The need for an effective public debtmanagement strategy has increased with Tunisia'sstronger presence in the international financial markets andthe larger exposure to changing borrowing conditions andexchange rate fluctuations. At the same time, there arebetter conditions today for public debt management, with thedeepeningthe secondary market for Tunisian debtinstruments on the international bond market, while thepublic debt management strategy would be greatlystrengthened by the steps taken to develop the domesticgovernment securities market. This study discusses optionsto the reform of the government public debt managementpractices, with the aim of increasing their efficiency,consolidating further the country's market access andcontaining the costs and risks of borrowing in both externaland domestic markets. The study is intended to facilitatethe introduction of an action plan for the implementation ofthe public debt management strategy, as part of the set ofmeasures aiming at strengthening the macroeconomic frameworkin Third Economic Competitiveness Adjustment Loan Project(report no. P7489). Chapter One presents debt sustainabilityscenarios and discusses the underlying vulnerabilityfactors. Chapter Two examines key principles of a strategyfor public debt management, and presents a discussion of howactive risk management can be progressively introduced inTunisia. The analysis benchmarks Tunisia's debtsituation against other emerging economies with comparablecharacteristics. Chapter Three addresses reform options tostep up the development of domestic government securitiesmarket-a key component of the strategy. Finally, ChapterFour considers options in institutional reforms that wouldfacilitate the implementation of the desired innovations indebt management strategy and operations.