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Contingent Liabilities: Issues and Practice
Author:
Aliona Cebotari
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Series:
IMF Working Papers
Volume/Issue:
Volume 2008: Issue 245
Language:
English
Publication Date:
01 Oct 2008
DOI:
https://doi.org/10.5089/9781451871036.001
ISBN:
9781451871036
ISSN:
1018-5941
Pages:
60
Keywords:
WP; balance sheet; government guarantee; insurance coverage; net present value; risk premium
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Contingent liabilities have gained prominence in the analysis of public finance. Indeed, history is full of episodes in which the financial position of the public sector is substantially altered-or its true nature uncovered-as a result of government bailouts of financial or nonfinancial entities, in both the private and the public sector. The paper discusses theoretical and practical issues raised by contingent liabilities, including the rationale for taking them on, how to safeguard against the fiscal risks associated with them, how to account and budget for them, and how to disclose them. Country experiences are used to illustrate ways these issues are addressed in practice and challenges faced. The paper also points to good practices related to the mitigation, management and disclosure of risks from contingent liabilities.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund