portfolios in emerging market countries prior to the crisis and concludes that the policies and strategies pursued by governments provided them with a buffer when the crisis hit. Nevertheless, with the international capital markets effectively closed for over three months and domestic borrowing in many cases impacted by extreme risk aversion, government debt managers were required to adapt their strategies to rapidly changing circumstances. The paper reviews the impact of the crisis and the responses of debt managers to the drying up of international capital, decreased liquidity in markets, and sharply increased term premia. Three categories of response are identified: (i) funding from other sources to reduce pressure on market borrowing; (ii) adapting funding programs to changes in demand in the different types of securities; and (iii) implementing liability management operations to support the market. Most governments were willing to accept temporarily greater risk in their portfolios, often reversing long established strategies, at a time when financial markets were under stress. These actions contributed to the measures taken by governments to stabilize markets and prevent economies from stalling. Looking to the future, government debt managers will need to consider how they can increase the resilience of public debt portfolios for the uncertain times that lie ahead.

Bibliographic Details

Main Authors:	Anderson, Phillip R. D., Silva, Anderson Caputo, Velandia-Rubiano, Antonio
Format:	Policy Research Working Paper biblioteca
Language:	English
Published:	2010-08-01
Subjects:	ASSET POSITION, AUCTION, AUCTIONS, BAILOUT, BANK FINANCING, BANKING SECTOR, BANKRUPTCY, BASIS POINTS, BOND AUCTIONS, BOND FUND, BOND FUNDS, BOND INDEX, BOND MARKETS, BOND PRICES, BOND YIELDS, BONDS, BORROWING COSTS, BORROWING PLANS, BORROWING REQUIREMENTS, BORROWING STRATEGIES, BUY BACKS, BUYBACK, BUYBACKS, CAPITAL FLOWS, CAPITAL INFLOWS, CAPITAL MARKETS DEVELOPMENT, CAPITAL MOBILITY, CAPITAL OUTFLOWS, CASH FLOWS, CASH RESERVES, CDS, CENTRAL BANK, CENTRAL BANKS, COMMERCIAL BANKS, COMMODITY, COMMODITY PRICES, CREDIBILITY, CREDIT DEFAULT, CREDIT DEFAULT SWAP, CREDIT LINES, CREDITORS, CURRENCY, CURRENCY COMPOSITION, CURRENCY DEPRECIATION, CURRENCY RISK, DEBT CRISES, DEBT CRISIS, DEBT FINANCING, DEBT INSTRUMENTS, DEBT ISSUANCE, DEBT LEVELS, DEBT MARKET DEVELOPMENT, DEBT RATIO, DEBT RATIOS, DEBT SERVICING, DEBT SERVICING COSTS, DEBT STOCK, DEBT STOCKS, DEVALUATION, DEVALUATIONS, DISBURSEMENT, DOMESTIC BOND, DOMESTIC BOND MARKETS, DOMESTIC BORROWING, DOMESTIC CREDIT, DOMESTIC DEBT, DOMESTIC DEBT MARKET, DOMESTIC DEBT MARKETS, DOMESTIC DEBT SECURITIES, DOMESTIC FINANCIAL MARKET, DOMESTIC INSTITUTIONAL INVESTORS, DOMESTIC MARKET, DOMESTIC SECURITIES, ECONOMIC CRISES, ECONOMIC CRISIS, ECONOMIC DOWNTURN, EMERGING MARKET, EMERGING MARKET BOND, EMERGING MARKET COUNTRIES, EMERGING MARKET ECONOMIES, EMERGING MARKETS, EMERGING-MARKET, EXCESS LIQUIDITY, EXCESS SUPPLY, EXCHANGE RATE, EXCHANGE RATES, EXPOSURE, EXPOSURES, EXTERNAL DEBT, EXTERNAL FUNDING, FEDERAL RESERVE, FEDERAL RESERVE BANK, FINANCIAL CRISIS, FINANCIAL FRAGILITY, FINANCIAL INSTITUTIONS, FINANCIAL MARKETS, FINANCIAL SECTOR, FINANCIAL STABILITY, FINANCIAL SYSTEM, FISCAL DEFICITS, FISCAL POLICIES, FISCAL POLICY, FIXED RATE, FLOATERS, FLOATING RATE, FLOATING RATE NOTES, FOREIGN CURRENCY, FOREIGN CURRENCY DEBT, FOREIGN INTEREST, FOREIGN INVESTOR, FOREIGN INVESTORS, FOREIGN MARKETS, GLOBAL BOND, GLOBAL BONDS, GLOBAL CAPITAL, GLOBAL CAPITAL MARKETS, GLOBAL FINANCIAL STABILITY, GOVERNMENT BOND, GOVERNMENT BONDS, GOVERNMENT BUDGETS, GOVERNMENT DEBT, GOVERNMENT DEFICIT, GOVERNMENT FINANCES, GOVERNMENT PAPER, GOVERNMENT REVENUES, GOVERNMENT SECURITIES, GROUP OF INVESTORS, HOLDING, HOLDINGS, ILLIQUID SECURITIES, INDEBTED COUNTRIES, INDEXED BONDS, INFLATION, INFLATIONARY EXPECTATIONS, INSTRUMENT, INSURANCE, INSURANCE COMPANIES, INSURANCE INDUSTRIES, INSURANCE REFORMS, INTEREST COSTS, INTEREST RATE, INTEREST RATE RISK, INTEREST RATES, INTEREST-RATE RISK, INTERNATIONAL BANK, INTERNATIONAL BONDS, INTERNATIONAL CAPITAL, INTERNATIONAL CAPITAL MARKETS, INTERNATIONAL FINANCIAL INSTITUTIONS, INTERNATIONAL RESERVES, INTERNATIONAL SECURITIES, INTERNATIONAL SETTLEMENTS, INVESTOR BASE, INVESTOR CONFIDENCE, ISSUANCE, ISSUANCE OF T-BILLS, ISSUANCES, LIABILITY, LIABILITY MANAGEMENT, LIQUID INSTRUMENTS, LIQUIDITY, LIQUIDITY CRISES, LIQUIDITY POSITION, LOCAL CURRENCIES, LOCAL CURRENCY, LOCAL INVESTOR, LOCAL MARKETS, MACROECONOMIC MANAGEMENT, MACROECONOMIC POLICIES, MACROECONOMIC POLICY, MARKET ACCESS, MARKET BORROWING, MARKET CONDITIONS, MARKET DEVELOPMENTS, MARKET ENVIRONMENT, MARKET INSTABILITY, MARKET INSTRUMENTS, MARKET LIQUIDITY, MARKETABLE SECURITIES, MATURE MARKETS, MATURITIES, MATURITY, MONETARY FUND, MONETARY POLICIES, MONETARY POLICY, MUTUAL FUNDS, NATURAL DISASTERS, NEGATIVE SHOCK, PENSION, PENSION FUNDS, POLICY RESPONSE, PORTFOLIO, PORTFOLIO FLOWS, PORTFOLIOS, PRICE DISCOVERY, PRICE STABILITY, PRIVATE CAPITAL, PRIVATE SECTOR DEVELOPMENT, PUBLIC DEBT, PUBLIC DEBT MANAGEMENT, PUBLIC DEBT MANAGERS, REMITTANCES, RENEGOTIATIONS, RESERVES, RETAIL DEBT, RISK AVERSION, RISK MANAGEMENT, SAMURAI BOND, SECONDARY MARKETS, SECURITIES, SECURITIES MARKETS, SHAREHOLDERS, SHORT-TERM INSTRUMENTS, SHORT-TERM INTEREST RATES, SOVEREIGN DEBT, STOCKS, SUKUK, T-BILL, TOTAL DEBT, TREASURY, YIELD CURVE, YIELD CURVES,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100813134031 http://hdl.handle.net/10986/3883
Tags:	Add Tag No Tags, Be the first to tag this record!