Fiscal Openness: Public Debt

Public Debt

Debt is a critical component of a country’s public finances. When acquired and managed responsibly, debt plays an important role in a country’s economy and fiscal health. It helps finance the development of new infrastructure, emergency procurement, and economic stabilization. However, many governments do not publish sufficient debt information, leading to an increased risk of corruption, bad investment decisions, and undemocratic borrowing practices. Increasing debt integrity through greater transparency and public accountability helps ensure that debt levels are sustainable and that funds received through borrowing are efficiently allocated to meet public needs.

The National Democratic Institute (NDI) authored this chapter of the Open Gov Guide.

Key Terms The Evidence Reform
Guidance Active OGP
Partners Benchmarking
Data Guidance
& Standards

Open Gov Challenge: Fiscal Openness

With OGP’s 2023-2028 Strategy, OGP members are set to work toward a number of aspirational thematic reforms through the Open Gov Challenge. This section of the Open Gov Guide addresses Fiscal Openness.

Challenge prompt: Advance public oversight and inclusion reforms across the budget and spending cycle.

Actions and reforms that fit within the scope of this challenge area (i.e. budgeting, revenue, spending and auditing) are:

Strengthen the role of the legislature, and other relevant institutions, in approving, monitoring, reviewing and publishing the budget, fiscal and debt related data and reports, from an open government perspective.
Reforms or activities that empower independent fiscal oversight institutions (SAI’s) and Ombudsman offices to enforce transparency and accountability measures throughout the budget cycle.
Promoting participatory mechanisms, targeting underrepresented groups, to inform spending priorities.
Combining online and offline tools to promote participation across the budget and spending cycle.

Key Terms

Definitions for key terms such as annual borrowing plan and public debt.

Annual Borrowing Plan: These plans are documents prepared by the executive branch, explaining how much and what kinds of debt that is to be contracted during the fiscal year and how it aligns with established borrowing objectives and supports fulfillment of budget priorities.
Contingent liabilities: Contingent liabilities are financial obligations that only materialize “if a particular event occurs in the future.” These can be implicit (e.g., a government would likely go into debt to finance a bankrupt local government) or explicit, where a government is contractually required to make payments on a debt (such as debt contracted by a state-owned enterprise).
Medium-Term Debt Strategy (MTDS): The MTDS is a document that outlines the government’s plans to borrow, the objectives of borrowing, and plans to manage the debt with the goal of ensuring debt sustainability. A detailed strategy includes information on repayment plans, restructuring plans, current interest rates, maturities, information on current and prospective lenders, and planned actions to reduce or maintain the existing debt burden. Lastly, the MTDS is a living document that benefits from regular updates.
Public debt: This is the total amount of debt a country is in from all public sources, including subnational governments and state-owned enterprises. Inclusive of all bonds, loans, internal debt (from national banks), external debt (from other countries, the World Bank or International Monetary Fund, international commercial banks), and public-private partnerships. This may also include implicit and explicit contingent liabilities.

SHOW KEY TERMS

HIDE SHOW KEY TERMS

The Evidence

Research suggests debt transparency (though nascent), and fiscal transparency more broadly, can have many positive effects, such as contributing to democratic stability and potential economic growth from increased investments.

Debt and fiscal transparency can improve efficiency and effectiveness in public finance management and contribute to fiscal discipline. The ability of parliament, government, and civil society to see the country’s current debt status can create pressure to limit borrowing if the situation is unsustainable. It also provides a basis for collaborative discussions on spending between government, legislature, and civil society.
Full awareness of a country’s debt status improves lender confidence. Transparency can reduce a lender’s perceived risk of lending to the country and improve the country’s credit rating, which means that lenders are more certain of a country’s ability to repay loans. In turn, greater investor confidence leads to lower borrowing costs and interest rates.
If public oversight of debt contributes to better debt performance, it has very real consequences for human development. For example, prudent debt management can also reduce the risk of high debt service costs or debt crises, which can negatively impact a government’s ability to fund public service delivery. Case studies from the UN Development Programme, the Inter-American Development Bank, and Oxfam illustrate the consequences of debt servicing on social spending, especially for vulnerable populations.

Reform Guidance

The recommendations below represent reforms that national and local governments, representatives of civil society organizations, and others can consider for their action plans and the Open Gov Challenge. The reforms are categorized according to OGP’s principal values: transparency, civic participation, and public accountability. Reforms should be adapted to fit the domestic context, and involve and coordinate with other levels and branches of government.

Reforms across policy areas are also tagged by the estimated degree of difficulty in implementation. Though progress is often not linear, the recommendations have been categorized using these labels to give the reader a sense of how different reforms can work together to raise the ambition of open government approaches.

Recommended Reforms Key

OGP Values

Transparency: Transparency empowers citizens to exercise their rights, hold the government accountable, and participate in decision-making processes. Examples of relevant activities include the proactive or reactive publication of government-held information, legal or institutional frameworks to strengthen the right to access information, and disclosing information using open data standards.

Civic Participation: When people are engaged, governments and public institutions are more responsive, innovative, and effective. Examples of relevant initiatives include new or improved processes and mechanisms for the public to contribute to decisions, participatory mechanisms to involve underrepresented groups in policy making, and a legal environment that guarantees civil and political rights.
Public Accountability: Public accountability occurs when public institutions must justify their actions, act upon requirements and criticisms, and take responsibility for failure to perform according to laws or commitments. Importantly, public accountability means that members of the public can also access and trigger accountability mechanisms. Examples of relevant activities include citizen audits of performance, new or improved mechanisms or institutions that respond to citizen-initiated appeals processes, and improved access to justice.
Inclusion: Inclusion is fundamental to achieving more equitable, representative, and accountable policies that truly serve all people. This includes increasing the voice, agency, and influence of historically discriminated or underrepresented groups. Depending on the context, traditionally underrepresented groups may experience discrimination based on gender, sexual identity, race, ethnicity, age, geography, differing ability, legal, or socioeconomic status.

HIDE OGP VALUES

Degree of Difficulty

Foundational: This tag is used for reforms that are the essential building blocks of a policy area. “Foundational” does not mean low ambition or low impact. These recommendations often establish basic legal frameworks and institutional structures.
Intermediate: This tag is used for reforms that are complex and often involve coordination and outreach between branches, institutions, and levels of government, with the public or between countries.
Advanced: This tag is used for reforms that close important loopholes to make existing work more effective and impactful. Specifically, “Advanced” reforms are particularly ambitious, innovative or close important loopholes to make existing work more effective, impactful or sustainable. They are often applied in mature environments where they seek to institutionalize a good practice that has already shown results.

HIDE DEGREE OF DIFFICULTY

Branch of Government

Executive: The executive branch of government is responsible for designing, implementing, and enforcing laws, policies, and initiatives. It is typically led by the head of state or government, such as a president or prime minister, along with their appointed cabinet members. The executive branch’s functions also include overseeing the day-to-day operations of the government, managing foreign affairs, and directing the country’s armed forces. In democratic systems, the executive branch is accountable to the legislature and the electorate, with its powers and limitations outlined in the constitution or legal framework of the respective country.
Legislative: The legislative branch of government is responsible for making laws and regulations and overseeing the functioning of the government. It typically consists of a body of elected representatives, such as a parliament, congress, or assembly, which is tasked with proposing, debating, amending, and ultimately passing legislation. The legislative branch plays a crucial role in representing the interests of the people, as its members are elected to office by the public. In addition to law-making, this branch often holds the power to levy taxes, allocate funds, and conduct certain investigations into matters of public concern. The structure and powers of the legislative branch are usually outlined in a country’s constitution or legal framework, and it serves as a check on the executive and judicial branches to ensure a system of checks and balances within a state.

HIDE BRANCH OF GOVERNMENT

Recommended Reforms

Policy Area	Recommendation	OGP Value	Degree of Difficulty	Government Branch
Legal and Institutional Frameworks	Create or strengthen the legal framework on public debt Create or strengthen the legal framework on public debt, ideally through a single, overarching piece of debt legislation (often called a public debt management act, or PDMA). Having a single piece of legislation that contains the following elements, among others, can create an enabling environment for debt transparency: Clearly defining what constitutes public debt, Setting obligations for the administration to publish debt information, and Establishing clear roles and responsibilities in debt management, including specific provisions for parliamentary approval of loans and public oversight. Specifically, parliament should be able to approve and scrutinize loans from international sources, determine which government bodies are entitled to contract loans, as well as the processes and procedures for borrowing and the penalties for improper borrowing, and support the organization of a centralized debt management office. Policy Area Legal and Institutional Frameworks OGP Value Transparency Degree of Difficulty Foundational Government Branch Legislative	Transparency	Foundational	Legislative
Legal and Institutional Frameworks	Establish and organize a centralized debt management body Establish and organize a centralized debt management body. International best practice suggests that all government debt management and contraction should be conducted through a single government body, typically called a Debt Management Office or Debt Management Unit. According to international standards, such a body should have delegated authority from parliament to conduct all debt management operations and be subject to public parliamentary oversight. Policy Area Legal and Institutional Frameworks OGP Value Public Accountability Degree of Difficulty Foundational Government Branch Executive Legislative	Public Accountability	Foundational	Executive Legislative
Legal and Institutional Frameworks	Increase coordination between the debt management office and the legislature Increase coordination between the debt management body and the budget office, including around budgeting and borrowing processes, to ensure appropriate oversight. Such coordination should include public reporting on major decisions related to this data. Policy Area Legal and Institutional Frameworks OGP Value Transparency Degree of Difficulty Intermediate Government Branch Executive	Transparency	Intermediate	Executive
Borrower Transparency	Proactively develop, publish, and submit key debt management documents Proactively develop, publish, and submit key debt management documents, including for public parliamentary review. The following documents, and many more listed in this checklist from NDI and Transparency International, can be published online to facilitate public engagement with public debt. For more details, see the “Open Budgets” chapter of the Open Gov Guide, which includes fiscal openness guidance that is also relevant to public debt. A Medium-Term Debt Strategy (MTDS) An annual borrowing plan published before the start of the fiscal year, covering planned borrowing for central government and other entities (such as subnational governments and state-owned enterprises) Debt Sustainability Analysis Mid-Year Budget Reviews Annual Reports Disaggregated debt information, including individual loan agreements and transactions Policy Area Borrower Transparency OGP Value Transparency Degree of Difficulty Foundational Government Branch Executive Legislative	Transparency	Foundational	Executive Legislative
Lender Transparency	Allow borrowers to disclose debt information Lenders can support transparency by omitting confidentiality clauses in lending instruments, allowing borrowers to disclose information about their debt information. Preventing borrowers from sharing such information through confidentiality clauses is essential to creating an environment where transparency can thrive. Policy Area Lender Transparency OGP Value Transparency Degree of Difficulty Intermediate Government Branch	Transparency	Intermediate
Lender Transparency	Disclose debt information to support transparency Lenders may also support transparency by disclosing the value of loans, fees, charges and interest, payment schedules, and relevant information on the purpose of the debt incurred. Policy Area Lender Transparency OGP Value Transparency Degree of Difficulty Advanced Government Branch	Transparency	Advanced
Lender Transparency	Support the creation of a standardized, publicly accessible creditor registry on loans and debt Create a standardized, publicly accessible registry on loans and debt that creditor governments would populate. Ideally, this registry would be housed in a permanent, international institution. Over time, such a registry could also include entries from borrower governments. Policy Area Lender Transparency OGP Value Transparency Degree of Difficulty Advanced Government Branch	Transparency	Advanced
Civic Participation	Support public participation at key points of the fiscal management cycle Increase public participation during all stages of the fiscal cycle and at important milestones related to debt specifically, such as during debt contraction, negotiations, and the drafting of new or revised fiscal laws. The inclusion of members of vulnerable and excluded groups should be explicitly taken into account when designing public participation initiatives. Such engagement should also follow the best practices for budget openness, which are described in more detail in the “Open Budgets” chapter of the Open Gov Guide. Policy Area Civic Participation OGP Value Civic Participation Inclusion Degree of Difficulty Foundational Government Branch Executive	Civic Participation Inclusion	Foundational	Executive
Public Accountability	Create a specialized parliamentary committee to monitor public debt Legislatures play a crucial role in approving loan agreements and holding the government accountable. Legislatures can establish a specialized committee whose responsibilities entail monitoring public debt and its interaction with budget and policy priorities to ensure that parliaments can effectively play their role. Such a committee can lead debt discussions with civil society and work together to increase public debt oversight and accountability, as in the case of Kenya. Policy Area Public Accountability OGP Value Public Accountability Degree of Difficulty Foundational Government Branch Legislative	Public Accountability	Foundational	Legislative
Public Accountability	Require the publication of annual, independent audit reports Require the publication of annual, independent audit reports that the mandated agency (typically the Supreme Audit Institution) will submit to parliament for scrutiny. Legislatures are responsible for reviewing and discussing the audit results and using findings to exercise oversight of the administration’s actions. Wide publication of audit results will also enable civic participation and support advocacy for greater accountability. Examples of audits include: Financial audits, or traditional audits, which assess if reported financial statements match actual spending, Performance audits, which determine if the debt has been used in the most efficient manner possible, and Compliance audits, which ensure that the government spent the authorized amount of money for the purposes intended by parliament. Policy Area Public Accountability OGP Value Public Accountability Degree of Difficulty Foundational Government Branch Executive Legislative	Public Accountability	Foundational	Executive Legislative

Examples of Reforms from OGP and Beyond

The following examples are commitments previously made within or beyond OGP that demonstrate elements of the recommendations made above. Debt transparency has so far been relatively unexplored in OGP commitments, even though debt transparency is increasingly considered a critical issue. However, a few countries have submitted commitments related to disclosing debts, particularly in 2022–2024 and 2023–2025 OGP action plans, which could signal that this topic will receive greater focus in years to come.

OGP Reforms

CROATIA Published Local Debt Information: Publishes the balance sheets of local and regional units (including a 17-year archive) and includes public debt information in the published annual budget. Also provides updates on the state of public debt at the beginning and end of the fiscal year.
GHANA Public Debt Information: Committed to publishing more information on fiscal deficits, the government’s borrowing, and debt management. Though this data is not yet accessible to the public, the commitment is an important first step. Currently, the Ministry of Finance website has a section dedicated to its public debt obligations, complete with an annual borrowing plan, reports, and MTDS.
KENYA Public Debt Register: Committed to increasing the amount of public debt information published on the National Treasury website, which now contains data on external debt up to June 2022 (at the time of assessment by OGP’s Independent Reporting Mechanism). Institutions and the media reported using the register for their own reporting and outreach efforts.
LITHUANIA Municipal Finance Data Portal: Created a data portal for all municipalities in the country related to state and local revenue and expenses, debts, and unemployment, as well as national budget details. The portal also includes public and private recipients of public funding and the use of tax revenue.
MALAWI Parliamentary Oversight of New Loans: Committed to mandating the referral of loan bills to the Parliament’s Budget and Finance Committee, which then presents its findings to the National Assembly to ensure parliamentarians can track new loans. Parliamentarians would also receive training to strengthen their capacity to oversee debt management.
MONTENEGRO Local Government Fiscal Transparency: Committed to making data on local governments’ revenues, expenditures, and tax debts more transparent, particularly through an open data format.

Beyond OGP Action Plans

CHILE Public Debt Office: Maintains a Public Debt Office that publishes its debt issuances as well as a debt issuance calendar.
NIGERIA Debt Management Office: Established its Debt Management Office in 2000, which releases quarterly updates on its debt stock and findings of its bond auctions and publishes data on subnational borrowing.
SIERRA LEONE Medium-Term Debt Strategy: Made strides in improving its debt management practices by publishing a 2021–2025 MTDS.
THE GAMBIA Directorate of Debt Management: Created a Directorate of Debt Management (DDM), which designs the national public debt strategy, conducts debt sustainability analyses, approves disbursements, and maintains a loan database, among other tasks. The DDM also regularly publishes debt statistics and debt issuance plans.

Who is working on this topic?

A

Abuja, Nigeria

Albania

Anloga District, Ghana

Argentina

Armavir, Armenia

Armenia

Austin, United States

Australia

B

Basque Country, Spain

Béni Mellal-Khénifra, Morocco

Bogotá, Colombia

Bosnia And Herzegovina

Brazil

Buenos Aires, Argentina

Bulgaria

Burkina Faso

C

Cabo Verde

Canada

Chile

Colombia

Costa Rica

Côte D'ivoire

Croatia

Czech Republic

D

Denmark

Dominican Republic

E

Ecuador

Elgeyo Marakwet, Kenya

Estonia

F

Finland

France

G

Georgia

Germany

Ghana

Glasgow, United Kingdom

Greece

Guatemala

Gyumri, Armenia

H

Honduras

I

Indonesia

Ireland

Israel

Italy

J

Jalisco, Mexico

Jordan

K

Kaduna State, Nigeria

Kenya

Khoni, Georgia

Kutaisi, Georgia

Kyrgyz Republic

L

La Libertad, Peru

Latvia

Liberia

Lithuania

M

Madrid, Spain

Malawi

Malta

Mexico

Mongolia

Montenegro

Morocco

N

Nandi, Kenya

Netherlands

New Zealand

Nigeria

North Macedonia

Norway

O

Osasco, Brazil

Ozurgeti, Georgia

P

Panama

Papua New Guinea

Paraguay

Paris, France

Peru

Philippines

Portugal

Q

Quintana Roo, Mexico

R

Republic Of Korea

Republic Of Moldova

Romania

S

San Pedro Garza García, Mexico

Santa Catarina, Brazil

São Paulo, Brazil

Scotland, United Kingdom

Sekondi-Takoradi, Ghana

Semarang, Indonesia

Senegal

Seoul, South Korea

Serbia

Seychelles

Shama, Ghana

Sierra Leone

Slovak Republic

South Africa

South Cotabato, Philippines

Spain

Sri Lanka

Sweden

T

Tbilisi, Georgia

Timișoara, Romania

Tunisia

U

Ukraine

United Kingdom

United States

Uruguay

V

Vanadzor, Armenia

W

Wassa Amenfi East, Ghana

This list reflects members with commitments in the “Fiscal Openness” policy area of the Data Dashboard.

Active OGP Partners

The following organizations have recently worked on this issue in the context of OGP at the national or international level. They may have additional insights on the topic. Please note that this list is not exhaustive. If you are interested in national-level initiatives, please contact research@opengovpartnership.org.

Other Experts

The following organizations specialize in debt and debt-related topics, such as fiscal openness.

Benchmarking Data

The OGP 2023-2028 Strategy sets out the Open Gov Challenge and aims to provide clear benchmarks for performance through reliable data.

While benchmarks for individual countries and Open Gov Guide recommendations are not yet integrated, for this chapter, interested individuals may rely on the following data sets:

The Global Debt Database, hosted by the International Monetary Fund, collects and aggregates debt statistics across 10 indicators from 190 countries.
The World Bank maintains the Debt Reporting Heat Map, which outlines the level of transparency of governments’ debt information and is updated annually.
The Debt Transparency Monitor, published annually by the United States Agency for International Development, creates a score for governments based on the answers to 14 questions on the transparency of a country’s debt information.
The United States Department of State releases annual Fiscal Transparency Reports, which assess the level of government transparency on a number of fiscal indicators (including debt) and prepares individual reports for assessed countries.
IBP conducts the Open Budget Survey, which evaluates the degree of transparency, public participation, and oversight of budgets in over 120 countries. The survey also covers details related to debt, new borrowing, and interest costs for the budget year and prior year.

Guidance & Standards

While the list below is not exhaustive, it aims to provide a range of recommendations, standards, and analysis to guide reform in this policy area.

The National Democratic Institute and Westminster Foundation for Democracy developed four for Democracy briefs on Parliamentary Debt Management in English, French, and Spanish. Each brief offers in-depth information on the different roles and responsibilities of parliament in debt management, as well as guidance on how parliamentarians can improve accountability in public debt management.
The Westminster Foundation for Democracy’s E-Course for Parliamentarians on Public Debt Management is a comprehensive online course outlining the fundamentals of public debt management principles for parliamentarians.
The United States Agency for International Development (USAID) has developed its primer on public debt for development practitioners, providing a high level overview of debt definitions, the fundamentals of debt management, and more.

The World Bank and International Monetary Fund (IMF) have published guidance on how lenders can increase their own debt transparency and the Overseas Development Institute created this report to discuss how creditors can increase lending transparency.
The World Bank’s Debt Transparency in Developing Economies report discusses the major policy challenges facing all stakeholders in developing economies’ debt and proposes recommendations to alleviate them. In addition, the World Bank’s Debt and Fiscal Risks Toolkit provides practical guidance on developing several debt-related documents, including the MTDS. It pairs well with the InterAmerican Development Bank’s Toolkit to identify, measure, monitor, and conduct risk management on contingent liabilities.
The IMF has several resources with recommendations on this topic, such as publications on aligning legal frameworks with good practices, exploring reform options to improve public debt transparency, and strengthening public debt transaction disclosure practices.
IBP publishes many resources related to debt alongside its debt-related data collection as part of the Open Budget Survey. IBP also publishes a calculator tool that helps countries predict the outcome of the next survey, which can be used to guide reforms to improve budget accountability as a whole and public debt policies and processes in particular.

Featured Resources

Broken Links

How can open data help shine a light on political corruption and make political systems fairer and more inclusive? How can we further link people and data to create a chain of accountability? Explore our new report.

13th September 2022

Global Report

The promise of democracy is often defined by the ballot box, where citizens determine who will represent their interests in government. That promise, however, too often fails to translate to the reality of people’s daily lives...

14th May 2019

The Skeptic’s Guide to Open Government – 2022 Edition

Evidence continues to show that open government affects people’s lives. But there are still skeptics who are not aware of all the benefits associated with this approach. Use this guide to convince them to take an open government approach when implementing reforms.

16th May 2022

turquoise-ish25- Justice offices in ogp paper

Justice Policy Series

The OGP Justice Policy Series is a three-part series on Access to Justice, Open Justice, and Accountability for Democratic Renewal. It aims to highlight the important synergies between justice and open government and the ways in which countries can use OGP to make accountable, credible improvements to their justice systems.

14th December 2020

Data Dashboard

Access data on OGP commitments. Filter commitments by location, policy area, and year. Search by keyword.

21st January 2023

A Guide to Open Government and the Coronavirus

This guide is a one-stop shop for the best current resources on how open government projects and approaches can support tackling the pandemic.

25th August 2020

Fiscal Openness