Press Release No. 09/208

Press Release: 9th IMF Public Debt Managers' Forum Concludes Public Interventions Place Debt Management at Heart of Policy Debate

June 11, 2009

Debt managers and central bankers from 25 countries joined invited representatives of the private sector in Istanbul, June 8-9, for the 9^th Public Debt Managers’ Forum. Participants at the event, which was co-hosted by the International Monetary Fund (IMF) and the Turkish Treasury, concluded that public interventions place debt management at the heart of the policy debate.

Discussions at the Forum took place against the general backdrop of the various public interventions that have been made to support the financial sector in the current crisis, and which have brought debt management and debt market issues to the forefront of the policy debate.

At the opening of the Forum, Turkey’s Deputy Prime Minister and Minister for State Ali Babacan said “these discussions will make an invaluable contribution to the policies aimed at facilitating the global recovery process. This is why we attach special importance to this event.”

“The discussions at the Debt Forum have proved to be very rich, and stimulated much thought and debate on key issues surrounding the management and eventual exit from these interventions,”said IMF Deputy Managing Director Murilo Portugal. “A number of issues have emerged that warrant further work, including by the IMF.”

The variety in country experiences across the mix of advanced and emerging market countries that were represented enriched the debate, which covered a broad range of issues, including how debt managers are coping with meeting the increased financing needs in more difficult market conditions, the need to determine a clear and credible strategy that will maintain or restore fiscal sustainability in the medium- to long-term, the outlook for credit ratings and investor demand going forward, and how best to secure an orderly unwinding of the various interventions to support the financial system and overall economic activity in a coordinated manner both within and across borders.

Mr. José Viñals, Financial Counselor and Director of the Monetary and Capital Markets Department, emphasized the importance of implementing exit strategies in “a way that ensures price stability and fiscal sustainability, and secures a robust, private-sector driven financial sector within an enhanced and more effective regulatory environment.”

Flexibility was a key theme in how debt managers were responding to changing market dynamics, with many taking an active approach to supporting liquidity in the markets. A closer and more intense interaction with investors was also proving key in facilitating the smooth absorption of increased issuance.

“One of the interesting characteristics of this crisis is the home bias we have seen in the context of emerging market based investors. In many instances, this has provided an important stabilizing influence on the market, and overall, it is encouraging that, to date, markets have absorbed large volumes of debt issuance relatively well,” Mr. Viñals said.

The private sector provided some important insights into how the investor base is changing, and what the longer-term implications for debt markets might be of a reduction in leverage going forward.

In his closing remarks, Mr. Ibrahim H. Çanakci, the Undersecretary of Treasury, said “I believe there has been a general agreement on the point that flexibility, creativity, predictability and transparency should be the key guiding principles for debt managers in this current challenging environment. It was a great pleasure for us to host this Forum and I would like to thank the IMF for the excellent preparations and background work.”

“We are extremely grateful to our host, the Turkish Treasury, for arranging this very successful event,” Mr. Portugal said. “We are looking forward to our return to Istanbul for the Annual Meetings of the Board of Governors of the IMF and World Bank in October.”