Debt Offices: Key to Crisis Prevention

Debt offices are the missing crisis-prevention layer — OMFIF

OMFIF says all four G20 Common Framework applicants — Chad, Ethiopia, Ghana, Zambia — cycled back to distress after HIPC relief. The fix is institutional, not technical.

Every low-income sovereign that has queued at the G20 Common Framework since 2020 had already been through debt relief once. All four — Chad, Ethiopia, Ghana and Zambia — passed through the IMF and World Bank Heavily Indebted Poor Countries initiative between 2004 and 2015, and all four came back. The July 9, 2026 OMFIF paper by Guillaume Chabert and Yannis Manuelides argues the missing reform is not another debt sustainability analysis but the debt office itself: an under-powered administrative unit that should be re-founded as a statutory crisis-prevention agency with a duty to warn parliament, on a five-year deadline. If distress keeps recurring under the same institutional design, OMFIF writes, "the design is part of the diagnosis."

That is the argument worth taking seriously — because the alternative the multilateral system has been running, six years of playbook edits at the Global Sovereign Debt Roundtable, is not converging on prevention. It is optimising the workflow for the next default.

The load on the hinge

A market-access sovereign borrows in one continuous market. A low-income sovereign works two disconnected ones: an episodic Eurobond window and a domestic system in which regulation, thin liquidity and few alternatives make government paper the default asset and banks the sovereign's captive marginal lender. In the West African Economic and Monetary Union, government paper accounts for 43% of bank assets, OMFIF reports — the tightest sovereign-bank nexus of any region. The World Bank's Pablo Saavedra warned in an August 2024 Peterson Institute presentation that the nexus is now "at its highest level in decades" in emerging and developing economies and is worst in countries already in macroeconomic distress.

Add duration. Some 41% of new debt in low-income countries in 2025 was short-term, according to OMFIF. Ghana restructured in 2023 and by late 2025 its domestic debt averaged less than three months to maturity. One in five Ghanaian T-bill auctions has been under-subscribed since the restructuring. The IMF's May 2026 staff statement called the resumption of T-bond issuance a "return of investor confidence" but stipulated a debt rollover strategy for 2027–28 as a condition for the new 36-month Policy Coordination Instrument. Translation: Accra is being asked to walk off the 90-day treadmill without stumbling into a second domestic funding air-pocket.

The obligations that never reach an auction are worse. Guarantees, state-enterprise borrowing and arrears form what OMFIF calls a "shadow deficit." In Chad, OMFIF reports, the single largest commercial loan — more than 40% of the sovereign portfolio, in effect the Glencore oil-backed advance — sat outside the state's recording system. IMF debt sustainability analyses of Chad have tracked this obligation for a decade: two rescheduling rounds in 2015 and 2018, a Common Framework treatment in 2022, and a fresh four-year Extended Credit Facility approved on June 26, 2025. Same country, same commodity trader, three restructurings, one HIPC completion — and still not on the books.

The data existed. Nobody had joined it.

The most striking evidence for OMFIF's institutional argument is negative: until 2025, no one had assembled the full picture of African sovereign borrowing. That gap was closed by the African Debt Database, a joint project of the Kiel Institute, Geneva Graduate Institute, Global Sovereign Advisory, the UN Economic Commission for Africa and the World Bank. It traces more than 50,000 sovereign debt instruments issued by 54 African governments between 2000 and 2024, worth roughly USD 6.3 trillion. Kiel's Christoph Trebesch, a co-author, told the institute that "debt transparency is feasible even in data-scarce environments." The point is the counter-factual: the data lived on official sources; the office responsible for consolidating it did not exist in a form that made it possible.

The World Bank's own diagnostic corroborates the diagnosis. The Debt Management Performance Assessment — a 15-indicator scorecard applied in more than 150 countries since 2007 — awards a "D" grade where minimum international practice is not met. A "D" is not analytical shade; it signals, per the World Bank's 2021 methodology, "a performance deficiency, requiring priority corrective action." Published country reports show clusters of D scores on the load-bearing indicators: legal framework, debt strategy, domestic borrowing arrangements, guarantee issuance, debt recording. The tool has diagnosed the disease with precision for nearly two decades. The institution to act on it does not exist in most low-income capitals.

The Common Framework is optimising for restructuring, not prevention

Read the Global Sovereign Debt Roundtable's April 2026 progress report and the accompanying "Restructuring Playbook" and the direction of travel is clear. Kristalina Georgieva, Ajay Banga and the U.S. G20 co-chair Francis Brooke have compressed the process: two to three months from staff-level agreement to IMF programme approval; six months from programme to agreement in principle with official creditors; twelve months from the memorandum of understanding to bilateral signatures. The Playbook reads:

"For a debt restructuring undertaken under the Common Framework, the need for debt treatment, and the restructuring envelope that is required, will be based on the IMF-World Bank DSA and the participating official creditors' collective assessment."

That is a lean process document — for a country that has already defaulted. Ethiopia is a case in point. The Official Creditor Committee memorandum was signed in July 2025; the IMF Executive Board completed its fifth review on July 1, 2026; bilateral agreements are still trickling in; one large private creditor has an agreement in principle. Ghana signed its OCC MOU on January 29, 2025 and reached staff-level agreement on a follow-on non-financing programme sixteen months later. Zambia, as the Global Sovereign Debt Roundtable co-chairs noted in April 2026, is "close to full completion" of a restructuring that began in 2020. Chad already had a Common Framework deal in 2022 and is back on a new four-year Fund arrangement. The system is getting better at handling the crisis, not preventing the next one.

The reform, in three moves

OMFIF's specification is unusually concrete for a policy paper. First, steward the sovereign balance sheet, not just the debt portfolio: match currencies to revenues, integrate cash with issuance, project the shadow deficit as it accumulates rather than discover it at default. Second, broaden the investor base as the central policy variable — Tanzania and Uganda have lengthened their curves, but shifting paper from captive banks to captive pension funds "diversifies names, not risk." Third, build a live monitor. The IMF's Low-Income Countries Debt Sustainability Framework is, in OMFIF's phrase, an "annual photograph"; the auction book is a real-time signal, and no one is obliged to act on what it shows.

The institutional payload matters more than any of the three tasks. OMFIF proposes a statutory debt office with its own board, its own objective, a perimeter defined "by economic substance, not instrument form," and a warning function no minister can silence. Reporting lines run past the finance ministry to the legislature. Distress indicators are pre-committed. Disclosure is graduated. The point is to convert warning "from an act of courage into an act of compliance." That is a live constitutional-design question in Ghana today, where a comprehensive audit of the country's arrears — currently estimated at several percent of GDP — is running under IMF programme conditionality.

The Danish Institute for International Studies reached a compatible conclusion in a 2025 report: "For African sovereigns, robust debt management systems are important as they allow pre-emptive restructurings, which have been found to be better on many fronts than post-default restructurings." The intellectual case is settled; the political economy of implementation is not.

Who benefits, who loses

An empowered debt office redistributes power inside the finance ministry and away from it. It reduces the discretionary space in which finance ministers time issuance to political calendars, guarantee state enterprises off the books, or roll a 91-day bill because they cannot face the auction result on a 10-year bond. It empowers legislatures whose oversight is currently symbolic. It embarrasses central banks that have been carrying quasi-fiscal deficits — Ghana's Bank of Ghana holdings of non-marketable government debt were restructured as part of the 2022–23 exchange. It creates a mandatory audience for the World Bank's DeMPA scorecard, which today sits on shelves.

The losers include commodity traders and non-Paris Club bilateral lenders whose commercial terms depend on opacity. The winners are pension funds and long-duration domestic investors that need a credible yield curve to allocate savings, and the multilateral system itself, which currently spends most of its African fiscal bandwidth on post-default paperwork. The Africa Expert Panel of the South African Institute of International Affairs argued in a November 2025 report that Africa's two G20 seats — South Africa and the African Union — should press for exactly this shift toward borrower technical capacity in the debt architecture.

Diplomat View

The forecast: within eighteen months, at least one Common Framework alumnus will formalise a statutory debt-office reform along OMFIF lines — Ghana is the leading candidate, because its Policy Coordination Instrument runs through 2029 and its legislated 45% debt anchor by 2034 makes the political cost of a fresh crisis prohibitive. Ethiopia and Zambia will follow if their post-restructuring debt trajectories hold. What would falsify the call: a fifth Common Framework applicant (Kenya, Malawi and Mozambique are the near-term watchlist) requesting treatment before any of the current four legislates a debt office with statutory reporting lines to parliament. That would confirm the sceptics' read — that the workflow is optimising for restructuring, not for prevention — and would push the reform debate back into the AU's continental-borrowers-alliance track, where progress depends on collective bargaining rather than domestic law.

What to watch

• October 2026 IMF/World Bank Annual Meetings — the seventh GSDR co-chairs' report is due; watch for whether the "prevention pillar" is added to the restructuring playbook.
• Ghana's 2027 budget cycle — first test of the IMF-supported debt rollover strategy for 2027–28 and of any legislative move on debt-office statute under the new PCI.
• Ethiopia's remaining private-creditor deals — pace of bilateral signatures after the July 2025 MOU will determine whether Common Framework timelines are converging on the 12-month target.

The Bottom Line

The debt office is the missing crisis-prevention layer in low-income sovereign finance, and OMFIF has now put a five-year deadline on rebuilding it as a statutory agency with a duty to warn parliament. The four G20 Common Framework applicants are the natural pilot cases — they have already paid the price of not having one. If none of them legislates a proper debt office in this cycle, the next African sovereign crisis is being written now, in short-dated T-bills and unrecorded guarantees.