Financial Sector Strategies For Public Financial Managers

Debra C. von Koch Government Debt Issuance & Management Program

International Financial Crisis & Global Economic Recession Strategies and Tactics For Emerging Market Countries

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OTA MISSION Strengthen public financial management and financial institutions in developing and transition countries

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Real Economy • Impact of crisis reaching EM countries at varying speeds, with differing results • Economic growth contracting more than forecast – Demand for goods/services – Remittances – FDI – Commodity prices & exports – Tourism receipts 4

Government Finances • Cash Flow Problems – Revenues – Countercyclical/social spending – Interest rates on government debt

= Fiscal Gaps • IFI Credit • Prior Reform Efforts 5

Financial Markets • Reduced Hard Currency Inflows • Depreciating Local Currencies • Declining Official Reserves

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Financial Markets -2 • Low Demand for New Debt • High Concentrations Foreign-Currency Denominated Debt/High FX Risk • Short Maturity Profile/High Rollover Risk

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Response to Challenges • Accelerate Domestic Debt Market Development to Support: – Fiscal stability – Monetary policy transmission – Broader capital market development

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Response to Challenges -2 • Update Debt Strategies • Debt Restructurings • Improve Cash Forecasting/Management • Improve Risk Analysis/Management 9

Response to Challenges -3 • Implement Reforms to Attract Domestic Savings • Enhance Transparency and Market Communication – Investors – Coordination fiscal and monetary policies

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Thank you! Debra C. von Koch Associate Director U.S. Treasury International Affairs Office of Technical Assistance Government Debt Issuance & Management Program Email: [email protected] Website: www.treasuryota.us 11