Download Project to prepare a Database on Advanced Fiscal Vulnerability

INTOSAI
Project to prepare a Database on
Advanced Fiscal Vulnerability and
SustainabilityIndicators
Dr. Jorge Manjarrez-Rivera
Superior Audit Institution of Mexico
Public Debt Committee Meeting
Moscow, Russian Federation
June 8, 2004
INTOSAI
Background
• “Public Debt Management and Fiscal Vulnerability: Potential
Roles for SAIs” (SAI of Canada)
– Relevance of the correct management and the development of
effective public debt strategies, taking into account:
• How the capital markets globalization influence the economy.
• its effects on each country’s financial situation.
– Greater relevance for countries with emerging economies.
• “Performance Audit on Public Debt and its Reference Terms”
(SAI of Mexico)
– Strategic role of SAIs to estimate fiscal vulnerability and
sustainability through an information system that captures and
generates accurate and reliable data.
• Public Debt Training Program (IDI/PDC)
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INTOSAI
Fundaments
• SAIs may actively participate in the development of solid
strategies and transparent practices to manage public debt
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Designing a performance assessment system based on debt vulnerability and
sustainability indicators.
• Vulnerability and sustainability indicators
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Make possible that public debt managers:
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Assess the real governmental situation.
Assess the economy strength.
Assess the involved risk for creditors.
Enables to prioritize risk management.
The follow-up of their behavior enables:
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To identify fundamental economic aspects changes.
To prevent setbacks in the short, medium and long run.
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INTOSAI
Fundaments
• Fiscal Vulnerability and Sustainability Indicators usually
used:
– Characteristics:
• Static nature.
• Limited scope.
• Restrained to the short run.
– Examples:
• Debt / GDP.
• Deficit / GDP.
– Disadvantages:
• Ineffective to prevent financial crisis.
• Unable to identify economic risks in the long run caused by external
events.
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INTOSAI
Proposal
• To compile advanced fiscal vulnerability and
sustainability indicators.
– Based on the documents prepared by Canada, Mexico, as well as
the indicators used in Public Debt training programs.
– The indicators are expected to be useful to forecast the impairment
of the economic fundamental aspects, and
– Capable of identifying potential fiscal vulnerability and sustainability.
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INTOSAI
Objectives
• To design and integrate a database comprised of
quarterly and annual information from year 2000 on
– To enable econometric and statistical analysis on fiscal vulnerability and
sustainability related to public debt in INTOSAI members.
– To be annually updated with quarterly data.
• To provide information that enables the identification
of similar conditions with regard to fiscal vulnerability
and sustainability among countries
– To encourage the exchanging of information and experiences on public
debt.
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INTOSAI
Potential users
• Researchers interested in undertaking
studies and
analysis on public debt indicators and the Public Debt
Committee with the aim to generate new official
documents to be distributed among INTOSAI members on
this matter.
• It could also be used by SAIs as to identify similarities to
other countries. The comparison of the data base
information may encourage the creation of information
channels among countries which are going through the
same financial and economic conditions.
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INTOSAI
Process to be followed up
• June 8, 2004.
Presentation on the indicators to be included in the questionnaire, before PDC
members.
• June 22, 2004.
Receipt of comments from PDC members.
• July 7, 2004.
Preparation of the questionnaire with the revised indicators.
• August 2, 2004.
Receipt of PDC members comments on the questionnaire.
• August 15, 2004.
Dissemination of the questionnaire among OLACEFS members requesting quarterly
information for the 2000-2003 period.
• October 1, 2004.
Receipt of completed questionnaires.
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INTOSAI
Process to be followed up
• October 1 – November 15, 2004.
Review of completed questionnaires.
• November 15, 2004.
Dissemination of preliminary results among OLACEFS members.
• January 17, 2005.
Receipt of comments and clarifications from OLACEFS members.
• January 17, 2005 – February 15, 2005.
Making of the Database.
• February 15, 2005.
Uploading of the database on to the PDC’s webpage.
• June 1, 2005.
Dissemination of the questionnaire to OLACEFS members, requesting quarterly
information for year 2004.
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INTOSAI
Advanced Fiscal Vulnerability
and Sustainability Indicators
• Total Public Debt
– Total direct public debt* / GDP.
– Public Debt Service** / Exports revenues.
– Weighted average of term of maturity and duration of the short,
medium and long-term public debt.
– Increase of direct and indirect public debt*** / Increase of GDP.
– Public Debt in foreign currency / Total direct public debt.
– Foreign currency denominated Public Debt / Total Public Debt.
– Increase of debt service* / Increase of GDP.
– Public Debt Financial Cost / Public revenues
– Short-term Debt / Total Direct Public Debt
*/
**/
***/
Direct Public Debt .- Debenture debt plus the one acquired through bank credits.
Debt Service includes debt redemption, financial cost, commission and expenses.
Indirect Public Debt.- Contingent Public Debt.
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INTOSAI
Advanced Fiscal Vulnerability
and Sustainability Indicators
• Internal Public Debt
– Internal debt service / Ordinary revenues.
– Internal debt interest expenses / Net paid expenses.
– Internal debt financial cost / Ordinary revenues.
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INTOSAI
Advanced Fiscal Vulnerability
and Sustainability Indicators
• External Public Debt
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External Public Debt / GDP.
External Public Debt / Exports revenues.
Short-term External Debt / GDP.
Short-term External Debt / Exports revenues.
Short-term External Debt / International reserves.
External Debt Service / External Debt.
External Debt Service / Exports revenues.
External Debt Service / Imports.
External debt financial cost / GDP.
External debt financial cost / Exports revenues.
Capital Account Balance / Current Account Balance.
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INTOSAI
Advanced Fiscal Vulnerability
and Sustainability Indicators
• Liquidity
– International reserves / Amount of the external and internal public
debt with maturity within a year.
– International reserves / Total short-term external debt.
– International reserves / Current account balance.
– International reserves / Imports.
– International reserves / M2.
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INTOSAI
Further Considerations
 If it is decided that the data base be mainly used by the
Supreme Audit Institutions then it is necessary to receive
feedback from PDC members as to what indicators should be
useful to be included.
 The Supreme Audit Institution of Mexico will look after the
updating as well as the consistency and comparability of
information.
 The official countries data would be the main source of
information. Other official sources such as the World Bank
and the International Monetary Fund may be consulted.
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