facilitate creation of a unique DMRS, ensuring that all participating countries benefit from the latest technological advancements; this is a move that would assist with further standardizing debt reporting.

# 6. Conclusions

The lack of uniform, comprehensive and timely public debt data poses severe challenges to the international financial architecture. In particular, inaccurate or diverging debt records across sources may hinder effective debt management, affect the quality of debt sustainability analysis and limit implementation of swift and fairly-designed debt restructurings. During the COVID-19 crisis and in its aftermath, pressing demands for debt reconciliation and restructuring processes have made the debt transparency agenda more relevant than ever.

Countries directly disclose their debt statistics, but these efforts are varied and not equally mandated at the national level. Debt offices with reporting obligations to IFIs have high stakes, and it is assumed that these obligations will generate incentives to comply with requests of indirect reporting. However, varying levels of coverage, poor debt recording and the use of different debt definitions and standards across multiple reporting channels lead to discrepancies across sources and generate the need for frequent reconciliation.

This paper contributes to the debt transparency discussion by: (i) measuring the extent of transparency in direct reporting; (ii) studying its determinants; (iii) describing the ecosystem in which direct and indirect reporting channels coexist; and (iv) providing novel estimates of data gaps.

The results indicate that debt transparency is best supported by standardized recording and reporting systems. LIDCs benefit from existing DRMSs, despite their limitations, as they are usually constrained in their ability to develop and maintain their own in-house systems. This result highlights the huge potential to increase transparency by improving current systems and tightly coordinating these efforts. The results also show that high levels of external scrutiny in the form of ratings and Eurobond issuances have a high impact on LICDs’ transparency as a result of the data disclosure and investor relations practices required by them. Finally, increasing the numbers of highly skilled staff in debt offices has also been identified as a key part of improving transparency.

In the absence of reliable and comprehensive data disclosed by the authorities, indirect reporting is currently integrating and, in some cases, replacing direct reporting channels. Indirect reporting has been found to expand the coverage of debt statistics in most LIDCs, and country-specific comparisons of debt stocks from direct sources versus those recorded in the WB-IMF’s DSAs show that deviations therein can represent up to 30 percent of national GDP, confirming that differences in coverage are a key driver of this gap. Even when direct and indirect reporting coincide in terms of sectoral coverage, discrepancies can be as high as 7 percent of national GDP. This additional mismatch can be attributed to the use of decentralized and non-automated recording processes, data manipulation, and different debt definitions.

Given these challenges, this paper puts forward a call for action to i) improve debt transparency by focusing on those factors that are most likely to promote transparency; (ii) shift the focus of MDBs’ operations and technical assistance from indirect to direct reporting; (iii) introduce a core of enforceable