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	About the Government Debt Management Unit The Government Debt Management Unit (GDMU), an office of the Ministry of Finance, is in charge of managing Israel's domestic and external debt and the development and implementation of an overall debt management strategy. In this context, the unit is responsible for issuing tradable government bonds in Israel's domestic market and raising capital in international markets; initiating and promoting reforms and structural changes in the Israeli capital market, in particular the secondary government bond market; constantly studying and monitoring global capital markets; providing information to the international rating agencies; cooperating with the Development Corporation for Israel (the Israel Bonds Organization); and managing other countries' debts to Israel through the "Paris Club." The GDMU was established in January 2002, by merging the Foreign Exchange Transaction Department, part of the Division of the Accountant General, with several sections of the Capital Market Department at the Capital Market, Insurance, and Saving Division. Until the GDMU was established, the Foreign Exchange Transaction Department had been responsible for the management of the government's external debt and the Capital Market Department had been in charge of managing the domestic debt. The two units were merged to improve the management of government debt by gathering all relevant policymaking bodies into a single unit, so that the cumulative insight of all concerned would improve the coordination of the two aspects of debt management. Other reasons for setting up the GDMU were the favorable experience of similar units in many advanced economies and the recommendations of the International Monetary Fund (IMF), the World Bank, and the Organization for Economic Cooperation and Development (OECD). The GDMU is comprised of three departments that correspond to its main activities: the Domestic Debt Management Department, the Foreign Debt Management and Foreign Exchange Transactions Department, and the Risk Management Department. The GDMU works closely with the New York office of the Ministry of Finance and the Development Corporation for Israel (the Bonds Organization), which raises a large share of the government's external debt. The GDMU - Organizational Structure Risk Management To improve the management of government debt, the Ministry of Finance has established a risk-management department within the Government Debt Management Unit. The Risk Management Department is expected to assist policymakers in making decisions in regard to several types of risk: Market risk-risk resulting from changes in prices, exchange rates, interest rates, and interest spreads. Refinancing risk-risk related to the government's ability to roll over its debt once it matures. Liquidity risk-risk related to the government's ability to raise funds unexpectedly and in a short time. Credit risks-the risk that a debtor will fail to pay back its debt; this is especially relevant in swaps and derivatives transactions. Other risks, such us technical errors and legal risks. The Department's goals are: To identify the optimal currency mix of the government's debt portfolio. To identify possible scenarios related to government debt, including cash flows in each scenario, and their probability. To identify the most efficient frontier (cost vs. risk) of different currency and fixed/floating weightings (benchmarking ). To improve the government-debt databases. To price the government's foreign currency transactions, private placements, and derivatives transactions. To examine principal and interest rate sensitivity to market changes for budgeting purposes.
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