::: UNCTAD's Debt Management and Financial Analysis System (DMFAS) Programme :::

The DMFAS Programme is one of the world's leading providers of technical cooperation and advisory services in the area of debt management. Integrated as a key activity of the United Nations Conference on Trade and Development (UNCTAD), the Programme has been successful in helping governments improve their capacity to manage debt for nearly 30 years.  It has so far worked directly at the country level with 69 countries (mostly low and lower-middle income) and is currently in use in 90 institutions in 57 countries.  

The DMFAS Programme is a concrete example of how the United Nations builds capacity at the country level, in support of good governance, development and poverty reduction. In partnership with other organisations and the donor community, it provides countries with the means to improve their management of public liabilities, and consequently public resources, through the strengthening of their institutional capacity in this area.

The Programme is largely financed thanks to the generous support of bilateral donors.   Currently these include France, Germany, Ireland, Italy, the Netherlands, Norway and Switzerland.   

What we address

In recent decades, unsustainable debt - mostly external - has brought country after country into deep economic crisis, with dramatic social consequences for their populations. Unsafe borrowing and high debt servicing has thrown developing countries into a "debt trap", depriving them of the resources needed to secure long-term economic development and build up strong social and physical infrastructures.  

The need for good debt management is underlined by growing international recognition of its importance and by global initiatives such as the Monterrey Consensus and the Millennium Declaration. In particular, Goal 8 of the Millennium Declaration emphasises the importance of, inter-alia, debt management and debt relief for achieving poverty reduction. In this context, there is increasing recognition that good debt management is an intrinsically important component of Public Financial Management and overall good governance. It is now globally accepted that it is essential to build national capacity in the area of debt management in order for highly indebted poor countries to reach debt sustainability. Similarly, it is widely recognised that good debt management within an effective macroeconomic framework will improve overall democratic governance and lead to greater economic stability, economic growth and social development. As a result, there will be an increase in the resources available to low-income countries for allocation to priority areas in improving the lives of poor people, such as education, health services and other social sectors.

In order to attain sustainable debt levels and to use debt instruments as an efficient tool for development, prudent debt management and the availability of reliable and timely debt data are essential. Many governments, however, quite simply lack the appropriate human and technical capacity for handling public resources and liabilities more effectively, despite their commitment to development. This is particularly the case for developing countries and where UNCTAD's DMFAS Programme makes a difference.

What we do

The DMFAS Programme offers countries a set of proven solutions for improving their capacity to handle the day-to-day management of public liabilities and the production of reliable debt data for policy-making purposes. This includes its specialized debt management software, the DMFAS – which greatly facilitates the work of the debt office - as well as advisory services and training activities in debt management.

By working directly with the countries as well as with international and regional organizations involved in debt, the Programme identifies best practices in debt management and translates them into specialized products and services. These are shared with countries through technical cooperation projects, as well as through international and regional conferences and workshops.

Through the Programme's assistance, governments are able to produce and publish reliable, comprehensive and timely information on their debt and also publish it so it is accessible to all at the international, national and local levels. The production of reliable debt information helps countries negotiate better re-payment terms with their creditors, as well as debt relief. Having a debt management software such as the DMFAS, for example, is often a pre-requisite for achieving debt relief

The DMFAS system

At the Programme’s core is the Debt Management and Financial Analysis (DMFAS) system, from which the Programme draws its name.  The DMFAS is a software that can be used for the purposes of recording, monitoring, reporting and analysis. Usually installed in the Ministry of Finance and/or Central Bank, it supports both external and domestic public debt (loans and securities), whether this be short-, medium- or long-term. It also provides coverage for private debt, grants and on-lent loans. 

The DMFAS enables the debt office to develop a debt database containing detailed and aggregated data on loan contracts, bonds and grants, real operations (disbursements and debt service) as well as future operations (disbursements and debt service). As the system can process large quantities of debt data, more time and energy can be deployed on analytical and management tasks. Its design allows for easy customisation and adaptation in accordance with the needs and preferences of each client institution. It can also be integrated with other financial systems if the institution so wishes.

DMFAS software contains a number of pre-defined reports and also offers the user the possibility to design his own reports. The flexibility of the reporting module facilitates the production of debt statistics using codes that follow international standards. The number of possible user-defined reports is nearly unlimited and they can be easily exported to other applications.

A recording and monitoring tool

The DMFAS enables debt managers to:

A management and analysis tool

Robust debt management capabilities
Once the database has been populated with data on loans, securities and grants, DMFAS becomes a powerful management and information tool, greatly increasing the efficiency of a debt office. As the system processes large volumes of data, more time and resources can be devoted to analytical and management tasks.

Powerful and flexible reporting features

• Standard and user-defined reports : DMFAS provides an extensive library of analytical and managerial reports that meet both internal and external requirements.  Furthermore, it can generate a wide range of user-defined reports that are country-specific.  Reports can be easily produced in local currency, US dollars, euros or SDRs, or in multiple currencies.  In addition, data can be exported in different formats to standard software applications such as Microsoft Excel ®.
  
  
• Compliance with international statistical standards:   A series of predefined statistical tables are delivered with DMFAS to facilitate the production of statistical bulletins.  These follow the latest international standards, such as those outlined in External Debt Statistics:  Guide for Compilers and Users, published by the IMF.
  
  
• World Bank reports:  The DMFAS system automatically generates reports requested by the World Bank from its borrowing countries.

Debt service projections
DMFAS calculates projections based on debt outstanding and on total commitment as well as the present value of loans, using different calculation methods

Debt analysis
DMFAS Analysis modules offer powerful tools for middle-office debt managers to determine the sustainability of their debt portfolio and to build debt strategies. They cover: debt ratios, financial indicators, sensitivity, debt portfolio analysis, a debt sustainability interface, and a risk model(s) interface.

Linking with other financial softwares

Interfaces exist between the DMFAS system and all standard analytical tools including the debt sustainability model (DSM+), Medium-Term Debt Management Strategies (MTDS), DSF, and risk models. A standard interface is also available in DMFAS for linkage with Integrated Financial Management Information Systems (IFMIS), in particular for streamlining operations with budgeting and accounting, and has been implemented in a number of countries.

Help in rescheduling

In the preparatory phases of a rescheduling agreement (e.g. with the Paris Club), DMFAS helps the analyst evaluate the impact of alternative debt restructuring scenarios, and can be used to select the loans to be renegotiated. It can then be used to record the bilateral terms signed in the Agreed Minutes of the Paris Club or other rescheduling bodies.

A complete technical cooperation programme

The development and implementation of the DMFAS software is just one of the objectives of the DMFAS Programme.  To maximize the benefits gained from a debt management software, UNCTAD also assists national authorities in reinforcing their relevant legal, institutional, organizational and technical environment.