The Debt Management and Financial Analysis System (DMFAS) Programme is a technical assistance programme managed by the United Nations Conference on Trade and Development (UNCTAD), in Geneva. The objectives of the DMFAS Programme are to assist countries to develop administrative, institutional and legal structures for effective debt management; to provide technical assistance to government offices in charge of debt management; to deploy and advance debt analysis and management systems; and to act as a focal point for discussion and exchange of experiences in debt management. The Programme's debt management software system is currently installed in over ninety government institutions, almost exclusively ministries of finance and/or central banks.
Background In 1975, the inter-sessional oversight body of the United Nations Conference on Trade and Development (UNCTAD), the Trade and Development Board (TDB),http://unctad.org/en/Pages/Meetings/TDB.aspx endorsed a recommendation of an UNCTAD Ad hoc Group of Governmental Experts which were that UNCTAD "be invited to participate in the multilateral debt negotiations on the same basis as the representatives of other international organizations".TDB Resolution 132 (XV), paragraph 8.
The intention was that UNCTAD – formally in the capacity of an observer – help the debtor countries present their case to the creditors. However, the resolution did not specify which negotiations. The fourth UNCTAD Conference, UNCTAD IV, in May 1976, requested the UNCTAD Secretary-General to convene a new "Ad hoc Intergovernmental Group of Experts on Debt and Development Problems".Debt Problems of Developing Countries. Report of the Ad hoc Group of Governmental Experts on its third Session, TD/B/545/Rev.1 This group met on a regular basis from 1976 to 1983.The History of UNCTAD 1964–1984, UNCTAD/OSG/286, pp. 94–97
The Expert's Group worked to produce a draft on sovereign debt renegotiation and retroactive terms of aid. In March 1978, the TDB in its Special Session IX at Ministerial level, adopted by consensus Resolution 165 S-IX, which said that sovereign debt problems should be addressed in "an appropriate multilateral framework consisting of interested parties" (paragraph 10-b). This was understood to be an implicit reference to the Paris Club as the only "appropriate multilateral framework", and opened the door to UNCTAD participation to this forum based on TDB Resolution 132 (XV).Cosío-Pascal, Enrique, (2008), The Emerging of a Multilateral Forum for Debt Restructuring: The Paris Club, UNCTAD Discussion Paper Nº 192, United Nations Conference on Trade and Development, Geneva, November
In the negotiation of Resolution 165 (S-IX), OECD countries made substantial concessions on debt relief (Part A of the Resolution) but resisted the formal introduction of a debt restructuring mechanism (Part B of the Resolution). This resolution also implicitly introduced the Paris Club as the "appropriate multilateral framework" for international consideration of debt problems of developing countries, as noted earlier. Part A of the resolution contained an agreement on "retroactive terms adjustment" on aid for a group of 30 least developed countries (i.e. repayment obligations on outstanding aid loans were changed to the easier terms that donors were now offering these countries). Some OECD countries that had decided to give aid exclusively as grants implemented this resolution by cancelling old debts, making this a precursor of the Heavily Indebted Poor Countries (HIPC) Initiative.
The debate ended in September 1980 when TDB Resolution 222 (XXI) was adopted by consensus. Part B of the resolution contains the "Detailed Features for Future Operations Relating to the Debt Problems of Interested Developing Countries". The Resolution was adopted without dissent, albeit with France abstaining to emphasise its strict neutrality, being the host of the debt renegotiations, as this time the resolution made explicit reference to the Paris Club as the recognised multilateral forum for bilateral debt rescheduling.Cosío-Pascal, Enrique, (2010), "Paris Club: Intergovernmental Relations in Debt Restructuring", in Herman, Barry; Ocampo, José Antonio, and Spiegel, Shari, Overcoming Developing Country Debt Crisis, Oxford University Press, New York Part B of resolution 222 (XXI), the "Detailed Features for Future Operations Relating to the Debt Problems of Interested Developing Countries", were in fact an agreed "code of conduct" for official debt rescheduling as only governments (UNCTAD constituency) were represented when it was adopted.Herman, Barry, (2010), "Why the Code of Conduct for Resolving Sovereign Debt Crises Falls Short", in Herman, Barry; Ocampo, José Antonio, and Spiegel, Shari, Overcoming Developing Country Debt Crisis, Oxford University Press, New York
History
Early 1980s Since 1979, based on TDB Resolutions 132 (XV) and 165 S-IX, UNCTAD has attended practically all Paris Club meetings that involved developing countries or economies in transition. The UNCTAD Division that was nominated to attend the Paris Club was the "Money, Finance and Development Division" (presently "Globalization and Development Strategies"), led at the time by Gerasimos Arsenis (Greece). This division had in charge, among other duties, the economic forecasts for the Trade and Development Report, one of UNCTAD's flagship reports. The quantitative team of this division belonged to the Trade and Projections Branch, which officers were commissioned since 1979 to help countries in debt difficulties to present their cases to the Paris Club. The reason for this was that the staffs of that branch maintained a set of econometric models for major developing countries around the world, and had the quantitative skills for calculating additional flows needed to close the balance of payment gap, either through new flows or through rescheduling of debt. This team was composed by Kenneth Ruffing (United States) team leader; Enrique Cosío-Pascal (Mexico) in charge of Latin America; Valery Prokohrenkov (USSR) in charge of North Africa and the Middle East; Sam Chan-Tung (Mauritius) in charge of Asia and Oceania; Kombo Moyana (Zimbabwe) in charge of Sub-Saharan Africa; and Jacques Baert (Belgium) statistical assistant of the Branch.
When UNCTAD started to support countries attending debt rescheduling negotiations in 1979, data were needed to make calculations. The first difficulty the Trade and Projections Branch staffs encountered was the lack of information on external debt of debtor countries: they did not know how much they owed, to what countries and what creditors, in what currencies the loans had to be repaid, when the payments were falling due and who the national debtors were. The idea of creating a computer-based debt management system (CBDMS) came out very naturally after this experience. The Branch staffs representing UNCTAD at the Paris Club in the early 1980s confirmed this lack of information as a general situation in developing countries. The question that came up at this stage was: why debtor countries did not have a CBDMS?
There were two major reasons why the debtor countries did not have accurate debt data and a performing CBDMS. The first one was the lack of centralisation of information on foreign debt and inefficient legislation on public guarantees. The second one was the lack of availability of debt managers to produce comprehensive specifications for computer specialists. The urgent nature of the problems that a debt manager had to solve at the time would lead him to address specific punctual problems, for instance preparing the Paris Club and then preparing the negotiations with private banks. This will imply the collection of data in two different databases and the development of two different computer systems. These two systems once developed they would be interfaced, the outcome being an inflexible and unpractical computer patchwork inefficient and expensive to maintain.
First version In 1981, Kombo Moyana left UNCTAD to join Bernard Chidzero, former Deputy Secretary-General of UNCTAD and Minister of Finance in Zimbabwe at the time. Other members of the Branch had to cover Sub-Saharan Africa waiting for the replacement of Moyana. In particular, Cosío-Pascal covered Liberia, Madagascar and Zaire (now Democratic Republic of Congo). Four countries, in 1981, agreed to form the initial DMFAS pool—contributing from their national United Nations Development Programme (UNDP) funds to a common technical cooperation fund with UNCTAD—that allowed the development of the first version. Those countries were two from Latin America: Bolivia and Costa Rica and two from Africa: Liberia and Madagascar. These resources allowed hiring a systems analyst, Pekka Sankala Finland and a programmer, Cameron Turkey. These two persons, jointly with Cosio-Pascal, team leader, and Baert, formed the first DMFAS Programme team.Toye, John, (2014), UNCTAD at 50: A Short History, UNCTAD/OSG/2014/1, United Nations, 2014, p. 66.
The first DMFAS version, finalised in early 1982, was developed in COBOLA Brief Historical Overview, UNCTAD/GDS/2006/1 and designed to run on an IBM System/370 mainframe computer. This very first version was installed at the National Institute of Statistics of Bolivia, which was the only institution in Bolivia owning an IBM 370 computer. However, at the time, the country was governed by a military junta, the Head of State being General Luis García Meza, and it was decided by the Bolivian authorities that external debt data was classified information, and no one should be able to access it, with the exception of the authorised persons belonging to the International Department of the Central Bank of Bolivia. Therefore, it was requested to UNCTAD to develop a DMFAS version for Personal Computer (PC) that should be at the Central Bank with limited access to authorised staffs. This was a very fortunate request, because PC's prices subsequently went down, is by far less expensive than mainframe computers, and since all DMFAS versions have been created to run on PCs. The second version of DMFAS, the PC version, was installed at the Central Bank of Bolivia, the Central Bank of Costa Rica and the Central Bank of Madagascar. It was never installed in Liberia due to the recrudescence of civil war.
Expansion of the DMFAS Programme and the DPS: a debt analysis tool The 1980s decade was characterised by a series of defaults and debt rescheduling negotiations by developing countries and some communist countries at the time. As a consequence, the demand for DMFAS increased very rapidly. The demand for the system was huge and the DMFAS team's staff number growth fast as well. By end of the 1980s, the team was of around 20 persons and the number of countries benefiting from DMFAS technical co-operation around 30 to 40. The demand was so high that around 1984 the Commonwealth Secretariat started to develop a CBDMS for its member countries, the CS-DRMS. However, the CS-DRMS is primarily targeted to English speaking countries, albeit there is a French version for some Sub-Saharan French-speaking countries. In comparison, DMFAS was created independently of the language the users would speak, which means that the "vocabulary" of the system is independent of the computer codes. Presently, the system can be set up to run in Arabic, English, French, Russian or Spanish. In addition to that, in a country running DMFAS in other languages than English, the system's administrator can switch momentarily the language to English to produce reports for the international financial community and switch it back to the users" language.DMFAS Programme