Managing the treasury and the public debt involves the following tasks:
- forecasting the movement of the treasury position, so as to anticipate what will need to be issued by way of borrowing, and managing the treasury itself;
- carrying out debt issuance. This takes place for the most part by auction — weekly for short-term borrowing, monthly for medium and long-term operations.
So that the interest burden of that debt is as light as possible, various commercial approaches must be made to a wide range of investor categories, setting out the characteristics of the instruments on offer and persuading as many as possible to subscribe: the higher the demand, the lower the cost of borrowing; and the more varied the sources of that demand, the more stable it is, and so the less volatile the interest charge.
Debt management is not confined to issuing new debt. It also comprises:
- buying back or exchanging existing debt where the State stands to gain financially. For that, there must be an unexpected increase in tax revenue;
- systematic use of the various means available to the State to reduce the total burden of the debt.
The cost of debt: the cost of servicing debt is very high and holds back development, particularly in developing countries. Several courses of action are therefore open for reducing the level of indebtedness while increasing the State’s income, in particular:
- reducing State subsidies to businesses and to social bodies of other kinds, by building their capacity to manage themselves profitably
- reducing the running costs of the State
- rigorous control over the work of the administration, over how public expenditure is used and over the relevance of public policy, in order to cut out spending that is unnecessary or merely for prestige
- reducing State expenditure so that budget deficits are incurred only to finance productive investment
- clarifying responsibilities at each level of the administrative structure, so as to remove unnecessary tiers that generate duplication and avoidable cost
- broadening the tax base by encouraging the creation of viable businesses, through various measures and notably a substantial system of training
AUDICO’s experts are available to support governments in managing the public debt, and above all in increasing tax revenue so as to meet the State’s needs more fully.
The administrative organisation of centralised and decentralised systems of government
AUDICO supports you in the following:
- Designing and putting in place effective schemes of government organisation, including the links between central government and the regions
- Developing the operating principles of the regions
- Developing and putting in place mechanisms of internal and external control between the regions and central authority
- The links between regions
- The links between regional authority and communities