Federal Debt Management Office
Sustainable Economic Growth with Sovereign Bonds
The United Arab Emirates seeks to maintain a robust economy
through the issuance of sovereign bonds as a federal
mechanism to consolidate the efforts of the UAE Government
in financing diverse projects for economic and social development.
Federal Debt Management Office (FDMO) was formally established as a directorate within the UAE Ministry of Finance through Decretal Federal Law No (9) of 2018 regarding Public Debt. It is tasked to maintain sovereign debt at a sustainable level and raise sovereign funds at the lowest risk and cost. It is the focal point of the federal government for sovereign credit ratings.
Legal Framework
Setting parameters for federal debt management
The legal framework clearly defines the functions of the FDMO, in accordance with the UAE financial laws and regulations, to ensure prudent and efficient federal debt management, as well as to promote transparency and accountability in all operations undertaken on behalf of the UAE federal government.
Support and develop a highly efficient financial market in the UAE
Provide a federal mechanism for financing infrastructure projects, government financial guarantees, and emergency financial obligations
Provide another level of funding for the federal government to achieve a diversified financing strategy
Provide support to the Central Bank of the UAE to enhance liquidity management within the banking sector
FDMO Responsibilities
Key roles and scope of activities
The duties of the FDMO are implemented through its activities and procedures which focus on achieving sustained funding within acceptable risks and costs, promoting the UAE as a strong credit rating borrower, maintaining communications and relationships with key entities, and promoting the development of the local debt market.
The main responsibilities of the FDMO are the following:
01
Propose and implement strategies and policies of Public Debt management in coordination with the Central Bank and submit them to the Minister for approval by the Cabinet
02
Monitor financial risks and any other risks related to the issuance and trading of any Public Debt Instrument and propose solutions to manage and monitor such risks
03
Provide advice to the Minister regarding investment options for any Public Debt Surplus through safe and highly liquid investment instruments, in coordination with the Central Bank and the Emirates Investment Authority
04
Provide advice to the Minister to determine the level of acceptable risks when borrowing or issuing any guarantees for the purpose of implementing any of the governmental development projects
05
Coordinate with the Central Bank regarding the management of issuance and sale of government bonds, treasury bills, and any other government securities
06
Coordinate with the local government in each emirate to support and develop highly efficient primary and secondary financial markets, through the issuance of Public Debt Instruments in the State
07
Promote the position of the UAE Federal Government as a reliable, credible and sovereign borrower, in cooperation with other relevant authorities, through frequent communication, maintaining relations with banks and investors and disclosing to them the prevailing conditions of the banking system, as well as the current general status and expectations for the economy of the UAE and scoring the best credit rating issued by international credit rating agencies
08
Enhance, develop, and maintain communications and relations with other relevant authorities
09
Propose and implement strategies and policies of Public Debt management in coordination with the Central Bank and submit them to the Minister for approval by the Cabinet
Organisational Structure
Risk Management
The FDMO is taking a hands-on approach on managing the risks in the debt and investment portfolios. It will prepare a medium-term debt strategy (MTDS) covering the next 3 fiscal years, which will address the annual borrowing plan and debt operations. The FDMO risk management policy addresses all key risk types.
Financing and Liquidity Risk
Mitigate refinancing risk by managing the maturity profile of debt and asset portfolios so that there is sufficient cash on hand to meet future maturities
Credit Risk
Managing credit risk by ensuring that counterparts are rated at acceptable approved levels, and mitigate exposure through netting and collateralisation
Market Risk
Mitigate market risk for changes in interest rate, currency and commodity prices by employing asset-liability matching strategies where it is both feasible and cost effective.
Operational Risk
Formulate an operational risk management framework that includes a business continuity plan and disaster recovery plan.
The Federal Decree Law No (9) of 2018 on Public Debt
This Decree-Law regulates the general rules governing the issuance and management of Public Debt in accordance with a prudent and safe policy, to manage its risks and minimise its cost.