Statute and Governance

The Debt Management Department (DMD) was established as a department of the Ministry of Finance, and reports to the Debt Management Committee (DMC). The DMC has the decision power on DMD proposals being so empowered by the Minister of Finance. The DMD is bound by the current bylaws and by the procedures manual that outline its set of internal rules which are approved by the DMC. The DMD has the right to propose changes and to issue an opinion concerning any proposed amendments by the DMC to these bylaws. Changes to DMD governance and functioning are defined and permitted by the DMC. The DMD may also support eventual debt transactions issued by other state agencies and governmental bodies.

Objectives

The DMD recommends to the DMC a financing strategy (i.e. assessment of instruments to be used to mitigate any current or future deficits) that covers the central government financing needs within the legal frameworks. This involves contracting loans, and issuing debt and/or debt like government securities and GRF drawdowns. This should be done in an efficient and effective manner to optimize the government’s cost of borrowing taking into account risk.

The DMD makes all the necessary recommendations to the DMC and works with other concerned parties such as but not limited to the CBK, KIA, CMA and Boursa Kuwait in view of developing a liquid secondary market for Kuwaiti sovereign bonds.

The DMD promotes improvements in issuance techniques and to the debt markets that help enhance its efficiency and lower the cost of public debt.

The DMD works to make debt management as transparent as possible by publishing all relevant and accurate data needed to understand the debt position of Kuwait and sharing all necessary economic information relevant for investors.

The DMD makes all efforts required to promote the diversification of both financing instruments and investor base, always taking costs and risks into consideration.

The DMD develops and maintains control systems to ensure best in class risk management.

The DMD should have full visibility on quasi-sovereign entities in Kuwait debt issuances and will try to coordinate with them in order to avoid competing instruments being issued simultaneously on the market. All entities having a partial ownership by the State of Kuwait are considered as quasi-sovereign.

Responsibilities

The DMD keeps all the information on all outstanding State obligations and is in charge of all background work, including the preparation of studies, analysis, and proposals relating to the design, management, and implementation of the debt strategy.
  1. Financing strategy and financing instruments

  2. A. Prepare an annual financing strategy, in the context of a debt management strategy to be presented at the start of every fiscal year to the DMC for approval. In addition to the financing strategy, the debt management strategy will consider cash buffers risk limits and other debt management instruments. This will subsequently be approved by the Minister of Finance;
  3. Reporting requirements

  4. A. Report on a quarterly basis on the evolution of the financing strategy and debt management strategy to the DMC and propose updates to the strategy as required;
    B. Prepare an annual presentation to the DMC including:
    i. Debt evolution including the current stock of direct debt, different scenarios and a debt sustainability analysis (in coordination with the Macro Fiscal Unit) based on the Medium Term Fiscal-Framework;
    ii. Update on the debt management strategy execution;
    iii. Debt risks report including risk guidelines and present to the DMC;

    C. Prepare an annual presentation to the DMC on contingent claims;
    D. Prepare a report following every syndicated debt transaction and report regularly on auctions to the DMC.
  5. Market monitoring, rating agencies and investor relations

  6. A. Monitor general market conditions for issuance, assess GCC markets, key international markets and local corporate debt issuances jointly with KIA;
    B. Prepare all materials to be presented to investors jointly with KIA and publish the materials regularly on the official website;
    C. Publish on the official website regular updates on the stock of direct domestic and external public debt;
    D. Manage Investor Relations for the Kuwaiti sovereign debt jointly with KIA, including organizing and participating in regular roadshows with existing and potential investors in Kuwaiti sovereign debt;
    E. Interact on a regular basis with Rating Agencies (S&P, Fitch, and Moody’s).
  7. Risk management and Legal

  8. A. Develop and maintain a risk management framework for public debt including the time horizon considered;
    B. Follow closely the operational issues concerning public debt in cooperation with the KIA;
    C. Prepare and update an internal procedures manual required to be approved by the DMC;
    D. Develop and update a Code of Conduct for the DMD to be approved by the DMC;
    E. Ensure compliance with cooperation protocols entered between the Ministry of Finance on behalf of the DMD and other entities;
    F. Ensure respect for the law in what concerns the issuance and management of public debt;
    G. Prepare back-up and disaster recovery policies and systems.
  9. Contingent claims & quasi-Sovereign

  10. A. Gather all relevant information and report on contingent claims;
    B. Coordinate with quasi-Sovereign issuers in Kuwait.
    C. Propose a debt database policy that includes all sovereign debt to the DMC. After the policy is duly accepted by the DMC and relevant cooperation agreements are signed, manage the database and ensure information is shared with the members of the DMC and other institutions when necessary;
    D. Propose a hedging policy to the DMC if needed and when hedging instruments exist and are cost effective;
  11. Other

  12. A. Participate actively in any debates concerning the markets for sovereign debt;
    B. Take any other actions in view of developing a secondary market for debt and to generate a sole liquid yield curve.