Question 14

Does the Executive’s Budget Proposal or any supporting budget documentation present information related to the composition of the total debt outstanding at the end of the budget year? (The core information must include interest rates on the debt instruments; maturity profile of the debt; and whether it is domestic or external debt.)
 * a. Yes, information beyond the core elements is presented for the composition of the total debt outstanding.
 * b. Yes, the core information is presented for the composition of the total debt outstanding.
 * c. Yes, information is presented of the total debt outstanding, but it excludes some core elements.
 * d. No, information related to composition of total debt outstanding is not presented.
 * e. Not applicable/other (please comment).

Guidelines
Question 14 focuses on the composition of government debt at the end of the budget year, asking whether “core” information related to its composition is presented. These core components include: The interest rates affect the amount of interest that must be paid to creditors. The maturity profile indicates the final payment date of the loan, at which point the principal (and all remaining interest) is due to be paid; government borrowing typically includes a mix of short-term and long-term debt. As discussed in Question 13, domestic debt is held by a country’s citizens, banks, and businesses, while external debt is held by foreigners. These factors related to the composition of the debt give an indication of the potential vulnerability of the country’s debt position, and ultimately whether the cost of servicing the accumulated debt is affordable.
 * interest rates on the debt;
 * maturity profile of the debt; and
 * whether the debt is domestic or external.

Beyond these core elements, a government may also provide additional information related to the composition of its debt, including for instance: whether interest rates are fixed or variable; whether debt is callable; the currency of the debt; a profile of the creditors (bilateral institutions, multilateral institutions, commercial banks, Central Bank, etc.); an analysis of the risk associated with the debt; and where appropriate, what the debt is being used to finance.

To answer “a,” the Executive’s Budget Proposal or supporting documentation must present all of the core information related to the composition of government debt at the end of the budget year as well as some additional information beyond the core elements. To answer “b,” the Executive’s Budget Proposal or supporting documentation must present all of the core components noted above. Answer “b” is also accepted if one of the core elements is not presented but additional information beyond the core elements is presented. A “c” answer applies if some information related to the composition of government debt is presented, but some of the core pieces of information are not included. Answer “d” applies if no information is presented on the composition of the debt outstanding at the end of the budget year.

1) Coverage of all debt (India in OB 2019)
India has detailed information on the interest rates (p. 58-62) and maturity profiles (p. 9) of total debt during the budget year, but only for domestic debt. However, external debt does not have as much detail on the maturity profile or interest rates, only total external debt, loan providers (see p. 52, 71-73) and loans by project. The documents also show ‘beyond the core’ information about currencies and the purpose of the debt.

In OBS 2019, this question was scored as “a” because external debt that year in India was less than 3% of total debt.

2) The case of Jordan in OBS 2021
Jordan’s EBP presents information on whether debt servicing is domestic or external (see Tables 1 & 2 here, where there are about a dozen lines that list how much of the budget is going to pay off loans for a variety of specific foreign donors and how much is going to service domestic debt instruments). Tables 5 & 6 in the same document present the total outstanding stock of debt (broken down into domestic and external) up until the third quarter of BY-1 (but, there is no information on the outstanding stock of debt for the budget year itself). Finally, Jordan’s EBP includes a little information on the maturity profile of the debt, but not really an overall picture (see Table 4 here, which lists payments to a couple dozen creditors over a six-year span).

Question: I lean towards assessing this as a “c” response, given that there is a lot of good information on the debt, though it doesn’t exactly fit into the parameters of the question. Would you agree? In addition, would it be appropriate to tick the boxes “Whether the debt is domestic or external” and “Information beyond the core” in Question 14b?

Resolution: We assessed this as a “C” response and for 14b only “Information beyond the core” was chosen