lacking in several respects. Scores within this indicator reflect: (i) a low degree of assessment of the most beneficial/cost‐effective borrowing terms and conditions; and (ii) a general absence of documented procedures for borrowing in foreign markets. These findings are particularly worrying because a number of the countries in the sample have expressed their interest in issuing in international capital markets once the financial turbulence settles. Moreover, the fact that the majority of countries have effective legal frameworks that underpin borrowing, while positive, is negated by the lack of accountability and transparency as regular performance audits have not been undertaken.

A surprising area of deficiency was “debt records and reporting”, where despite several years of technical assistance and availability of ‘off‐ the‐shelf’ software, less than half of the countries met with the required criteria. Anecdotal evidence suggests loss of key trained staff, lack of transfer of skills among staff, and lack of documented procedures as the main reasons for this. An important explanation relates to incentivizing staff and retaining key trained staff. In several countries, public sector policies mandate rotation of staff and better incentives offered by the private sector for skilled debt managers lure away skilled personnel. This results in loss of key skill‐sets resulting in slippages that imply ‘starting all over again’. This is compounded by a fundamental weakness inherent in most debt offices, for example the lack of procedures manuals and documented work processes. Such documentation would to a great extent mitigate these gaps when key staff are transferred or leave.

Cash management was inherently rudimentary across the assessed countries. Most countries had a large number of bank accounts at times driven by

**Table 2: Priority Areas for Improvement: Number and Percent of Countries not Meeting Minimum Requirements**

||**Number**|**% of Total**|
|---|---|---|
|**DEBT MANAGEMENT STRATEGY**|||
|Quality of debt mng strategy documents|29|85.3%|
|Decision making process, updating, and publication of the<br>debt management strategy|11|32.4%|
|**AUDIT**<br>|||
|Frequency of internal and external audit on DM activities,|||
|<br>policies, and operations, as well as publication of external<br>audit|27|79.4%|
|Degree of commitment to address the outcomes from<br>internal and external audits|4|11.8%|
|**EXTERNAL BORROWING**|||
|Assessment of most beneficial/cost‐effective borrowing<br>terms and conditions|25|73.5%|
|availability and quality of documented procedures for<br>borrowing in foreign market|28|82.4%|
|Availability and degree of involvement of legal advisors|13|38.2%|
|**CASH FLOW FORECASTING AND CASH BALANCE MANAGEMENT**|||
|Effectiveness of forecasting the aggregate level of cash<br>balances in government bank account|27|79.4%|
|Effectiveness of managing the aggregate level of cash|||
|balances in government bank account, including<br>integration with the domestic debt borrowing program|25|73.5%|
|Where DEM entity operates its own bank accounts, the<br>frequency of reconciliation of these bank accounts|6|17.6%|
|**DEBT ADMINISTRATION AND DATA SECURITY**|||
|availability and quality of documented procedures for the<br>processing of debt service|26|76.5%|
|availability and quality of documented procedures for<br>debt data recording and validation, as well as storing of<br>agreements and debt administration|28|82.4%|
|availability and quality of documented procedures for|||
|controlling access to the central gov. debt recording. Mng.<br>system and payment system.|26|76.5%|
|frequency and off‐site, secure storage of debt recording/<br>mng. System backups.|25|73.5%|
|**SEGREGATION OF DUTIES, STAFF CAPACITY AND BCP**|||
|Segregation of Duties for some key functions, as well as the<br>presence of a risk‐ monitoring and compliance function|28|82.4%|
|Staff capacity and human resource mng.|26|76.5%|
|Presence of an operational risk mng. Plan, including|29|853%|
|continuity and disaster recovery arrangements||.|

Source: Authors’ calculations donor insistence. In many countries, information on the aggregate level of cash balances was not 14