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WB: Transparency in debt reports needed

THE World Bank has called for greater transparency to better assess the sustainability and restructuring of debts after the pandemic.

World Bank Group President David Malpass warned that many poor countries will emerge from the pandemic with the largest debt burdens but have limited debt transparency.

In its report titled, “Debt Transparency in Developing Economies,” the World Bank found that 40 percent of low-income countries have not published any data about their sovereign debt for more than two years.

“Improving debt transparency requires a sound public debt-management legal framework, integrated debt recording and management systems, and improvements in the global debt monitoring,” Malpass said in a statement.

“International financial institutions, debtors, creditors, and other stakeholders, such as credit-rating agencies and civil society, all have a key role to play in fostering debt transparency,” he added.

The report noted, however, that there are efforts to be more transparent in terms of securing debt. The World Bank said countries like the Philippines have adopted a requirement to disclose entire debt contracts.

Other countries which have disclosed debt contracts include Barbados, Kosovo, Kyrgyz Republic, and Sierra Leone.

Transparency is crucial, the World Bank said, given the increase in government liabilities. As of 2018, International Public Sector Accounting Standards (IPSAS) reflects P8-billion total liabilities while Government Finance Statistics (GFS) showed P6.8 billion of general government gross debt.

The World Bank noted that the Philippines reports its annual financial statements largely consistent with accrual-based IPSAS. Its 2018 Annual Financial Report reported general government gross debt of 38.9 percent of GDP.

However, this has significantly increased. The national government’s outstanding debt as of end-September this year ballooned to another record high of P11.92 trillion from P9.37 trillion a year ago.

Latest data from the Bureau of the Treasury showed the government’s debt stock grew by 27.2 percent or P2.55 trillion in just a year.

The outstanding debt level as of end-September this year has already exceeded by 1.62 percent the government’s expected level of debt stock by year-end of P11.73 trillion.

“Debt Transparency in Developing Economies should end any complacency about addressing debt transparency challenges in low-income countries. The time to act is now,” Malpass said in his foreword in the report.

Achieving effective debt surveillance, the World Bank said, will not be easy—but it can be done. The report lays out a detailed list of recommendations, ranked in order of urgency.

Prominent among them: publishing public and publicly guaranteed debt statistics annually; encouraging coordinated data collection and reporting; and instituting integrated debt recording and management systems that align with international standards.

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