IMF and World Bank Recommend Establishing a Separate Unit for Public Debt Management

Staff Reporter | PNN

The International Monetary Fund (IMF) and the World Bank have proposed creating a separate unit to make public debt management more effective and transparent. They believe such an institution is necessary to reduce inconsistencies and coordination gaps in domestic debt management.

The recommendation came during a “Debt Management” workshop organized by the Ministry of Finance at the Secretariat on Monday, where the joint technical assistance mission presented its findings. According to the mission, debt management in Bangladesh is currently divided among several government agencies, making coordination and strategic decision-making complex. Furthermore, the absence of a central debt database or cash flow forecasting system makes it difficult to ensure cost-effectiveness and efficiency when borrowing.

The proposed separate unit would initially handle: domestic debt issuance, preparation of annual borrowing plans, coordination of auction calendars, risk assessment, and creation of a central debt database. The mission also suggested integrating existing information and systems.

It emphasized the importance of establishing a clear legal framework for debt management, defining borrowing authority, accountability, reporting, and transparency standards. Recruiting professional staff, especially those experienced in capital markets, pricing, settlement operations, and risk management, is deemed essential.

The mission noted that, in the medium term, the proposed unit could gradually evolve into an autonomous institution responsible for debt oversight and investor relations. International experience since the 1980s shows that centralized debt management models reduce borrowing costs, improve financial transparency, and clearly separate debt management from monetary policy.