Do parliaments have control over sovereign debt management?

Abstract

Sovereign debt management (SDM) requires decisions about the composition and structure of central government debt. Nowadays the process is delegated to professional debt management offices (DMOs), which use complex financial instruments and resort to capital markets. Parliaments in some countries have expressed concern over losing control of SDM. This article devises two indices to measure parliamentary control over SDM and DMOs’ implementation flexibility. It applies both indices to original data from 17 OECD countries. The article finds that parliaments’ legal authority over SDM and rights to information pertaining to it relate to their general power as well as economic and SDM financialisation. There is no trade-off between parliamentary strength and DMOs’ flexibility in operational decisions. These findings are of interest for research on parliamentary power, financialisation and delegation. To draw causal inferences from these associations more research is needed on the timing, politics and consequences of institutional change towards professional DMOs.