The Debt Management and Financial Analysis Program (DMFAS) is a program run by the United Nations Conference on Trade and Development (UNCTAD), in Geneva. The goal of the DMFAS Program is to help countries develop administrative, institutional and legal structures for effective debt management; to provide technical assistance to government offices responsible for debt management; to disseminate and advance debt analysis and management systems; and acts as a focal point for discussion and exchange of experience in debt management. The program's debt management software program is currently installed in over ninety government agencies, almost exclusively the finance ministries and/or central banks.
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In 1975, the inter-agency oversight body of the United Nations Conference on Trade and Development (UNCTAD), the Trade and Development Agency (TDB), endorsed the recommendation of the UNCTAD Ad hoc Government Experts Group in which UNCTAD "was invited to participate in multilateral debt negotiations on a together with representatives from other international organizations ".
The intention is UNCTAD-officially in observer capacity-assisting the debtor countries to file their case with creditors. However, the resolution does not mention which negotiations. The fourth UNCTAD Conference, UNCTAD IV, in May 1976, asked the UNCTAD Secretary-General to hold an "Ad hoc Intergovernmental Advisory Group on New Debt and Development Issues". The group met regularly from 1976 to 1983.
The Expert Group works to generate a draft of debt renegotiation and retroactive assistance requirements. In March 1978, the TDB in its Special Session IX at the ministerial level, adopted by Consensus Resolution 165 S-IX, said that the issue of sovereign debt should be addressed in a "appropriate multilateral framework of interest" (paragraph 10-b). This is understood as an implicit reference to the Paris Club as the only "appropriate multilateral framework", and opens the door for UNCTAD's participation to this forum under TDB Resolution 132 (XV).
In negotiations of Resolution 165 S IX, OECD countries made major concessions on debt relief (Part A of Resolution), but refused formal recognition of the mechanism of debt restructuring (Part B Resolution). This resolution also implicitly introduces the Paris Club as an "appropriate multilateral framework" for international considerations of emerging sovereign debt issues, as mentioned earlier. Part A of the resolution contains an agreement on "retroactive requirements adjustment" on assistance for a group of 30 underdeveloped countries (ie the obligation of repayment of outstanding aid loans is changed to the easier terms now offered by donors of these countries). Some OECD countries that have decided to grant exclusive assistance as grants apply this resolution by canceling old debts, making this a precursor of the Poor State Debt Initiative (HIPC).
The debate ended in September 1980 when Resolution TDB 222 (XXI) was adopted by consensus. Part B of the resolution contains "Detailed Features for Future Operations Relating to Debt Problems of Developing Countries Interested". This resolution was adopted without dissent, although with France abstaining to emphasize its strict neutrality, it hosted debt renegotiation, as this time the resolution explicitly referred to the Paris Club as a recognized multilateral forum for bilateral debt scheduling. Section B resolution 222 (XXI), "Detailed Features for Future Operations Relating to Emerging Growth Debt Issues", is actually an agreed "code of conduct" for official debt scheduling because only the government (UNCTAD constituents) are represented at the time of adoption.
Maps DMFAS
History
Early 1980s
Since 1979, based on TDB Resolution 132 (XV) and 165 S-IX, UNCTAD has attended almost all Paris Club meetings involving developing countries or economies in transition. The UNCTAD division nominated to attend the Paris Club is "Money, Finance and Development Division" (currently "Strategy of Globalization and Development"), leading at the time by Mr. Gerasimos Arsenis (Greece). This division is responsible, among other tasks, economic forecasts for Trade and Development Reports, one of UNCTAD's major reports. The quantitative team of the Division is a member of the Trade and Projection Branch, which was commissioned by officers since 1979 to assist countries in debt trouble to present their case to the Paris Club. The reason for this is that the staff of the branch maintain a set of econometric models for major developing countries around the world, and have quantitative skills to calculate the additional flows required to close the balance of payments gap either through new currents or/and through rescheduling debt. The team was composed by team leader Kenneth Ruffing (USA); Enrique CosÃÆ'o-Pascal (Mexico) in charge of Latin America; Valery Prokohrenkov (USSR) in charge of North Africa and the Middle East; Sam Chan-Tung (Mauritius) in charge of Asia and Oceania; Kombo Moyana (Zimbabwe) in charge of Sub-Saharan Africa; and statistical assistant Jacques Baert (Belgium) from the Branch.
When UNCTAD began supporting countries that attended the rescheduling of debt negotiations in 1979, data were needed to make calculations. The first difficulty faced by Trade Branch and Projection staff is the lack of information about the debtor's external debts: they do not know how much their debt is, to what country and creditors, in what currency the loan should be repaid, when the payment is due and who the debtor national. The idea of ​​creating a Computer Based Debt Management System (CBDMS) comes naturally after this experience. The Branch staff representing UNCTAD at the Paris Club in the early 1980s confirmed this lack of information as a common situation in developing countries. The question that arises at this stage is: why are the debtor countries not having CBDMS?
There are two main reasons why debtor countries do not have accurate debt data and CBDMS performers. The first is the lack of centralized information about foreign debt and inefficient laws on public guarantees. The second is the lack of availability of debt managers to produce comprehensive specifications for computer specialists. The urgent nature of the problems that a debt manager must solve at that time will lead him to deal with certain oppressed issues, such as preparing the Paris Club and then preparing for negotiations with private banks. This will imply data collection in two different databases and the development of two different computer systems. Both these systems have evolved and will be linked, the result is an inflexible and impractical patchwork of computers that are inefficient and costly to maintain.
First Version of DMFAS
In 1981, Kombo Moyana left UNCTAD to join Mr. Bernard Chidzero, former UNCTAD Deputy Secretary General and Minister of Finance in Zimbabwe at the time. Other members of the Branch must include Sub-Saharan Africa awaiting the replacement of Mr. Moyana. In particular, Mr. CosÃÆ'o-Pascal covered Liberia, Madagascar and Zaire (now the Democratic Republic of Congo). Four countries, in 1981, agreed to form an initial DMFAS pool - contributing from their United Nations Development Program (UNDP) fund to joint technical cooperation funds with UNCTAD - allowing the development of the first version. The countries are two from Latin America: Bolivia and Costa Rica and two from Africa: Liberia and Madagascar. This resource allows hiring a systems analyst, Pekka Sankala Finland and a programmer, Ms. Cameron Turkey. These two men, together with Mr. Cosio-Pascal, team leader, and Mr. Baert, formed the first DMFAS Program team.
The first DMFAS version, completed in early 1982, was developed in COBOL and designed to run on IBM System/370 mainframe computers. This first version was installed at Bolivia's National Institute of Statistics, which is the only institution in Bolivia that has an IBM 370 computer. However, at the time, the country was ruled by the Military Junta, the Head of State General Luis GarcÃÆ'a Meza, and it was decided by the Bolivian authorities that foreign debt data was classified information, and no one could access it. , with the exception of those authorized incorporated in the International Department of the Central Bank of Bolivia. Therefore, it is requested to UNCTAD to develop a DMFAS version for Personal Computer (PC) that should be located in the Central Bank with limited access to authorized staff. This is a very lucky request, because PC prices then drop, much cheaper than mainframe computers, and because all versions of DMFAS have been made to run on PC. The second version of DMFAS, the PC version, is installed in the Central Bank of Bolivia, the Central Bank of Costa Rica, and the Central Bank of Madagascar. It was never installed in Liberia because of the overflow of civil war.
Program Expansion DMFAS and DPS: Debt Analysis Tool
The 1980s was characterized by a series of default and debt rescheduling negotiations by developing countries and some communist countries at the time. As a result, DMFAS demand is increasing rapidly. Demand for the system is huge and the number of staff of the DMFAS team is also growing rapidly. By the end of the 1980s, the team numbered about 20 people and the number of countries benefiting from DMFAS technical cooperation was around 30 to 40. Demand was so high that around 1984 the Commonwealth Secretariat began developing CBDMS for its member countries. , CS-DRMS. However, CS-DRMS is primarily targeted to English-speaking countries, although there is a French version for some Sub-Saharan French speaking countries. By comparison, DMFAS is created independently of the language the user uses, which means that the "vocabulary" of the system does not depend on computer code. Currently, the system can be set to run in Arabic, English, French, Russian or Spanish. Additionally, in countries running DMFAS in languages ​​other than English, system administrators can switch language to English to generate reports for the international financial community and change them back into the user's language. DMFAS Program
The creation of DMFAS is a step forward for the user debtor countries in improving their public debt management, particularly foreign debt. However, the ultimate goal at the time was to help countries plead their case in negotiations, first with the International Monetary Fund (IMF) to reach agreement on the economic adjustment program, and second at a debt rescheduling meeting with the creditors of the Paris Club. It was found that a tool that would collect combined figures from external debt and combine them with a balance of payments scenario is required. Therefore, the DMFAS Program, in the second half of the 1980s, commissioned the team to develop Debt Projection and the Balance of Payments System (DPS). The team was composed by Mr. CosÃÆ'o-Pascal, Mr. Baert and external consultant Mr. David Nathan (UK). DPS is developed in Lotus 1-2-3 spreadsheets, which implies transportability and simplicity. The functionality of DPS includes a combination of balance of payments scenarios under the "old debt rescheduling" scenario and different "new money" scenarios. The algorithm used by DPS to close the gap is the "net transfer approach". In fact, DPS is a precursor of the debt sustainability analysis template.
DPS was a major breakthrough in the area of ​​debt negotiations at the time, because as developed in Lotus 1-2-3, it was suitable for portable computers that began to emerge in the second half of the 1980s. Therefore, the negotiating team of many debtor countries - not just DMFAS countries, but every country that attends the Paris Club - uses DPS behind the negotiating room to assess different proposals during debt rescheduling meetings, which is a considerable advantage for negotiators. DPS was used intensively in the Paris Club negotiations as well as in major negotiations between the Mexican government and the steering committee of private banks headed by William R. Rhodes in New York in 1988.
DMFAS 5: Cooperation with World Bank and UNDP Financing
In the late 1980s, DMFAS version 4 was a stable and fully mature computer-based debt management system (CBDMS). However, computer engineering and software have evolved and increasingly proven that new platforms for DMFAS are required. Nonetheless, large amounts of resources are needed to improve the DMFAS of COBOL, which uses indexed files, into relational database systems.
At that time, two major technical cooperation providers were assisting developing countries in debt: the World Bank and UNCTAD. UNDP agrees to finance the upgrading of the DMFAS provided that UNCTAD and the World Bank coordinate their technical activities on public debt management. Negotiations were made between the two institutions and it was finally agreed that UNCTAD would be responsible for the database with the DMFAS and the World Bank would be responsible for the analytical tool, DPS. The World Bank increased DPS, which became the Plus Debt Sustainability Model (DSM), and upgraded it from Lotus 1-2-3 to Microsoft Excel. Then, the government budget is also included in the DSM (DSM) where the budget gap also closes with the same algorithm.
With the approval of UNCTAD/World Bank to work together to provide technical assistance to developing countries, UNDP agreed to finance the updating of the DMFAS to the relational database system. The resources are derived from UNDP Inter-regional funds and amounts to approximately US $ 5 million. The selected relational database is the ORACLE Database. The work and arrangements for selecting relational database providers, hiring consultants and other organizational matters made the development of DMFAS 5, to pass from COBOL to ORACLE beginning in 1992.
Funding from Client Country and Bilateral Donors
Unfortunately, an unprecedented event arrived in early 1993: UNDP found that their resources were insufficient to maintain an initial US $ 5 million pledge and requested UNCTAD to replace the unused balance. This situation forced the DMFAS and UNCTAD Programs to make calls to the international financial community to continue with the work schedule.
At this time, the early 1990s, the problem of bankruptcy by HIPC Weight HIPC (HIPC) became increasingly acute. The main objective of the HIPC Initiative aimed at debt relief, and recipient countries must take responsibility for managing their daily debt, among them, to maintain an accurate database of all public, domestic and external debt. Many DMFAS user countries are HIPC, and this fact makes developing donor countries respond swiftly to UNCTAD/DMFAS calls: Belgium, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Sweden, Switzerland and the UK respond positively to support The DMFAS program, either by depositing resources with UNCTAD technical cooperation trust funds or by submitting to the Junior Professional Officers Program (JPOs), and in some cases, senior officers as well. Therefore, regardless of withdrawal of UNDP financing, an upgrade to the version of DMFAS 5 in ORACLE has been carried.
Since the first call to donor countries, the DMFAS Program has been financed through regular UNCTAD budgets, contributions from donor countries and contributions from donor countries.
DMFAS Version 6
After several versions of DMFAS 5, major upgrades were made by the DMFAS Program in the second half of the 2000s. This new version, DMFAS 6, is an application for public debt management using the latest information technology.
DMFAS_and_a_New_Approach_to_Technical_Cooperation "> DMFAS and New Approach for Technical Cooperation
The development of CBDMS is a complex issue and the reasons vary; for example, each creditor has his own methodology for calculating accrued interest, fees and rounding for principal payments. Second, the imagination of financial engineers is unlimited and CBDMS should be upgraded in the function of new financial products coming into the market.
There are three major comparative advantages related to the development of a system center such as DMFAS. The first is the large-scale economy created by the DMFAS Program. Regarding economies of scale, the core of the system is common to all countries and this avoids repetition of the same development in every country. The development and refinement of DMFAS is driven by demand so that the system reflects all the functions requested by the user. DMFAS staff produce specifications that will lead to a comprehensive and coherent CBDMS. The end product is a tool that is easy to use, flexible and efficient.
The second is the rotation of personnel in the Debt Management Office (DMO) is a real problem, and in many countries no permanent solution is found to employ and retain qualified personnel. DMOs very often lack staff, but personnel are hired for temporary duty or with temporary pay arrangements. Turnover rates are often very high, with no appropriate capacity for in-service training to improve the remaining staff knowledge to quickly make new employees fully operational. This situation was identified immediately, in fact in a report requested by UNDP in the late 1980s, and unfortunately this situation has not changed much in a large number of countries. Therefore, the DMFAS Program has functioned as a storage place for technical knowledge that can retrain new personnel and reinstall DMFAS when necessary.
The third is that installing DMFAS is cheaper than developing a completely new system for reasons of cost and workability. Compared with designing, programming, and completely new system maintenance, packages can be relatively inexpensive. DMFAS designers with the help of users have been debugging available systems to the point where they are likely to have fewer operating problems than custom made systems. They can be implemented rapidly, and maintenance is centralized, creating a high economic scale: the application of DMFAS, for example, varies from 6 months to 3 years, to cover the full database depending on its complexity; this is fast compared to in-house development. System maintenance is very important; it has been proven that the rotation of personnel in the IT Department - which is a characteristic observed from the DMO of the developing countries as mentioned above - makes the system developed domestically very vulnerable. Choosing a standard software package like DMFAS also reduces the need to maintain a full group of developers within the DMO's IT department, there is only need for maintenance and services for daily work, database management, and security procedures such as regular backup.
Traditional conceptions for technical cooperation imply that external teams financed by external donors will assist the receiving country to start certain activities, and once local teams have mastered the technique and can earn from supported activities, technical assistance comes to an end.
The three points mentioned above imply a new approach to technical cooperation provided by DMFAS. The DMFAS program changed the philosophy of technical assistance, from the approach described in the preceding paragraph, to the permanent service to the "client country" - no longer "beneficiaries" in the sense given by the traditional technical assistance approach - received to pay the annual fees and fees sharing system development in the exchange of ongoing technical support for their public debt management responsibilities.
Mid-Year 2012 DMFAS is installed in 69 countries and more than 100 institutions: Ministry of Finance, Central Bank, and other Public Government agencies. DMFAS Program
List of DMFAS Program Managers and Headers
Note
External links
- DMFAS Program Home page
Source of the article : Wikipedia
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