By Tobias Adrian, Financial Counsellor and Director of the Monetary and Capital Markets Department, International Monetary Fund (IMF)
The world is facing an era of heightened fiscal pressures, with emerging market and developing economies (EMDEs) confronting rising borrowing costs, constrained access to capital markets and increasing public-debt burdens. Against this backdrop and amid ongoing global economic uncertainty, public-debt transparency is not a choice, but a necessity.
Behind many past sovereign-debt crises lay a common and troubling thread: key information about public debt and contingent liabilities remained hidden until it was too late. Ensuring that the full scope of a country’s debt obligations is visible to markets, institutions and citizens alike is critical to managing vulnerabilities and building trust and credibility for the sovereign borrower. As the International Monetary Fund (IMF) and its member countries intensify their efforts to strengthen sovereign-debt frameworks, transparency must move from aspiration to implementation.
The imperative of transparency
Transparency serves as the cornerstone of sound debt management. In stable times, it bolsters credibility and reduces borrowing costs. In moments of stress, it can stabilize expectations and facilitate quicker crisis resolution. Sovereigns that proactively disclose debt data—paired with credible fiscal plans—are better positioned to maintain market access and navigate turbulent periods.
By contrast, opacity can prove costly. Hidden liabilities, undisclosed collateralized debts and off-budget borrowing by state-owned enterprises (SOEs) increase uncertainty and erode investor confidence. These “debt surprises” not only raise borrowing costs but can also deepen fiscal crises and prolong restructuring processes.
Transparency must be understood in both narrow and broad terms. It involves more than just publishing debt statistics; it encompasses legal and institutional frameworks, disclosure of borrowing strategies, clarity on contingent liabilities and robust governance over public financial management.
The current landscape in EMDEs
While advanced economies generally maintain high standards of debt transparency, the picture in many EMDEs is more mixed. In some cases, transparency is limited by the use of confidential debt structures, particularly in resource-rich countries in which creditors demand collateralized agreements that circumvent reporting standards. Elsewhere, sovereigns may underreport liabilities by relying on off-budget financing through SOEs or extra-budgetary entities.
In many instances, the issue is not a lack of willingness, but a lack of capacity. Fragmented debt-management responsibilities, inadequate reporting systems and weak institutional arrangements hinder comprehensive disclosure. These gaps are particularly pronounced in smaller middle-income countries and frontier markets, which often depend on non-marketable debt and lack developed bond markets.
Tackling these challenges requires targeted legal reforms and institutional “plumbing” that strengthens public-debt governance. The legislative council in a country should have greater oversight over high-level public-debt issues, including comprehensive visibility of the public-debt portfolio and its associated costs and risks.
Source: Author’s elaboration based on a survey of domestic legal frameworks across sixty jurisdictions | IMF LEG Paper on Debt Transparency
At the same time, debt managers should have a greater voice to ensure that debt-authorization processes support sound debt-management principles. Fiscal institutions should recognize the limitations of debt management to support open-ended government funding, especially in a challenging global environment. Effective coordination between macro-fiscal considerations and debt management through collaborative efforts on assessing debt sustainability by the fiscal institution and determining the appropriate debt-management strategy by the debt manager should pave the way for greater transparency on the fiscal-debt nexus.
Countries must establish disclosure mandates that extend beyond the central government to encompass general government and SOE obligations. At the same time, creditors and international institutions have a role to play by aligning lending practices with transparency standards and encouraging the phasing out of opaque structures.
Leveraging marketable domestic debt for greater transparency
Much of the global conversation on sovereign-debt transparency has focused on external borrowing. Yet domestic debt—especially in lower-income countries—deserves closer scrutiny. Where domestic markets rely heavily on non-marketable instruments, public-debt management tends to become less transparent and more vulnerable to political discretion.
Wherever external financing can be replaced without jeopardizing debt-sustainability considerations, a shift toward market-based domestic borrowing could offer a longer-term solution to enhance transparency. Transparency is fundamental to the development of healthy domestic debt markets. The practice of publishing annual borrowing plans, disclosing auction results and ensuring price visibility in secondary markets not only fosters investor confidence but also improves fiscal discipline. Over time, such practices, enshrined in market discipline, can create a self-reinforcing dynamic of transparency, market development and sustainable financing.
The role of the IMF in advancing debt transparency
Recognizing the importance of transparency, the IMF has stepped up its engagement across three core areas: surveillance, lending and capacity development.
Recognizing the importance of transparency, the IMF has stepped up its engagement across three core areas: surveillance, lending and capacity development.
- Surveillance: In 2024, the IMF expanded its reporting requirements. Starting in 2025, member countries must report general government-debt data, with detailed composition to follow by 2027. These enhancements aim to ensure more consistent and comprehensive monitoring of debt vulnerabilities.
- Lending: In IMF-supported programs, transparency is no longer optional. Staff reports now include detailed information on debt service by creditor, debt holders and the stock of collateralized obligations. These programs also prioritize upfront action to address critical data gaps.
- Capacity development: The IMF provides technical assistance to help countries strengthen debt-management frameworks, improve fiscal-risk assessments and publish borrowing plans. Importantly, debt transparency has been integrated as a specific outcome in the Fund’s results-based management system, ensuring sustained focus across technical-assistance projects.
The Fund’s policy guidance—ranging from the IMF-World Bank “Revised Guidelines for Public Debt Management” to “The Fiscal Transparency Code”—continues to provide a reference point for global best practices. Analytical research studies, such as “Making Public Debt Public”, “Sovereign Investor Relations” and “The Legal Foundations of Public Debt Transparency”, further contribute to shaping policy dialogue and global standards.
Toward a more transparent future
Improving public-debt transparency is a long-term endeavor, especially in countries with limited institutional capacity. Yet progress is both possible and necessary. The path forward requires a strong governance framework underpinned by sound legal structures, institutional clarity and political will. The positive news is that many countries have improved their debt transparency in recent years, but more needs to be done to achieve broader debt transparency.
In the near term, a phased approach may offer the most practical path for reform. Starting with central government debt, countries can progressively expand coverage to general government and SOEs. Over time, this will allow for a more integrated and comprehensive view of public-sector liabilities, better risk management and stronger policy credibility.
The IMF remains a committed partner in this journey—working alongside ministries of finance, debt offices, central banks and audit institutions to build more transparent, resilient and accountable public-debt systems. In an increasingly complex and uncertain world, transparency is not merely good practice. It is essential to safeguard financial stability and ensure sovereign-debt sustainability.
Tobias Adrian is Financial Counsellor and Director of the Monetary and Capital Markets Department of the International Monetary Fund (IMF), where he leads the IMF’s work on financial-sector surveillance, monetary and macroprudential policies, digital money, financial regulation, bank resolution, debt management, capital markets and climate finance.