Reforming Government Debt Markets in MENA

Garcia-Kilroy, Catiana ; Silva, Anderson Caputo

关键词: ACCOUNTING;    ALTERNATIVE INVESTMENTS;    ARBITRAGE;    ASSET CLASS;    AUCTION;   

DOI  :  10.1596/1813-9450-5611
RP-ID  :  WPS5611

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper examines the current stage ofdevelopment of government securities markets in the non-GCCMENA region focusing in five countries that have governmentbond markets with a minimum size and greater potential formarket development: Egypt, Jordan, Lebanon, Morocco andTunisia. The analysis focuses on the five key buildingblocks that normally sustain deep and liquid public debtmarkets: (i) money markets; (ii) primary market (issuancepolicy and placement mechanisms); (iii) secondary marketorganization; (iv) investor base; and (v) clearing andsettlement infrastructure. The study shows that despitecountry differences, several common weaknesses in the keybuilding blocks explain the underdevelopment of MENA bondmarkets. Most important among these are a symbioticrelationship between banks and Governments caused by lack ofalternative investments that makes banks act as captivedemand and dominate bond markets, opportunistic primaryissuance practices, and excess liquidity in the financialsystem. These demand and supply characteristics have led tohighly concentrated buy-and-hold portfolios by banks andState-owned institutions, poor price discovery and lack ofliquidity in secondary markets. A set of actions to unlockmarket development in MENA is proposed involving measures inall key building blocks - from improvements in monetarypolicy implementation and liquidity management toenhancements in issuance practices, price transparency, andclearing & settlement infrastructure. Measures toimprove the role of mutual funds and foster foreign investorpresence are also of utmost importance to increasecompetition and investor diversification in these markets.