Abstract
This guidance note was prepared by International Monetary Fund (IMF) and World Bank Group staff under a project undertaken with the support of grants from the Financial Sector Reform and Strengthening Initiative, (FIRST).The aim of the project was to deliver a report that provides emerging market and developing economies with guidance and a roadmap in developing their local currency bond markets (LCBMs). This note will also inform technical assistance missions in advising authorities on the formulation of policies to deepen LCBMs.
Highlights
Local currency marketable debt as a share of total government debt has increased in emerging market and developing economies over the past decade
Despite considerable growth of local currency bond markets (LCBMs) in recent years, LCBMs in emerging market and developing economies continue to remain relatively underdeveloped compared with advanced economies, in which the local currency share of total government debt is about 95 percent
The recent efforts to remove the tax impediments and create a competitive tax framework covering all key classes of investors, including nonresidents, has created conducive legislative conditions to further the aim of deepening the Georgian LCBM
Summary
Local currency marketable debt as a share of total government debt has increased in emerging market and developing economies over the past decade. The local currency share of total government debt in emerging market and development economies increased from 18.9 percent in 2011 to 46.6 percent in 2019. Emerging market and developing economies have adopted new issuance policies and procedures as their government debt portfolios have grown, advisory efforts among international financial institutions (IFIs) and global and regional actors have increased, and knowledge sharing on debt management and debt management best practices have improved within the international community. In December 2017, the BCH issued a resolution establishing that any credit transaction denominated in domestic currency taking place between institutions in the financial system (interbank loans) may be backed by any government or central bank secur ity, using the Central Bank of Honduras Securities Depository platform, or by a fiduciary guarantee
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