Republic of Tunisia : Strategy for Public Debt Management

Abstract

The need for an effective public debt
 management strategy has increased with Tunisia's
 stronger presence in the international financial markets and
 the larger exposure to changing borrowing conditions and
 exchange rate fluctuations. At the same time, there are
 better conditions today for public debt management, with the
 deepening the secondary market for Tunisian debt
 instruments on the international bond market, while the
 public debt management strategy would be greatly
 strengthened by the steps taken to develop the domestic
 government securities market. This study discusses options
 to the reform of the government public debt management
 practices, with the aim of increasing their efficiency,
 consolidating further the country's market access and
 containing the costs and risks of borrowing in both external
 and domestic markets. The study is intended to facilitate
 the introduction of an action plan for the implementation of
 the public debt management strategy, as part of the set of
 measures aiming at strengthening the macroeconomic framework
 in Third Economic Competitiveness Adjustment Loan Project
 (report no. P7489). Chapter One presents debt sustainability
 scenarios and discusses the underlying vulnerability
 factors. Chapter Two examines key principles of a strategy
 for public debt management, and presents a discussion of how
 active risk management can be progressively introduced in
 Tunisia. The analysis benchmarks Tunisia's debt
 situation against other emerging economies with comparable
 characteristics. Chapter Three addresses reform options to
 step up the development of domestic government securities
 market-a key component of the strategy. Finally, Chapter
 Four considers options in institutional reforms that would
 facilitate the implementation of the desired innovations in
 debt management strategy and operations.