Myanmar : Support for Strengthening Public Debt Management

Public sector management / Public expenditure and fiscal management

The Government's Framework for Economic and Social Reforms recognizes that _maintaining a stable macroeconomic framework is the first order of reforms essential for achieving the overall reform agenda_ and that sound public financial management (including public debt management) will be critical to ensuring this.

Similarly, ADB's Interim Country Partnership Strategy for Myanmar identifies support for an enabling economic environment as a core priority including support for reforms that focus on fiscal sustainability, macroeconomic stability, and strengthening public finance.

In recognition of the urgent need for support in this area within the context of Myanmar's reintegration with the international community and an extensive reform program (and related financing requirements), initial support has been provided under an SSTA approved in 2012 (Improving Fiscal Revenue Mobilization). This has allowed for timely support for critical functions primarily focusing on basic capacity building of the foreign exchange and external debt division within the Budget Department in the Ministry of Finance. This initial support, however, is due to end by September 2013.

Follow-on support will be needed over the medium term to allow for broader institutional reforms and capacity building necessary for establishment of an effective institutional framework for sound public debt management. This will include support for strengthening of MOF's capacity for debt recording and management through acquisition and operationalization of a modern debt management and recording system and conduct of related capacity building; support will also be needed to more broadly develop the institutional framework and capacity for public debt management in this regard the TA will support establishment and operationalization of a debt management division within the Treasury Department of MOF which will assume primary responsibility for public debt management, the development of a modern legal and regulatory framework for public debt, and development of domestic market for government securities.

Debt recording and management system

Plan defining structure and staffing needs of new debt management division (DMD), transition strategy for its establishment, and roadmap for developing its public debt management functions this will include development by DMD of a medium term debt management strategy

Strengthened legal and regulatory framework for public debt management

(Draft regulations and agreements [including public debt law, agency agreement, and code of conduct]).

Capacity and awareness building to support implementation of TA

With support from the TA, a new debt management division (DMD) was established in September 2014 within MOF''s new Treasury Department, consolidating previously fragmented responsibility for management of external and domestic debt. The TA is providing ongoing support for capacity building of the DMD including through placement of highly-experienced long term advisors and establishment of twinning arrangements with well-functioning public debt management offices in the region (e.g. the Public Debt Management Office in Thailand).

The TA is also supporting the establishment of a modern legal and regulatory framework for public debt management. A new public debt management law has been drafted and recently enacted with support from the TA.

In addition to the originally targeted main outputs noted above, the TA has also supported the establishment of an interagency agreement between MOF and the Central Bank of Myanmar along with commencement of regular auction-based issuance of Treasury bills, a necessary step in ending monetization of the deficit. The first Treasury bill and Treasury bond auctions commenced in January 2015 and September 2016, respectively, and are continuing in accordance with a published auction schedule.

A consulting firm to assist MOF in the acquisition and implementation of the debt recording and management system (DRMS) and four individual consultants have been engaged under the TA to date: (i) a public debt regulatory and institutional framework expert, (ii) a DRMS expert, (iii) a design expert, and (iv) a national IT support officer/database administration expert.

The TA has also supported experts who have worked with DMD to develop the legal and institutional framework for effective debt management, including a public debt management law and implanting regulations. Under the TA's support, DMD has also undertaken issuance of government securities for the first time, including both bonds and treasury bills.

The TA was physically closed 30 November 2018. Financial closure of the TA is in progress.

1. Debt Recording and Management System Expert (international, 4 person-months intermittent)

2. Public Debt Management Expert (international, 12 person-months intermittent)

3. Public Debt Regulatory and Institutional Framework Expert (international, 6 person-months intermittent)

4. Project Coordinator (national, 18 person-months intermittent)

5. CS-DRMS Implementation Expert (50 WDs; international consultant)