Debt Management In Developing countries:

In both the developing countries and developed countries the techniques of debt management are more or less same. But the maneuverability of using these techniques widely vary.  The objectives of debt management in developed economies are:

a) Attracting adequate funds into government issues

b) Minimizing interest costs

c) Having a suitable structure of maturity

d) Maintenance of economic stability etc.

As these objectives can also be implemented in the developed economies, they need to be modified in view of the  underdeveloped characteristics of money and capital markets in the developing economies.  In fact the main objectives of fiscal policy differ in between these countries.  For example, stabilizing aggregate demand at high level of employment is the objective of the developed nation, while accelerated rate of economic growth is the target of the developing economies.  So the differences continue with reference to debt management also.  For instance, the central bank attempts to bring changes in the structure, interest rates and the liquidity position by directly buying and selling in money and capital markets in the developed economies.

The developing economies too adopt these techniques.  But constraints like size of national debt backwardness of money and capital market and financial institutions dampen the effectiveness of debt management.  Moreover, several objectives of debt management in developing countries conflict each other.  It is necessary to adopt flexibility with regard to the policy of debt management in the developing countries while attempting to stabilize the government bond market in the short-run, to minimize the cost of servicing public debt, to attract people's response to government securities etc., Debt management in these countries is considered to be  a big task as it demands resourcefulness, foresight and judicious planning which may stain the resources of the monetary authorities to the utmost and which may not be available in these countries at the required level.