Cloud Technology for effective Public Debt Management: are we there yet?

Recent advancements in Information and Communication Technologies (ICT) are not only having a profound impact on our daily lives but also revolutionizing the way businesses and governments operate. Of the various developments that have occurred in recent years, cloud technology holds the biggest promise. In this blog we discuss how cloud technology could impact PDM in the future.

A bit of history…

The application of IT in debt management started in the 1980’s in the aftermath of the Mexican debt crisis. Realizing that any analysis of the debt situation (mainly for Paris Club purposes) was seriously hampered by the lack of accurate and timely data, countries began to develop debt so-called Computer-Based Debt Management Systems (CBDMS) with the assistance of multilateral and bilateral donors and the involvement of local IT staff. This led to the first generation of IT applications in PDM. These systems were all custom designed and developed on the mainframes and minicomputers of the time.

By the mid 1980’s many of these systems were ported to microcomputers, following the launch of the IBM PC in 1981. At the same time, both UNCTAD and the Commonwealth Secretariat embarked on the initial design of their debt recording and management systems in 1983 and 1985 respectively. Several private companies (including some of the larger accounting firms and banks) also developed debt recording systems that were sold and installed in some countries. However, it is fair to state that these systems had very limited success.

The advent of PCs brought about both advantages and disadvantages. Computing power was now literally in the hands of the users who could improve their productivity through the use of spreadsheets, word processors, email etc. However, many countries failed to distinguish between personal applications fit for PCs and “mission critical applications” that require a more rigorous computing infrastructure, environment and management. Debt databases ran on a PC under the debt manager’s desk; backups were taken once in a while, sometimes over and over on the same media and left in the desk’s drawer or taken to the debt manager’s home for safe keeping. Not a satisfactory situation!

The development of local area networks rationalized IT arrangements and moved the debt databases back to the IT department. This ensured- at least in theory – that regular backups were taken and that IT staff was available to maintain and support the debt recording and management systems which, by now, had grown in complexity.

Thirty years later…

Where do we stand to-day? Over the years the IT needs of debt managers have grown considerably. In most developing and emerging economies, the debt recording and management system is at the heart of the IT infrastructure for PDM.  In this area, UNCTAD and Commonwealth Secretariat remain the main players, sharing the market almost equally. This duopoly situation has led to “friendly competition” between the two providers and has prompted them to innovate.

However, if we consider the wider aspects of PDM, there are a number of other software applications that are used including:

  • Auctioning systems for government securities (which are often used in conjunction with online bidding systems);
  • Central Depository Systems (CDS);
  • Securities Settlement Systems, which connect to Real Time Gross Settlement Systems (RTGS);
  • Electronic platforms for the trading of government securities;
  • Links to sub-systems such as disbursement monitoring systems; and
  • Links to Integrated Financial Management Systems (IFMIS);

Many of these systems are custom-designed although there commercial products for certain functions e.g  auctioning and IFMIS. Given that there is at present no “ERP-equivalent*” for PDM, debt offices must ensure that software applications are well integrated and work smoothly together. Also, many of these systems will not be owned and operated by the debt management office. This makes coordination among institutions concerned very important.

Impact of cloud computing

One technology that has the potential to revolutionize public debt management is Cloud Computing.

Cloud technology is the result of the convergence between Information Technology (IT) and Communications Technology (CT). The concept is fairly simple: cloud technology is a system of storing and accessing data in/from central servers via the internet. Clouds can be public, private or hybrid. There are two main pre-requisites for exploiting cloud technology:

• The software applications must be developed to run in the cloud; and
• Users must have good internet access.

We make use of cloud applications everyday when using Social Media applications, Google, Amazon, Microsoft 360 or OneDrive.

One obvious use of cloud technology in PDM is the implementation of off-site backups. While this is very useful and will contribute to improved business continuity (and DeMPA scores!) cloud technology could have a much wider impact on PDM. The National Institute of Standards and Technology (NIST) states that “cloud computing is more than a new technology: it is a new way of delivering IT services”.

Three features of cloud computing are of particular importance:

• The use of cloud-based hardware (or virtual servers) – referred to as Infrastructure as a Service (IaaS);
• The hosting of software applications and/or data in the cloud – Software as a Service (SaaS)
• Software developed in the cloud – or Platform as a Service (PaaS).

IaaS is particularly appealing to countries that are finding it difficult to procure, install and maintain IT installations as well as retain competent staff to manage these. Cloud services are routinely advertised in computer magazines at very competitive prices.

The provision of cloud-based software for PDM would be a breakthrough. No longer would debt management offices have to worry about applying the latest releases to their applications. This would be undertaken by the software developer. The applications and debt data would be accessible from anywhere via an internet connection.

One of the advantages of cloud computing is that it provides a large degree of standardization in terms of software application and database structure thus facilitating consolidation. The development of cloud-based debt recording and management systems would therefore be of interest to group of countries e.g. in a currency union or in a sub-national debt situation. In the latter case, it is possible to imagine a setup whereby states would maintain their debt databases in the cloud which the central government would then be able to access and produce aggregated data.

Cloud computing does not come without risks and security is a major concern. The issue is not about loss of data but rather unauthorized access. There are ways to mitigate these risks including carefully selecting the cloud provider; carrying out due diligence to ensure one is aware of the facilities offered by the provider and the standards that are in place; using more than one provider etc. DMOs should seek independent advice when in doubt.


The application of the latest ICT technologies, such as cloud computing, in the area of public debt management is still work in progress. A lot will depend how software providers respond to the challenge. Moreover, countries also have an important role to play. Procuring new technology has initial cost implications as well as risks. At the end of the day, DMOs must be able to demonstrate that any investment improves delivery and productivity. To be able to do so, and to maximize the benefits that new technologies offer, DMOs must plan ahead and develop a strategy. It is also very important to select technology, products and providers with great care!

We believe that both software providers and countries will rise to the challenge. So, while we may not be there yet, we are definitely getting closer!

Note: * ERP or Enterprise Resource Planning is a suite of integrated applications that an organization can use to collect, store, manage and interpret data from its business activities (purchasing, manufacturing, marketing, inventory, shipping etc.)