The Treasury will set up an independent public debt management office (PDMO) and appoint a registrar for government securities as it seeks to control its fast-rising liabilities.
According to the newly released Draft Debt Policy and Borrowing Framework, the new office will have an expanded mandate of managing public debt and also assess the risks inherent in public private sector partnerships (PPPs) with the possibility of issuing guarantees.
The PMDO will also be more closely involved in debt acquisition by counties as it will stipulate the terms and conditions for borrowing and set debt limits entities can incur. The overall objective will be to ensure debt costs and benefits are shared with future generations — effectively a way to promote long-term liabilities.
“The objectives of the PDMO will be to: a) minimise the cost of debt management and borrowing over the long-term taking account of risk; b) promote the development of the market for government debt securities; and c) ensure the sharing of the benefits and costs of public debt between the current and future generations,” says the policy.
Compared to the current Debt Management Office that is poorly funded and staffed, the PDMO will be provided with adequate resources to play its expanded role.
“The Cabinet Secretary [for the] National Treasury shall ensure that sufficient resources are made available to the PDMO so as to ensure the PDMO is able to carry out its mandate under the relevant laws and sufficient to safeguard the PDMO’s ability to provide independent policy advice and maintain the integrity of public debt management,” says the policy.
The registrar will be appointed by the Treasury secretary after a competitive recruitment, the new policy says.
“The role of the Cabinet Secretary in the efficient functioning of the PDMO will be to, among other things, establish office of Registrar of the National Government Securities: The Cabinet Secretary shall establish an office of Registrar of National Government Securities under the PDMO,” says the policy.
However, the new policy does not explain what happens to the existing Debt Management Office currently under the National Treasury. It only mentions head of the PMDO and not the director.
The sitting director of the office Harun Sirima said he was out of the country and would only address the issue when he returns next week.