Experience of the Accounts Chamber of the Russian Federation in Performance Auditing of Public Debt Management Vilnius, Lithuania June 2011 Accounts Chamber of the Russian Federation

Main Objectives of Debt Policy in the Audit Period  To ensure the federal budget balance and keep the high level of debt sustainability achieved in the recent years  To develop the national government securities market  To further reduce the relative amount of the external public debt of the Russian Federation

Criteria of public debt management assessment in terms of ensuring debt sustainability and current ability to perform obligations as the main debt policy objective Indicator Criterion (indicative value) Public debt of the Russian Federation, % to GDP< 50% Share of internal public debt in total public debt of the Russian Federation > 50% Share of costs of public debt service in total federal fiscal spending < 10% Share of market debt securitized with government securities in total public debt of the Russian Federation > 55% Relation of annual costs of public debt redemption and service to federal fiscal revenue <10% Relation of public debt of the Russian Federation to federal fiscal revenue <250% Relation of external debt of the Russian Federation to annual export of goods and services <220% Relation of annual costs of external debt redemption and service to annual export of goods and services <25%

Behavior of indicators applied for the public debt management assessment in terms of ensuring debt sustainability and current ability to perform obligations as the main debt policy objective Indicator Unit Criteria (indicative value) Public debt of the Russian Federation, % to GDP % < 50% Share of internal public debt in total public debt of the Russian Federation % > 50% Share of internal public debt in total public debt of the Russian Federation % < 10% Share of market debt securitized with government securities in total public debt of the Russian Federation % > 55% Relation of annual costs of public debt redemption and service to federal fiscal revenue % <10% Relation of public debt of the Russian Federation to federal fiscal revenue % <250% Relation of external debt of the Russian Federation to annual export of goods and services % <220% Relation of annual costs of external debt redemption and service to annual export of goods and services % <25% Reference information for the period is provided in underlined Italic type, outside the audit period.

Positions of Estimated Figures within Indicative Thresholds (0-1)

Results of the variation analysis of indicators used for public debt management assessment in terms of ensuring debt sustainability and current ability to perform obligations : - In the audit period ( ), all indicators used for assessment were below the indicative thresholds ; - Certain indicators were far below the indicative thresholds evidencing that there was a wide margin for debt sustainability. And the indicators with the minimum indicative threshold fixed were also at the “safe” level ; -Dynamics of certain indicators and analysis of factors determining these changes showed that some indicators had changed in relation to the indicative thresholds due to general economic factors and implementation of certain debt-related and budgeting decisions, and was not directly related to improvement or decrease in the public debt management performance. With that, some of these changes were posing certain additional threats to the federal budget. Final Performance Assessment Taking into account all the factors analyzed, as part of the general integral performance assessment of the Russia’s public debt management during the period of , the public debt management was assessed as quite efficient in terms of ensuring debt sustainability and current ability to perform obligations.

Conclusion 1.Basic indicators of assessment of the Russia’s public debt management performance in the context of ensuring debt sustainability and current ability to perform obligations as one of the main objectives of the government policy as approved by the Accounts Chamber of the Russian Federation and the Ministry of Finance of the Russian Federation in the course of the control activity, can be applied as a separate group of indicators included into the general system of performance indicators for assessment of public debt management. 2.It was decided to develop further cooperation between the Accounts Chamber of the Russian Federation and the Ministry of Finance of the Russian Federation in order to prepare an extensive list of criteria for performance assessment of public debt management.

Experience of the Accounts Chamber of the Russian Federation in Performance Auditing of Public Debt Management Vilnius, Lithuania June 2011 Accounts Chamber of the Russian Federation