DMFAS - DMFAS and A New Approach To Technical Cooperation

DMFAS and A New Approach To Technical Cooperation

The development of a CBDMS is a complex matter and the reasons are multiple; for instance, each creditor has its own methodology to calculate accrual interest, fees and the rounding for the principal repayments. Second, the imagination of financial engineers is boundless and the CBDMS has to be enhanced in function of new financial products coming to the market.

There are three major comparative advantages regarding the central development of a system like DMFAS. The first one is the huge economies of scale created by the DMFAS Programme. Regarding the economies of scale, the core of the system is common to all countries and this avoids repeating the same development in each country. The development and enhancements of the DMFAS are demand driven so that the system reflects all the functionalities that the users requested. The DMFAS staffs produce specifications that will lead to a comprehensive and coherent CBDMS. The final product is then a user-friendly, flexible and efficient tool.

The second one is that rotation of personnel within Debt Management Offices (DMO) is a real problem, and in many countries no permanent solution has been found for hiring and retaining qualified personnel. DMOs are very often understaffed, but also its personnel are hired on temporary assignments or with provisional salary arrangements. The rate of turnover is often alarmingly high, without a corresponding capacity for in-service training in order to upgrade the knowledge of the remaining staff to quickly render new employees fully operational. This situation was identified very soon, actually within a report requested by UNDP at the end of the 1980s, and unfortunately this situation has not changed very much in a large number of countries. Therefore, the DMFAS Programme has performed as repository of technical knowledge being able to re-train new personnel and re-installing DMFAS when necessary.

The third one is that installing DMFAS is less expensive than developing a wholly new system for reasons of cost and workability. Compared with designing, programming, and maintaining an entirely new system, packages can be relatively inexpensive. DMFAS designers with the help of users have debugged the available systems to the point where they are likely to have fewer operating problems than custom-made systems. They can be implemented quickly, and the maintenance is centralised, creating high economies of scale: the implementation of DMFAS, for instance, varies from 6 months to 3 years, in order to cover the full database depending on its complexity; this is fast compared to an in-house development. The maintenance of a system is of vital importance; it has been proven that the personnel turnover in the IT Department—which is an observed characteristic of a developing country DMO as pointed out above—makes domestically developed systems very vulnerable. Choosing a standard software package like DMFAS also decreases the need to maintain a full group of developers within the DMO’s IT department, there are only needs for maintenance and service for daily work, database management, and security procedures like regular backups.

The traditional conception for technical cooperation implied that an external team financed by external donors would help the beneficiary country to start a specific activity, and once the local team mastered the techniques and was able to obtain an income from the supported activity, the technical assistance came to an end.

The three points enumerated above implied a new approach for technical cooperation provided by DMFAS. The DMFAS Programme changed the philosophy of technical assistance, from the approach described in the previous paragraph, to a permanent service to “client countries”—not any more “beneficiaries” in the sense given by the traditional technical assistance approach—, which accepted to pay an annual fee and share system development costs in exchange of a continuous technical support for their public debt management responsibilities.

Mid-2012 DMFAS was installed in 69 countries and more than 100 institutions: Ministries of Finance, Central Banks and other General Government institutions.DMFAS Programme