1. This department is responsible for the development of medium- and longterm strategies aimed at reducing debt costs and risks. It tracks macroeconomic issues and their impact on the activities of the DMO. It undertakes risk analysis, monitors, and reports on portfolio-related risks, and publishes economic and debt management statistics in regular bulletins and quarterly status reports on behalf of the DMO. It] provides a check on the operations of the front office staff by ensuring compliance with established strategies and benchmarks. It undertakes research and does debt sustainability analysis in addition to assessing the riskiness of the nation’s debt portfolio.
2. The creation of the department is meant to cause a separation between those setting and monitoring the risk management framework (middle office) from those responsible for executing market transactions (front office) and those recoding them (back office). It is the reality check for the DMO. The department recommends policies for approval of the Board and formulates strategies to guide internal operations. It is also required to format strong working relationships with other governmental entities with the responsibilities for formulating macroeconomic policies, planning, public investment, cash management, budgeting, monetary policies and balance of payments.
3. The Policy, Strategy, & Risk Management department constitutes the analytical group of the organization. It performs analysis of the total stock of domestic and external public debt and debt flows in specific periods. It provides information corresponding to the indebtedness to each creditor and subscriber while evaluating the debt composition of each creditor on currencies, maturity, and interest-rate basis. It presents debt statistics in consonance with measurable indicators that conform to established standards of debt reporting that allow international comparison and measurement.
4. The department promotes the use of centralized public debt databases at the DMO and interactive Extranet in analyzing debt data and processing reports, part of which could be open to remote access by public entities in obtaining up-to-date information on the status stocks and flows of public debt. The diffusion of information to intended audiences should be performed through a distribution program prepared for this purpose according to the type of the reports and their periodicity. The preparation of debt information and reports should be subject to established standards and international best practice to allow comparability and to meet the specific needs of target audiences. The targets for the diffusion of the information and reports to be generated by the department should include internal users in key public agencies that deal with fiscal and monetary economy like the FMF, the OAGF, the CBN, the NPC, States and Local Governments, etc. It should also be directed at such external audiences as multilateral institutions and international development finance agencies like the World Bank, IMF, African Development Bank, IFC; and creditors like the Paris and London Clubs, as well as international commercial banks, Export Credit Agencies, and Embassies of creditor countries.
5. The responsibilities of the department also include the production of other information and reports needed for analytical purposes such as estimates andprojections of disbursements and public debt service using various assumptions of variable interest rates and exchange rates. This information normally aids its function of coordinating debt management with other public policy objectives. It is required to integrate these statistics with the analysis of Balance of Payments information to develop debt strategies using such DSA tools as DSM+, etc, to enable it provide strong support to the Portfolio Management Department.
6. The department is also responsible for proactive debt management, which measures the performance of the DMO within the context of a given minimum-risk benchmark, reducing the risk for government funds thereby. These functions provide substantive feedback to the Board and to the EDMC through the DG, which permits functional evaluation and revision of the debt strategy by the Board and the EDMC. The department’s proactive debt management functions include the performance of:
   • Portfolio Analysis in macroeconomic framework, as well as debt sustainability and cost-risk analysis to be performed on regular basis for external and domestic debt. This form of analysis should include fiscal sustainability and scenario testing to be accomplished using different DSA analytical tools such as Debt-pro or DSM+;
   • Sensitivity Analysis using varying scenarios of exchange- and interestrates to provide information about the impact of different debt service scenarios on fiscal and monetary variables. This responsibility should include the establishment of targets for the appropriate external-domestic debt mix and desired amortization profiles.

Departmental Struture

1. The department is made up of two units and three sections as follows:
   • Policy & Strategy Unit: responsible for strategy formulation for internal operation, activity monitoring to ensure compliance with approved policies and operational guidelines, and making policy recommendations for the approval of the Board and the EDMC. This unit is supported by three sections in the exercise of its functions: Debt Strategy, Monitoring & Compliance; and Research & Documentation;
   • Risk Management Unit: responsible for risk assessment and proactive debt management;