Malawi - Sovereign debt management, cash management, and domestic market development

35664 Case Study: Sovereign Debt Management, Cash Management, & Domestic Market Development Malawi Prepared by: MEFMI South African Debt Office The World Bank 1  Page Acknowledgements 4 Introduction 5 General Summary of Main Action Points 7 Sovereign Debt Management: Overview 8 The Front Office 11 - Objectives - Structure of a Front Office - Front Office responsibilities - Summary of current situation - Legal and regulatory process for debt issuance - Evaluation of new loan proposals - Analysis of markets in which the Government borrows - Loan negotiations - Coordination with the Middle Office - Communication with markets The Middle Office 22 - Objectives - Middle office responsibilities - Summary of current situation - Projection of debt service flows - Debt profile reviews - Sustainability analysis - Quantification of financial risks - Coordination with other entities - Advice on alternative debt strategies - Design of benchmarks - Role as secretariat to the Debt Management Committees - Implement risk control - Contingent liabilities - Action Plan The Back Office 34 - Objectives - Back Office responsibilities - Summary of current situation - Registration of external loans - Monitoring and recording disbursements - Debt service payments - Recording domestic debt - Data validation - Recruitment and training Sovereign Cash Management: 44 2  - Objectives - Cash Management responsibilities - Summary of current situation - Monitoring expenditure relative to budget - Approval of expenditure - Sanction of excess or unauthorized expenditure - Dedicated cash management staff - Reporting and accountability - Incentives for departments to manage their cash - Forecasting cash flows - Banking arrangements - Managing short term borrowing needs Domestic Debt (Money) Market Development: 57 - Objectives - Summary of the current situation - Level of macroeconomic risk - Issuance needs relative to the size of the market - Variety of buyers - Competitive primary market - Matching issue size with market capacity - Design of debt instruments - Adequate notice of issuance plans - Homogeneous issues to assist liquidity - Title registration and transfer - Ability to transfer funds - Secondary trading