Infrastructure Guarantees: Making It Simple

This study offers new insights into fiscal policy management by providing an alternative to the traditional way of estimating guarantee It therefore takes away the need for guesswork amongst policy makers in estimating contingent liability. The findings confirm the long held belief that fundamental risk consideration should influence the choice of method in calculating value at risk which will be guaranteed by government. The study confirms that political consideration influences the governance risk indicator which is used to calculate the governance risk factor and that a default by government on guarantees for public private partnership transactions will have a negative impact on the debt while also providing a valuable path in the choice of “fundamental risk” indices in determining the value at risk.