Articles & Updates

Potomac Group and ALSF: Understanding Sovereign Debt Options and Opportunities for Africa

This handbook is intended to empower public debt managers and other officials involved in public financial management in Africa by demystifying relevant concepts and terminology and by serving as a practical guide to public finance.

Throughout the handbook, generally accepted terms from the Task Force on Finance Statistics have been used to ensure consistency and clarity. For the purposes of this handbook, the term “public debt” is sometimes referred to as “sovereign debt” or other similar terms. Equally, a country may be referred to as a “sovereign”, “nation”, or “government”.

Public debt management has elements of both “science” and “art”. The “science” is comprised of the technical, financial and legal aspects of debt instruments and the markets in which they are traded. The “art”, however, is how public debt managers develop and implement strategies related to debt financing, and determine how much to borrow, which resources to use, how to structure them, with whom and how to interact, how to prevent debt distress, and crucially, what to do if a crisis hits.

The first 13 chapters of this handbook focus on that “science”. In this context, the broad reasons for borrowing debt, the various sources of financing, and the instruments that are most commonly used are examined. The second part of the handbook, chapters 14 through 17, considers both the science of public debt management (the functions, frameworks and tools available to debt managers and issues related to data management as well as the art of public debt management (the process for developing a debt strategy).

A specific chapter has been dedicated to the “Role of Advisors”. Independent, professional advisors for financial, legal and communications assignments play acritical role in assisting governments in achieving their objectives, not just in crisis. This chapter will examine the function of these advisors, and consider how and when they should be procured.

Finally, in the third part of the handbook, chapters 18 through 20, we describe the art of navigating times of debt distress and how to recover and restore resilience to the country.

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