through a comprehensive set of 15 debt performance indicators that cover the full range of government DeM operations, and to assess the overall environment in which these operations are conducted. The DeMPA aims to measure government DeM performance and capture the elements recognized as being indispensable to achieving sound DeM practice. An important facet of the tool is the emphasis it puts on both DeM processes and capacity in target countries, both of which are required for effective DeM. The DeMPA emphasizes meeting the minimum requirement on all measures—a score of ‘C’. The rationale is that the minimum requirements exhibit that the country possesses the adequate institutions and capacity to carry out the essential DeM functions effectively and independently. If countries do not meet the minimum requirements, that signals an area for priority attention and reform. The results of a DeMPA can thus help guide the design of sequenced and actionable reform programs, facilitate monitoring of performance over time, and enhance donor harmonization based on a common understanding of priorities.<sup>25</sup> Early results from the DeMPA exercise are useful in identifying priority areas for DeM reform across countries. Figures 22 and 23 display the results of 34 DeMPAs performed as of December 2009, revealing areas in which the sample countries met minimum requirements on the 15 indicators included in the analysis. The results also highlight areas in which significant progress still needs to be made. Indicators for which less than 10 countries in the sample met the minimum requirements are identified by the pink circle in figure 22. Figure 23 highlights the performance of LICs compared to their lower‐ middle income (LMIC) counterparts. While the patterns are broadly similar, LICs underperform LMICs across nearly every indicator.

Table 2 presents in detail the priority areas for reform, where less than 10 countries met minimum requirements. Across the sample, six key areas were highlighted as priority areas of reform: developing medium term debt management strategies; performance audits of DeM activities, processes and operations; procedures for analyzing and documenting external borrowing; improved practices in cash management; debt data administration, records and reporting; and strengthening operational risk management. The areas where 50% of the countries met the minimum requirements under the DeMPA framework related to the: legal framework, managerial structure, coordination with fiscal and monetary policy, and policies and procedures for domestic borrowing.

The positive results can be explained by the fact that several countries assessed during this round of the DeMPA were from regional monetary unions (as in the case of West Africa) with central banks that usually managed domestic debt. These central banks were well versed with the BIS Basel procedures and outreach activities on such issues, which explained the relatively higher scores on the monetary policy indicators and procedures for domestic borrowing. Likewise, scores on the fiscal policy interactions are explained by the fact that several countries were post HIPC and PRGF countries with effective medium term fiscal and expenditure frameworks in place. Effective coordination with macro‐ policies was compromised by the fact that the policies and procedures for external borrowings were

> 24 The DeMPA, developed by the World Bank, is a tool designed to undertake an assessment of the strengths and weaknesses in government DeM practices through a comprehensive set of 15 performance indicators spanning the full range of government DeM functions. The analysis here pertains to the results from the finalized reports of 34 assessments undertaken between November 2007 – December 2009.

> 25 See DeMPA Tool and Guide (2009) for a complete list of DeMPA indicators and subindicators; DeMPA material and complete list of country implementation to date can be found at www.worldbank.org/debt

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